For the Greater Good

Avatar

James K

James is a government policy analyst, and lives in Wellington, New Zealand. His interests including wargaming, computer gaming (especially RPGs and strategy games), Dungeons & Dragons and scepticism. No part of any of his posts or comments should be construed as the position of any part of the New Zealand government, or indeed any agency he may be associated with.

Related Post Roulette

63 Responses

  1. Avatar david says:

    (1) To do nothing is to approve of the status quo; as a consequentialist you have no reason to privilege the status quo over a proposed alternative, and the reasons you give for professing ignorance unfortunately apply equally to both the prevailing regime and any given alternative. You know as little as you do as to how far you are from Pangloss when some hypothetical subsidy/tax rate is 10%, as you do when it is 0%.

    “I don’t know” is not good enough, Sir Consequentialist. You must actually know why you favour 0%. Why not 1%? Why not -1%? Surely you recognize that the zero point is the product of arbitrary historical idiosyncrasies and accumulated injustices that have sadly surpassed the statute of limitations, not Natural Law. Smuggle not thine deontologies in thy argument.

    (2) The central planner doesn’t have to be omniscient and perfect; s/he just has to be ‘good enough’. Hayekian local knowledge matters less and less when decisions are to be made on highly legible, formalized aggregate data anyway, like “rates of inflation”. Remember that the central-planner can cheat: at any point he can hold auctions or contract out any bits that he finds exceptionally difficult, whereas the anti-planner can only lay claim to ‘centrally planning’ any bits when those bits happen to be consistent with a single profit-maximizing firm, a la Coase.

    (3) If you are interested in post-socialist political frameworks, then you must recognize that your opponent is no longer the Prices Board but the Regulatory Agency, and he waves not the flag of irrational pricing but wholly rational pricing – under externalities! Then protesting about local knowledge is for naught. Very likely the individuals leading a political charge to have something recognized as an externality worthy of regulation are, themselves, the local special interests, whereas you are now the ivory-tower economist with castles wrought of Coasean bargaining, a-floating in the sky. Then you must hastily abandon the cautious humility advocated of Hayek for the triumphal neoclassicism of Friedman, to assert that Yes! We Know Better than the peasantry, who are after all Rent-Seeking Irrational Voters.

    (4) Finally a note: you misread the historical calculation debate, I think… the economists of the era read the debate as a loss by the Austrians. The Marxists lost, too. Instead the neoclassical socialists won, which then lead to the era of ambitious neoclassical theorizing by (quite often) American, Keynesian, and socialist economists, like Paul Samuelson. You still see this ideological perspective today whenever one talks of social welfare functions, for instance. Economics papers have welfare analyses because we believe we can, in fact, say sensible things about welfare.

    The Austrians never regained their influence. An economics with Rational Expectations and an Efficient Market Hypothesis is wholly alien to Hayek, precisely because such an economy allows the central planner of point (2) to cheat too much. A sufficiently technocratically-engineered public policy would dance right past all of his decentralized local knowledge, there is a whole subfield of mechanism design filed under “incentive-compatible preference revelation” (and indeed it moves in favour of a state). Yet adherence to such an economics is orthodox today, even more so amongst the right-wing than the left, oddly enough.Report

    • Avatar Roger in reply to david says:

      David,

      Great input on a fascinating post (thanks James).

      I concur that the status quo is not inherently privileged. However, it is special in many ways. First, in a complex adaptive system that seems to be working, it establishes a baseline. Design changes to the system, if random, are more likely to be destructive that constructive as there are more ways to break things than make things. Yes, every system is path dependent with a particular historical narrative, but the fact that the system works cannot be taken lightly. This is one reason I worry even about deregulation.

      If you know what you expect from a system, then you can compare systems. For example, we can compare standards of living and economic growth rates between the US and North Korea. It is reasonable to assume that the US should be viewed as a superior adaptive system. The status quo should be privileged not because it is the status quo, but because it is clearly more effective than the alternative. In North Korea, the status quo should be viewed as defective assuming our goal is economic prosperity or some such. (if the goal is enslaving the people like cattle, then NK is a shining star).

