I’m a Theological Instrumentalist

My econ math class is hard, and I’m sometimes tempted to say it’s a waste of time, but last night I received further proof that it’s not. Namely, last night was the first time I was formally introduced to the belief known as instrumentalism, which led to my realization that the philosophical belief system I had developed to deal with theology had already been fully developed 120 years ago by William James, and is called pragmatism.

On the one hand, it’s disappointing to learn that what I considered my original ideas are, in fact, 120 years old. Further proof that I’m not a genius.

On the other hand, knowing that my beliefs are a well-established philosophical prediction gives me a lot more confidence that they are respectable enough that I can espouse them. Now I can precede my thoughts with, “As William James said…” and get some automatic credibility.

On the blog last week we were dealing with questions about free will and mental illness, to which I was applying the rubric of pragmatism without knowing it. There was a lot of talk of ghosts and belief in gravity. But the purpose of all that was to argue that the important question to ask of a theological model is not “Is it true?” but rather “Is it useful?” In economics and apparently in pragmatism, a model is constructed with a goal in mind, and so the test of the model is whether it achieves its goal.

The economist looks at the theological problem with these stylized facts:

1. I want to feel happy

2. One major obstacle to my happiness is a time-inconsistency problem. That is, I will set standards of behavior for myself that correspond to my long-term happiness, and then, later, will fail to observe my own standards. There is a part of me (my conscience) which feels unhappy when I do this.

Not the most rigorous statements of those facts, but you get the idea. Overcoming the problem in point two is the purpose of theology, and it’s why we build theological models. So what we want to know about any particular theological model is, “Does it help me overcome the problem in point two, thus helping me to achieve my goal (point 1.).

I wrote about “mental illness” last week, but I definitely don’t want to say that no one should mention mental illness, ever. Actually, I think that it is a very useful model, but you have to recognize that in using it, you are walking a fine line between empowerment and fatalism.

Khan or somebody said “Know thy enemy,” and that’s roughly the idea of mental illness. You know, in general, that you have this time-inconsistency problem, but it helps to give it a more exact form. If you are, say, “an alcoholic,” you will use that description to say to yourself, “Okay, I still want to achieve my goal of right behavior, and one thing I should be watching out for is alcohol, because that’s particularly likely to cause problems for me.”

Compare that with saying, “Well, I’m an alcoholic, so there’s nothing I can do to stop drinking and so it’s stupid to even try.” That’s fatalism, and whether or not fatalism is “true,” when we start saying these models are “true” or “false” we’re getting confused about what they are made for in the first place.

Mental illness, then, is better than the naive, perhaps Kantian, view that since I have free will, it doesn’t matter what I do or what situations I put myself in, because I’ll always be able to choose the right thing if I want to. A person who believes that will find himself making the same mistakes over and over again, with his strong belief in “free will” preventing him from doing anything to achieve better results. From a pragmatic point of view, that’s a model that’s failing, regardless of whether free will is true.

You definitely get my point by now, so I’ll just close with a reading suggestion. These kinds of themes come up a lot throughout The Brothers Karamazov. Fyodor Pavlovich doesn’t know whether to believe in hell because he isn’t sure whether the devil can really have sharp hooks. The Grand Inquisitor’s attack on Jesus focuses on the fact that free will is too difficult for people to use, but Jesus made us use it anyway. When Ivan himself encounters the devil, a huge portion of their debate is over whether the devil is real or not. So, check out that book again.

Update: One more thing. Check out this TED talk.

Wage Growth: Preliminary Evidence from Historical Long-Term Labor Contracts

Just kidding with that title. This post is going to be fun!

The other night in my micro class, the professor posed a question we all understand but probably haven’t thought about very much lately. Namely, what was the cost of trans-Atlantic travel in the 18th century?

We all remember from 5th grade social studies that people who wanted to go from Europe to America would pay for their journey by agreeing to become indentured servants (important words always get bolded in 5th grade). Nowadays, an unskilled immigrant, working in jobs that are probably no less pleasant than the work indentured servants did, might get paid something like $15,000 for a year’s work in America. So in the 1700s, you paid something like $45-75k for a one-way ticket across the Atlantic.

Key Terms:

indentured servant

Questions for Reflection:

1. If these agreements were voluntary, what does the prevalence of indentured servitude say about conditions in Europe in the 1700s?