      On point 2, I think it comes down to a combination of centralized and decentralized planning. At the extreme, we allow (observe?) competing systems of rules to emerge and allow the systems to compete and cooperate and evolve over time. At the other extreme, we plan everything from a central station. In the real world, everything has been somewhere in between. I would add that one of the benefits of decentralized systems is in decentralized goals. The central planner can of course also contract out the establishment of goals, but in the extreme this just leads to a decentralized system.Report

      • Avatar david in reply to Roger says:

        Thank you for the kind compliment!

        Design changes to the system, if random, are more likely to be destructive that constructive as there are more ways to break things than make things. Yes, every system is path dependent with a particular historical narrative, but the fact that the system works cannot be taken lightly.

        Does it work? Does it really? Don’t many objections take the form of “I don’t think this is sustainable”?

        And: Crisis! Scandal! Technological and economic shock! By what light do we keep the system unchanged, in the face of things which alter the effects of nominally unchanged policies?Report

        • Avatar Roger in reply to david says:

          Yeah, I think it is fair to say it works. Modern societies can sustain more people at ten times higher standards of living than that which dominated in prior eras. We have longer, healthier, freer, more educated lives, etc. The least advantaged are actually advantaged the most compared to the alternatives. So, compared to the thousands of competing social models, I think most of us if fully informed would agree that things work better than ever.

          There is always the possibility that the system will not be sustainable, or will experience shocks or changes which it cannot respond to. Yes, that is always a risk. But we have a complex adaptive problem solving system that reacts unexpectedly to not just external changes, but to well intentioned but misguided attempts from within. The solution IMO is to have multiple smaller experiments going and to compare how they respond over time. This at least allows us to compare, contrast and benchmark our system, and avoids placing all of humanities eggs in one basket.Report

          • Avatar david in reply to Roger says:

            (how do you know an integrated world economy will not react unexpectedly to the existence of multiple consciously-constructed different smaller experiments? ‘Race to the bottom’, ‘tragedy of the commons’, etc., to menti0n some ideas. I think this solution is implicitly imposing its own abstractions on the complex adaptive order!)

            Most political debates – the disputes which we are most interested in studying – do not have such clear-cut distinctions such as “the world now” vs “the world in a prior era”. Nor “North Korea” vs “the United States”. Typical policy proposals involve tiny changes in historical perspective: think of, say, present arguments over the ideal top marginal income tax rate.

            Arguing that we live longer, healthier, freer, and more educated lives would be wholly irrelevant to that debate. The rate has been higher, and lower, and it is higher and lower right now in both in countries that are healthier and countries which are less so. And of course, to invoke any econometrics, one first has to have a theory of causation… and that gives up the deference to complexity.Report

            • Avatar Roger in reply to david says:

              David,

              Going back to the start of the conversation, I suggested that the current system obviously works compared to prior systems in prior eras. Therefore, we should be cautious in making changes to a system that we do not understand well. I also clarified that we do have the benefit of multiple experiments (not necessarily consciously constructed) and that we can compare and contrast them based upon consequences. From this we can develop theories and look at those where the base case is privileged or suboptimal.

              Certainly there is no guarantee that what works today will always work, but it does imply that a system which works is usually more likely to keep working than a new system or changed system. Part of what works now is that we have a multiple decentralized systems that both compete and cooperate (primarily in constructive ways). I would strongly recommended we not lose this. We are not experiencing a race to the bottom, as the more integrated economies are, in general the better the various entities do. There has never been a better time to live than today on this planet. We should celebrate more.

              I disagree that we cannot use independent experiments to determine things such as tax rates. With hundreds of separate tax rates, we can compare if people flourish more in high tax districts or low. We can learn. Even if we do not learn, it doesn’t really matter, because as long as other societies do not all follow at the same time, then people and businesses will flock to the winners and avoid the losers. London never really lost. After a few generations the center of gravity just shifted to NY and Wadhington.

              In summary the current system works and is greatly decentralized. I suggest it is important that we keep it that way.Report

    • Avatar b-psycho in reply to david says:

      The central planner doesn’t have to be omniscient and perfect; s/he just has to be ‘good enough’.

      …what if the planner is self-interested?Report

    • Avatar James Hanley in reply to david says:

      David,

      The neo-classicalists won because they misunderstood Hayek. They thought he was just talking about the difficulty of aggregating and analyzing enough data, and determined that even if it couldn’t be done in practice, it could be done in theory. But what Hayek was actually saying was that prices don’t exist “out there” to be recorded and analyzed, but are created via the market process. So they’re not static bits of information that can be aggregated–by the time they’re aggregated they’re no longer the current prices.

      As to the central planner only needing to be “good enough,” you’re still assuming we can have a “good enough” understanding of what people actually want to make detailed rules about it, when what they want is a continually created outcome of market processes. And the regulatory board may wave a flag of rational pricing under externalities, but it’s a false flag. They have no way to really determine the cost of externalities to the affected people. There are ways to estimate it, and estimate it we must, since externalities–some, that is–ought to be regulated. But to call those estimates truly rational is to badly mistake what rational means in the market.Report

      • Avatar david in reply to James Hanley says:

        You misunderstand the neoclassicists. They understood perfectly well that prices don’t exist “out there”. Rather the claim is: we understand how the market process works, so when the great engine of the market runs, when we change the motor oil to this we will get that result.

        Observe that Lange – probably the most left-wing of the neoclassical socialists – advocated forcefully simulating the hypothetical ‘market process’ through the state to calculate prices; a real-life Walrasian auctioneer. The objection that prices are formed through market calculation missed the mark in 1930 and still does. The socialist just takes whatever mechanism of market calculation you propose exists, and assigns a bureaucrat to administer it, right down to incentivizing individuals to reveal their preferences, as prices do.

        And having put a driver in the seat of the market engine, he then advocates turning the steering wheel. Thence the division between Hayek and the neoclassicals.

        As for externalities, I do suggest consulting Coase and reflecting on rational revelation of externality evaluation, which is actually quite possible. The theory that underlies the state snapping its fingers and carving out tradable rights in whatever – the entire Posnerian revolution of economics-in-law – was underpinned by the insight that we actually can determine the cost of externalities and we can make meaningful assertions about welfare effects.

        And as for ‘good enough’ – it typically goes like this. Here is an aggregate outcome, over which any given individual has little plausible control, and it is Bad. At this point I must really put the burden on you to convincingly argue that this manner of argument is impossible, for I believe I am supremely justified when I point and say: Unemployment is Bad, Hyperinflation is Bad, dying of measles is Bad, etc. etc.Report

        • Avatar James Hanley in reply to david says:

          Um, you’re not familiar with Hayek’s rebuttal of Lange?

          See, this:
          we understand how the market process works, so when the great engine of the market runs, when we change the motor oil to this we will get that result.

          Is precisely what Hayek rebutted.

          …real-life Walrasian auctioneer… The socialist just takes whatever mechanism of market calculation you propose exists, and assigns a bureaucrat to administer it, right down to incentivizing individuals to reveal their preferences, as prices do.

          Hayek also rebutted that. Of course it was precisely Lange himself that Hayek was responding to (as Lange responded to Mises). There is no way that the bureaucrat can access all the information needed, because the crucial information is individual’s opportunity costs. And of course the bureaucrat/auctioneer must begin by setting prices for resources, an across the board decision that cannot take account of fragmented and localized knowledge, and then try to respond to literally hundreds of millions of individual decisions–a tremendously complex task of trying to re-create what the price system already does.

          And of course the bureaucratic price-setting model has no room for the role of the entrepreneur. It only responds by adjusting prices, not by adjusting processes, whereas the entrepreneur responds to a change in prices by looking for new manufacturing processes. The cost of tin increases, so someone devises a process to make aluminum cans at less than the new cost of tin ones. And even more importantly, it is the entrepreneurs who innovate the new products–the bureaucratic model works in relation to the mix of goods that exist, while the innovator imagines a good that doesn’t yet exist. Such “hypothetical future” goods are not predicted by any model, but come out of the imagination of people who usually aren’t even thinking about prices as their first step, but only about some hypothetical not-yet-existent thing they think would be cool and think others would find cool.

          And now you’ll respond with some disagreement, and that’s fine. I don’t anticipate persuading you. It’s others here that I’m really speaking to. An important thing to realize is that you don’t have to accept Austrian economic theory to realize that Hayek’s critique of Lange was on target; that even if the technical problem of gathering and processing all the information of market prices could be solved, the centralized bureaucrat has no way of imagining hypothetical future goods, because they are outside the neo-classical equilibrium model.