2. What is the difference between salaried work and indentured servitude? Why is indentured servitude illegal?

Think Critically

1. Would anyone benefit from legalization of indentured servitude? If so, who?

Matching

1. Indentured servant                                       a. someone who, in exchange for passage
from Europe to America, agreed to work
for a particular landlord for 3-5 years

Choosing to Fall at 32 ft/sec²

This is a very interesting story. It must be, because I read the whole thing, and I hardly ever read the Washington Post, even though we get it delivered.

I don’t think I can take a position on the article’s content.

For certain, I disagree with this quote:

“[C]onsensuality is impossible in that situation because of the power imbalance.”

And this one:

“In a pathology, you don’t have choice”

The easy summary of my position is that mental illness is a metaphor that is taken far too literally. As Robert Pirsig wrote about the law of gravity, mental illness is a ghost we believe in so strongly that we think it’s real.

Everyone is Lucky

Fun with Math, from Armen Alchian’s “Uncertainty, Evolution, and Economic Theory”:

Suppose two million Parisians were paired off and set to tossing coins in a game of matching. Each pair plays until the winner on the first toss is again brought to equality with the other player. Assuming one toss per second for each eight-hour day, at the end of ten years there would still be, on the average, about a hundred-odd pairs; and if the players assign the game to their heirs, a dozen or so will still be playing at the end of a thousand years!

The Laws of Economics

I’ve heard that when some kids pull leaves off of trees or bushes, their mothers or other concerned adults admonish them to stop, on the grounds that, “Well, if everyone did that, there would be no leaves for anybody else to look at.” A good insight, but one often scoffed at by economists who claim that an individual’s decision to take leaves or walk on the grass has no effect on others’ decision to do or not do the same.

True, but the reason political scientist Elinor Ostrom is all the rage these days is that she didn’t end her analysis there. It’s true, she thought, that no individual has the incentive to protect a community resource. On the other hand, it’s also true that everyone would be better off if this resource were protected. So, she next thought, since these situations are extremely common, if people aren’t irredeemably stupid, they will find a way of actually dealing with these problems, rather than just throwing up their hands and accepting that all community resources will be destroyed.

Not that Ostrom is the only person to ever be interested in such situations. Two of my new favorite economists, Harold Demsetz and Armen Alchian, have been thinking about these problems for a long time. In an article called The Property Rights Paradigm, written in the early 70’s, they talk about the consequences of private vs. communal rights. If you have JSTOR, I highly recommend the article. There are a lot of fascinating insights, presented much better than I am able to summarize here. Here’s the argument Alchian and Demsetz present:

Early in human history, people faced a choice: whether to live separately, or together in a community. It is easy to imagine that the most salient criterion in this decision was its effect on food supply. In this regard, communal living brought advantages. By pooling the production of several hunters and gatherers, the day-to-day variance in the food supply could be decreased, and probably the average per-capita food available increased, too, because of economies of scale. But these advantages carry with them a disadvantage. As soon as hunters agree to pool their production and divide the proceeds, each individual hunter has an incentive to decrease his own efforts, knowing that his own consumption does not depend directly on his output, but on the output of the group. Having agreed to output-sharing, the hunter can then go off into the forest, nap for a few hours, and then come back empty-handed, claiming he just didn’t have any luck that day.

Food is a common resource, but its production requires the efforts of individuals to maintain the supply. If this society is going to successfully form and stay together, they’ve got to overcome these disincentive effects. So, what do they do? Demsetz and Alchian write, “to reduce the severity of the shirking problem that is thereby created, it is necessary for societies which fail to establish private rights to move ever closer to a social organization in which behavior of individuals is directly regulated by the state or indirectly influenced by cultural indoctrination.” Basically, hunting becomes not a choice but a ritual. Every adult male hunts at the same time, and everyone is thus assured that no one is shirking his hunting duties. People hunt in teams, both because they are more effective for hunting, and because team members can monitor each other to ensure that nobody slacks off.

Just the other day, I was talking with someone who claimed that Native Americans “didn’t have property.” This is (arguendo) true, but economics implies that absence of property rights does not make a society immune to the problem of individual self-interest. Because they didn’t have private property, Native Americans had to use elaborate customs and rituals to keep in check the problems that would otherwise make their society fail. This system was a socialism that “worked,” by which I mean, it was better than the relevant alternative, which was not capitalism, but dissolution of the hunter-gatherer community.