          As to your final bit, you’ve left regulation behind. I was talking about regulation of externalities, not hyperinflation and unemployment. So of course I wasn’t disagreeing that those things were bad. I’m talking about, say, the possible extinction of the Trumpeter Swan, and the difficulty of discerning the cost of that vs. the benefit of saving it (the cost of saving it is the easiest part of that equation, which is an unfortunate reality for environmental politics).Report

          • Avatar david in reply to James Hanley says:

            I’m going off, so quick reply:

            There is no way that the bureaucrat can access all the information needed, because the crucial information is individual’s opportunity costs. And of course the bureaucrat/auctioneer must begin by setting prices for resources, an across the board decision that cannot take account of fragmented and localized knowledge, and then try to respond to literally hundreds of millions of individual decisions–a tremendously complex task of trying to re-create what the price system already does.

            Nope. Lange had the auctioneer start with present market prices, then simply respond to quantities: lower in a shortfall, higher in a glut. That is to say, how the price system was popularly understood in economics then (as an auctioneer!). Obviously, today we would invoke mechanism design and modern auction theory and this would tell us of assorted problems and issues we didn’t know then, problems which apply to assorted explicit bidding mechanisms or implied price mechanisms. And we would be concerned about things which are necessarily volatile in price, and the private-sector adoption of JIT and market prediction have largely internalized the benefits of 1930s Lange anyway.

            But in the 1930s the point was unbeaten. The individual is incentivized to reveal his opportunity costs and local knowledge, to exactly the same extent as prices. And then, having inserted himself in the price system, the auctioneer can then start enacting efficient transfers and so on in the name of assorted welfare causes.

            (a note which I find amusing: Lange was writing this in the 1930s, before the modern welfare mixed-economy state. Which of course already does exactly enact these transfers, via widespread and large taxes that raise huge amounts of revenue compared to the 1930s West! We do what Lange thought impossible, we are even less price-oriented than the Langean bureaucracy. You are protesting very hard that a world that you already live in is utterly impossible to conduct, even in theory.)Report

    • Avatar James K in reply to david says:

      Hi David, thanks for the comment:

      1) Under the First Welfare Theorem, we know that market will produce efficient outcomes if certain conditions are met. When those conditions aren’t met, it’s a market failure. So when it comes to government intervention the first question to ask is – is there a market failure? If not, then it is fair to assume the market is producing the allocatively efficient outcome. But if there is a market failure, then there is a prima facie case for government intervention, and then you get into the weeds of policy analysis, the sort of stuff I do for a living.

      2) Good enough is a much bigger ask than you let on. Aggregates like inflation are a tiny part of what economics is. If you want an economy that makes actual people’s lives better rather than spitting out a large number of generic widgets you have to go micro, and when you do that you have to account for what real people want instead of playing with aggregates like a game of Civilisation.

      3) I have no objection to government action in the face of market failures. But the mere fact of a market failure doesn’t justify any arbitrary policy. When a regulatory agency mandates a specific solution to an externality (like CAFE standards), rather than forcing the market to look at the problem and let it figure out how to solve the problem (like taxing exhaust emissions), then they are playing the central planner in microcosm. In my ideal word, government intervention would still exist, but it would be a lot less prescriptive.

      4) I isn’t mean to suggest Austrian economics won the day, I’m not an Austrian either. My point was merely that the anti-calculators won the debate, of which Hayek was one. Economists still speak of social welfare functions, but they don’t try to restructure societies to maximise it. Economists focus on correcting market failures, rather than declaring markets to be an obsolete and fatally flawed institution.Report

      • Avatar david in reply to James K says:

        Briefly:

        (1) We also know that the conditions under which the market produces efficient outcomes, are also conditions in which markets maintain their efficiency under many kinds of state policy (principally those that pursue transfers, but also assorted elaborate mechanisms that maintain marginal incentives). The most intuitively straightforward example are Georgist land-value taxes and such, but one can play a lot of policy tricks once one further discards the law of one price (price discrimination is the private-sector equivalent of pure transfers!).

        Unfortunately, questions of “so who does this [Arrow-securitied exchange economy, a la the welfare theorem] endowment belong to” are fundamentally zero-sum. Many real-life political disputes are pecuniary in nature, furthermore, and fall into this trap. For high theory, cue the analytical Marxist popping his head in to demand that you justify the status-quo distribution of capital (let me spoil the end of the Cambridge K debate: it is impossible to do so on efficiency grounds, and the distribution inherits past inequalities quite well, sadly). Regardless, limiting the case for state intervention to exclusively inefficiencies and not efficient transfers does demand that you (consequentialistically?) justify prevailing endowments.