Child Labor

Some interesting speculation and historical revisionism from VoxEu:

The effects of international [child-labour] interventions on developing countries today stand in sharp contrast to the situation in which child-labour laws were passed in Western Europe in the nineteenth century. In Europe, comprehensive child-labour restrictions were adopted precisely when children were moving from the family farm and workshop into formal employment in mills, mines, and factories, where they worked alongside adults. It was this direct competition between adult workers and children that motivated unions to oppose child labour.
International interventions in developing countries today shift working children instead from formal employment back to the informal sector, undermining prospects for political reform. Thus, international policies aimed at reducing child labour may achieve the opposite of their intended effect.

In other words, if you want child-labor law reform to succeed in developing countries, give the relevant political groups an incentive to care, i.e. “These kids are stealing our jobs!”

Heavy is the Head

Alright, I watched some Glenn Beck clip. Check out the first three minutes (before he starts talking again):

Of course, Anita Dunn should have expected some faux-outrage over this kind of thing. Whenever you talk about Mao, you really ought to at least mention that Mao was responsible for the deaths of 60 million of his fellow countrymen (that’s more than Stalin).

But, basically, Ms. Dunn is right. Really successful political leaders are successful because they think outside of the box. Too many people take things like term-limits as given. If you’re King, you’re king for life. If you’re President of the USA, you can be only be president for eight years. But, as one of my favorite political philosophers, Bruce Bueno de Mesquita, points out, staying in power is a lot more complicated than that.

Leaders like Fidel Castro, Muammar al-Gaddafi, Adolf Hitler, Michael Bloomberg, and other famous politicians understand that term limits are a soft constraint on your ability to stay in power. If you can’t manage to stay in your current job, there’s even the Vladimir Putin option.

In general, I think that a model in which legislated term limits are the true and only limits on power leaves out extremely important factors. My father, for one, believes that Supreme Court justices can basically do whatever they want after being confirmed. But the strange thing to note about the Supreme Court (and this is just something I’ve heard from reputable sources) is that their decisions closely track public opinion. This suggests that, even if we don’t quite understand the mechanism by which Supreme Court justices seek to stay in power, there is something at work here.

And hey, Mao was obviously really good at achieving his main objective, which was to stay in power. I mean, think about it, Mao’s opponent’s attack ad practically writes itself:

“Under Mao’s administration, somewhere between 40 and 70 million Chinese were killed or starved to death due to policies enacted by the Chairman. That probably wouldn’t happen under my administration.”

But Mao was savvy, so he probably got his people out there with a reply like:

“When we took over the leadership of this country, we inherited a huge mess caused by our predecessor’s wasteful and backwards policies.  But under Chairman Mao’s leadership, China has successfully made a good leap… nay, a great leap, forward, and our current projections show continued progress in the years to come.”

And that’s how you take control of your message.

By the way, just so we’re clear, Mao was truly one of history’s greatest monsters.

Making Fun of the NYT

It’s a time-honored tradition! Because they’re so snooty! Here goes, from an article about e-books:

For now, the advent of e-book borrowing has not threatened physical libraries by siphoning away visitors because the recession has driven so many new users seeking free resources through library doors. And in some cases, few library patrons seem to know that e-book collections even exist.

In the Brooklyn Public Library system recently, eight people were waiting for three digital copies of “The Lost Symbol,” Dan Brown’s follow-up to “The Da Vinci Code,” while 715 people were waiting for 526 print copies.

So, which waiting list has the shorter expected wait time?

I still owe the BPL $9 in late fees. And I owe the Vienna libraries roughly 18 Euro.

Philosophy and Milk

I just noticed this label on my delicious Trader Joe’s milk today, and thought it was kind of funny:

So when I write the following, I hope it’s clear that I’m serious, and not just trying to score a political point:

A lot of people criticize parents who teach their children that the Bible contains literal truths for being “anti-science.” Or, a lot of people criticize various religions for believing things that seem absurd to outsiders. I’m thinking about how so many people say, “I loved that South Park about Mormons!” while missing the entire point of the episode, which was to say, “What is your problem? Mormons may have ‘weird’ beliefs but they’re not hurting anyone with them. Why can’t you just let these people believe what they want to believe?”

Well, should I see this label and call you an idiot, or accuse you of being “anti-science” because you insist on buying milk that is rBST-free? Or should I just say “Okay, that’s a belief that works for you. I disagree that this is worth paying for, but you’re not actually hurting me by buying Trader Joe’s milk. Furthermore, it’s possible that you’re not an idiot, but your belief that rBST is bad is part of a larger belief system that I don’t fully grasp.”?*

(*Since if you’re reading this you almost certainly know me personally, keep in mind that I’m asking what I should say, not what I actually am likely to say.)