        (2) I confess it was a rhetorical trick; typically the way this goes is that you acknowledge the camel’s nose of inflation and then another ambitious reformer jumps in to go on passionately about things which are totally obvious to him, and then I leave you to duel him on obviousness theory. This thread is lacking in such individuals, sadly… 😉

        Okay, seriously. I think it is fair if I point out that in practice, there are many market failures which are not reasonable to MIT away through taxes, regulations, and transfer payments. For pragmatic reasons, whatever. I’m sure you can think of some, as a policy analyst. So you are obliged to apply good-enough no matter what you do.

        (3) Quite true. There is a fascinating and very common problem in market failures, whereby perfectly correcting the failure by policy obviates some dynamic incentive to technologically minimize the interaction that generates the failure to begin with (e.g., if the state renders the level of sulphur pollution perfectly efficient via an astonishingly successful sulphur cap-and-trade system, the incentive of third parties to invent less sulphurous mechanisms, or otherwise suffer less from sulphur, is going to decline – since the state will alter the sulphur cap as soon as I innovate anything!). The state entangles itself in a dynamic inconsistency problem that it can only remove via intervening even more to re-introduce dynamic incentives and such. You have to be careful about how “taxing exhaust emissions” is claimed to incentivize innovation.

        (4) I insist on my empirical claim that the economics orthodoxy of the 1940s walked away with the stance that the socialists won the day, which would reflect all the literature of hist. of econ. thought I’ve ever read, even Austrian sources. Lange was triumphant enough to suggest putting that statues of von Mises in front of every Ministry of Planning, for having correctly guided socialism onto the path of price-setting (which Austrian sources naturally take as a deadly insult).

        But economists today are quite willing to advocate policy that maximizes an SWF. We merely have an EMH which makes doing so very easy with a market process, and societies have been appropriately restructured to fit this much younger concept – did you miss the entire Third Way revolution and the restructuring of the welfare state across the West?Report

        • Avatar James K in reply to david says:

          1) While I haven’t mentioned it here, I have expressed some support for transfers in the past.

          2) Sure, but it’s a question of scope. There are always going to be hard problems, my point is that the government shouldn’t go around making more hard problems than already exist.

          3) That’s only a problem if the government makes it one. The invention of new technology is no reason to change your externality regime.

          4) I don’t think we’re defining socialism the same way, the Third Way (and the neoliberal synthesis more generally) is a sign of socialism’s retreat, not it’s victory.Report

          • Avatar david in reply to James K says:

            (1) I reiterate that most real-life political disputes over economic policy involve a pecuniary externality that exists bundled with a product or service. This is implicit in economic actors feeling that they are materially made worse off via some policy change.

            I would like to emphasize the point that the rightness of who deserves some transfer is not something that is easily justified consequentially. And the Hayekian sword of complexity – “we don’t know what will happen if we try to assign transfers, people are hard to predict” applies to all possible states of the universe.

            (2) These are not so much ‘problems’ as they are ‘things that happen’, and one has the choice of accepting the status quo as tolerable or otherwise. Markets make some kind of allocation anyway, and the state choosing to classify it as a problem policy should tackle vs a fine outcome doesn’t itself change anything about the allocation.

            When your car rattles, saying ‘yeah that’s fine’ or ‘no, it’s time to take it to the mechanic’ does not make marginally more problems than already exist either way. Either the car rattles or it does not.

            (3) It’s a policy-created market failure! The state policy resolving the pollution externality in every static period pushes the reward of new innovations downward, so it becomes underprovided on a intertemporal basis. By your own textbook justification for policy intervention on externalities, the same externality regime obliges at least its recognition as an entry in a cost-benefit analysis.

            (4) Hmm. Let me try to clarify: I do not say socialism won. I say neoclassicism won, and that the socialists who won the 1930s calculation debate were neoclassicist. I think it is worth separating the methodological perspectives offered in defense of, and against, socialism in the 1930s to 1950s from the politics of left-wing policymaking across the past century. I do not think it is sensible to both claim the old anti-calculation perspective and the utter triumph of its ideological opponent as your own. On a partisan basis, perhaps, but your post was about explanations, yes?