I don’t know if I’m setting up a straw man but I really do think there is an asymmetry in how we treat the beliefs of people we identify with and those we see as below us in some way.

This post ended up being longer than I thought, so I’ll close by quoting another bloggingheads session with Bob Wright, that I thought was pretty dead-on:

BW:

I think being human is hard. A lot of people don’t have trouble with it. God bless them, they’re lucky. I think even harder is trying seriously to live a moral life and be human. That’s really hard. And a lot of people – some people don’t have trouble doing that. A lot of people don’t have trouble because they don’t worry about it. Okay, but anyway -
If somebody is really making an earnest effort to lead a moral life in the face of all the obstacles, and you know — really moral by our lights, they’re decent, gentle people – they’re trying to help people, they’re not going on jihads and killing people, it makes me just almost nauseous when someone walks up to them and says, “Don’t you understand the basis for this noble struggle is just not as intellectually sophisticated as I am?” That just makes me sick.

So that’s all I was inspired to say by looking at my milk carton today.

The Story of Stuff

The other day, Bryan Caplan wrote a post claiming “economics is intuitive.” His claim is basically true, in that most economic insights can be explained in a way that is intuitive. The problem is that’s only half of the story. The real problem is not that economics contains abstruse (thanks, GRE!) or hard-to-understand truths. It’s that a lot of what people think matters actually doesn’t matter at all. So we’ll finish explaining why, say, wages are set by supply and demand, and people will respond with “but what about corporate greed?” To which we can’t say anything but “Right. That doesn’t matter at all.”

Let’s talk about the Story of Stuff. I will also point out this extended critique.

The critique is fun, but ultimately the tone is too polemical for my tastes. Yes, she makes a bunch of absurd claims and her use of evidence is more than shaky, but a lot of it comes across as nitpicky. That said, here are what I see as her truly fundamental errors:

1. She doesn’t understand the price system. At all.

This is really the big one, and you encounter it in a lot of places, so it’s worth talking about here. Anyone who says “we’re running out of resources” doesn’t understand that prices convey information. They tell you, all in relative terms, how abundant a resource is, and how difficult it is to obtain. Perhaps reading Hayek’s “The Role of Information in Society” or the articles “Toward a Theory of Property Rights” by Harold Demsetz would help move believers in “sustainability” toward a more appropriate understanding of how resources are appropriately “rationed.”

Many of the statistics she uses in the video are wrong, but quibbling over them is pointless because the more important fact is that they don’t matter. We only retain 1% of what we buy after 6 months? We shouldn’t argue over what the true number is, because even the true number would be meaningless.

2. “Capitalism depends on an endless supply of cheap labor to function.”

No, no, no, a million times no. I’ve heard this from Marxists before, and it just seems to be a bold defiance of the facts of the world. Capitalism, as Demsetz writes, gives people the incentive to use resources efficiently, i.e. in their most valuable uses. If capitalism depended on a supply of low-paid workers, why would high-wage workers ever be employed? The fact is, wages are determined by competition for workers. Both low-wage and high-wage workers are employed under capitalism, but you don’t have high-wage workers working in unskilled jobs on the factory floor, because that would be a waste of their abilities.

3. “Capitalism depends on consumption to sustain itself.”

From this I’d have to conclude that she doesn’t understand the possibility of spontaneous order. An analogy might be someone who believes that automobiles literally rule the Earth. The only thing the Automobiles want to do is go from place to place, and so they recruit an army of humans to drive them around. Thus we must work to buy more gas to feed the Autos. We must eat so that we’ll have the energy to drive them around. Thus the worth of a human is measured in how much he can feed gas to his Auto and drive it around. The story has some vague plausibility to it, and seems to fit with the facts, but it’s also completely insane.

If you rule out the possibility that people enjoy consumption, and because of this enjoyment they choose to buy and consume things, then it’s easy to reverse cause-and-effect in this case. But people consuming twice as much as they did fifty years ago is a good thing. People in Africa learn to be “thrifty” because they are extremely poor. What they want is to consume more, and thus consuming more would be good, if they could manage it.

———————————-

Of course the video is terrible and infuriating from beginning to end, but I feel like the critique adopts too harsh a tone, when we should be trying to identify the errors that are common to many critiques of capitalism and responding to those, rather than getting in a fight about citations and use of statistics.

In case there was any ambiguity, by the way, let me put it plainly: The Story of Stuff is an awful movie.