            Hayek and Friedman were partisan allies but methodological enemies, and insofar as we are sketching high-theoretical motivations for a broad political stance, asserting the importance of complexity and unexpected reactions directly contradicts the certainty and simplification that neoclassical analysis requires. Today it is Friedman’s policy universe you live in, right down to its optimistic approach to regulation and deregulation, independent central banks, and tendency to view the policy space in terms of market failures.

            The space of philosophies in economic thought don’t align on the same axis as the politics of the 20th century, and trying to squash both into “the calculators” and “the anti-calculators” renders one utterly unable to find a place for, say, the left-wing post-Keynesians of today, or right-wing American Rockefeller-Republican Keynesians who found the state-stabilized world of Bretton-Woods quite amenable for market-oriented economies and privately-planned industrial investment.

            True, Hayek rejected socialism. But so did Otto von Bismarck, and socialism’s retreat in the 1980s and 1990s is not a conservative monarchist’s victory any more than it was Hayek’s, simply because what replaced it was not Hayek’s.Report

  2. Avatar Murali says:

    I don’t think we need to presume that there is no objective way to trade off one good against another. All we need is to note is that even if there is one objectively best way, there is considerable disagreement as to what that is.

    That was basically what I was trying to do in my most recent post. I was trying to argue why we shouldn’t push our conception of the good onto others even if it was the case that there was one objective conception of the good and that we had it.

    A lot of people believe that there is an objective way to trade off goods and that they know what it is. Saying that there is no objective way just makes think of you as evil. I know its in your gravatar annd all bu still…

    But this is more than a rhetorical point. How do we get people who have so many conflicting comprehensive views of the good to live together and why should they care about doing so? I tend to lean on showing that it is an iterated prisoner’s dilemma situation (and that therefore cooperation is the best collective response) and rely on some norm of reciprocity (golden rule, categorical imperative, etc) to sustain that response.Report

    • Avatar david in reply to Murali says:

      The notion of ‘fairness’ publicly-reasoned norms which can spread contagiously contradicts the notion of an evolutionarily stable cooperation norm in societies.Report

      • Avatar Murali in reply to david says:

        I’m not claiming that fairness norms will spread contagiously. I’m saying that stable cooperation norms in market societies at least in part encapsulate an idea of fairness. When people actually make purchacing decisions,the psychological basis of their behaviour is not just a matter of calculated tradeoffs, but whether it “fair”. If it was merely a matter of maximising rational expectations, people will not reject any offer made to them in ultimatum games. But we know that when people in modern market societies play ultimatum games (whethey they come form Indonesia or the US or Europe), they regularly reject unfair offers. We ordinarily expect that it is in the individual’s interest to defect and just accept any deal offered to them instead of punish altruistically, but they don’t. This is best explained by a fairness norm.Report

        • Avatar david in reply to Murali says:

          Of course they encapsulate an idea of fairness, but you overestimate the universality of ‘fairness’. Part of the norm is that the prevailing regime is internalized by many of the participants as ‘fair’, because the meaning of ‘fair’ is fluid.

          Ultimatum games do not reflect the ‘fairness’ that you want to invoke, because they assume away the formation of a political identity that is intrinsic to political disputes over inequality. In an ultimatum game, the identities and roles are pre-assigned: you are one player, and they is the other, with these and those payoffs. In actual politics, people fight to legitimize both their identities and the claimed neutral point reflecting those payoffs (e.g.: this is my homeland, you are but guests in my house, thus it is only fair that you respect my position: ketuanan Melayu!. But of course I am very generous. I will let you stay as long as you do, see my generosity.).Report

        • Avatar david in reply to Murali says:

          Addendum: even in a purely ultimatum-game framework, asserting that it can spread contagiously via participation in global trade implicitly implies that the norm can invade pre-existing norms, so your pre-existing norm must not be terribly stable.

          What you are asserting, to get away from the language of abstract norms, is that people in increasingly market-based societies necessarily advance more egalitarian and liberalized reasoning for claims, thus restricting the kinds of claims they make. I don’t know that this is necessarily the correct causation. More egalitarian societies are also capable of more trust-based dependence on markets instead of Leviathan-driven prescriptive order. And Rodrik’s trilemma limits the kinds of claims that can be made if a country participates in global trade.

          These are economic forces rather than changes in personal standards in reasoning; people are quite willing to be exclusionary toward new generations of immigrants, or newly-feared ethnic groups, in the first world.Report

      • Avatar Roger in reply to david says:

        David,

        Could you please explain further? My understanding is that models of cooperation norms are dynamic — meaning they do not settle upon one permanent ESS.Report

        • Avatar david in reply to Roger says:

          For Murali’s purposes, he needs the cooperative strategy to be so stable that it can constitute a social norm. It is crucial to the argument – if the equilibrium ‘wanders’, then there is substantial payoff for ‘hoarding’ esoteric reasoning toward extreme claims so that future cooperative equilibria are in the hoarder’s favour.

          This is because Murali is not invoking the cooperation strategy at the first level of abstraction about the formation of claims (which has too many zero-sum disputes), but at a second level about how we should treat conflicting claims.

          The extreme-claims scenario is a real-life one, and extremely abhorrent: you see it whenever multiple ethnic-nationalist communities nervously coexist for externally-imposed reasons. Rhetoric and armories build up while everyone waits for the day the blue helmets leave, and then suddenly mere separation is not enough, let us have justice and revanchism.Report

          • Avatar Roger in reply to david says:

            Thanks, fascinating comment.

            Does this imply then that because the norms must adjust, and that therefore the participants will be encouraged to game the system to benefit from the adjustments, that all cooperative systems will tend to degrade over time?Report

            • Avatar david in reply to Roger says:

              You must understand that ‘cooperative’ here is used in an unusual way. For instance, a widespread norm enforcing and submitting to Jim Crow is here a ‘cooperative’ norm, since it does not break down into social disorder. It is merely an extremely unfair norm. The cooperation is in agreeing to an approach toward public reasoning, not in gauging the reasons being advanced.Report

    • Avatar James Hanley in reply to Murali says:

      Murali, there is no objective way to make those trade-offs because the valuation of each thing to be traded off is subjective. I give them values X and Y, you give them values Q and R. We are both right, because value is subjective. But to say there is an objectively correct way to make the tradeoff is to say that at least one of us is wrong about our subjective valuation of those things.Report

  3. Avatar NewDealer says:

    The issue for me is not central planning vs. non-central planning.

    Where I come in is with a question on whether suffering is necessary and natural? If I recall my economic history correctly, 19th century economists believed that the boom and bust cycle was perfectly natural and that the best thing to do during the post years was to do nothing.

    This resulted in a lot of wide-spread human suffering and often the people who suffered the most were not the people who caused the bust. Yes there are always some Wall Street types who do lose their fortunes during busts and sometimes whole firms go under and collapse. However, the biggest suffering tends to be among non-investors. Ordinary workers who are just trying to get through life and provide for themselves and their loved ones. These are also the people who recover last.

    I find it morally disgusting and ethically wrong for the powers that be who cause crashes to moralize to the non-involved about the importances of austerity and tightening their belts. I am not against capitalism or luxury. I like nice things and would like to live in expensive areas during my life. What I am against is Calvinist moralizing about boot straps and rugged individualism and blamming the laid off when they are not to blame.

    We are going through a paradigm shift right now. Automation and technological innovation are allowing corporations and countries to produce a lot more with fewer workers. In many ways, this is good. However, we are not having the necessary discussions about what to do on a planet with 6 or 7 billion people when we do not need all these people for work. We are simply having moralizing and blaming the displaced worker for things beyond his or her control.

    This is why safety nets are important. We need them to prevent the slings and arrows of outrageous fortune as much as possible. Anything can change at anytime in either direction. A moral and ethical society tries to have mechanisms to prevent the swings from being too wild. Someone should not go from being a worker to absolute despair and homelessness in one day.

    The purpose of universal healthcare is also this safety net. Yes people should be allowed to eat what they want and partake in drugs and alcohol. What universal healthcare is for is sudden disease or injury. A car accident caused by drunk driver or bad road conditions. That lower back pain that turns out to be cancer.

    Employment protection is inhibiting employer’s from firing employees who deserve to be fired but it is to make sure that the reasons are legitimate and not against public policy or morality. No one should be fired or discriminated against because of their race, religion, creed, sexuality, marital status, lawful out of work activity, politics, ethnicity, being called to public service (like jury duty or military service), or because a family member needs aid and care in an emergency. Managers should not be encouraged towards bullying.

    I would be willing to accept less economic regulation if it came with an active and robust social safety net. However, in the United States there are many on the right and a decent amount (but not all) libertarians who refuse to accept this. They want no safety net, no regulations, and no taxes. They want a race to the bottom where all are below Corporation. I am opposed to this.

    And I also don’t think there is anything wrong with a government encouraging healthy lifestylesReport

    • Avatar DensityDuck in reply to NewDealer says:

      “I am not against capitalism or luxury. I like nice things and would like to live in expensive areas during my life.”

      And you’re perfectly happy to have other people pay for them.

      Or, more likely, to take the nice things you have and the expensive areas you live in, and construct in your imagination even nicer things that other people have, and even more expensive areas that other people live in, and hate those imaginary people with a hate that’s no less real for being based on imagination.Report

      • Avatar NewDealer in reply to DensityDuck says:

        I work. I am an independent contractor and one of my monthly expenses is my own health insurance. I pay my rent and bills on-time.

        Healthcare, food, shelter, and clothing are not luxuries, they are basic human rights.

        Luxury is nice restaurants. That is something I will pay for myself.

        The British have NHS. I have not seen Belgravia or Hampsted Heath reduced to pig pens.Report

        • Avatar James Hanley in reply to NewDealer says:

          Healthcare, food, shelter, and clothing are not luxuries, they are basic human rights.

          I have real difficulty with this concept. A right to free speech does not require anybody else to do anything for me. All they have to do is nothing, nothing at all. A right to food, shelter, etc., implicates others, requiring them to do something for me. But who?

          If you are starving on the street and I walk past you, have I violated your rights? Should I then be punished for not giving to you? If not, then who is violating your rights by not feeding you? Society? That’s such a vague notion, it makes nobody responsible–how can you have a right that’s not enforceable against someone? Government? That’s just a pass-through from actual people, like me, so how can it violate your rights without me violating your rights?Report

          • Well how do we solve the questions you raise when we say “You have the right to an attorney.”? I’d argue the institution that is most capable is most culpable. In many instances that’d be the government being under an obligation to meet these positive rights. It doesn’t necessarily follow that the government is the only institution capable, or that these rights need be met in my idyllic social democratic fashion, there are other routes to securing these rights. That is, the rights claim and objection to violation don’t necessarily prescribe one route of securing these rights. So altogether, this set of rights claims is embedded in a view that the generations of rights are connected, complimentary, and reducing one set of rights, whether civil and political or economic and social, makes the other set far less meaningful. Can one genuinely be said to have civil and political rights absent the securities provided by having one’s economic and social rights met?Report

            • Avatar DensityDuck in reply to Creon Critic says:

              “Can one genuinely be said to have civil and political rights absent the securities provided by having one’s economic and social rights met?”

              So paying for my iPhone data plan is the government’s responsibility now?Report

              • Healthcare, food, shelter, and clothing are not luxuries, they are basic human rights.

                The US has embarrassingly high child poverty rates and infant mortality rates when compared to OECD peers. We could definitely do with a greater focus on our, thus far, limited attention to positive rights. Working as someone who supports healthcare professionals (not as a clinician, but in an office supporting clinicians who see patients daily), it is pretty disconcerting to have health care professionals writing, essentially charity-seeking letters to insurance companies so patients with serious, in the instance I’m thinking of terminal, illness to get basic supplies. I mean, supplies to ease the final months of life for some people. Anecdote I know, but that’s how I view what has come of America’s scant attention to positive rights, begging letters from doctors and nurses for those in serious need.

                America. Land of the free indeed.Report

              • Avatar Roger in reply to Creon Critic says:

                Creon,

                I find this pathetic as well. America should have the resources to take ease the final days of those with terminal illness.Report

              • Avatar DensityDuck in reply to Creon Critic says:

                “The US has embarrassingly high child poverty rates and infant mortality rates when compared to OECD peers.”

                And if only we were willing to define as “nonviable” infants born severely premature or with gross birth defects, we could vastly improve our infant mortality rates by the simple expedient of ignoring a whole bunch of dead babies. Which is what our OECD peers do.Report

              • Avatar greginak in reply to DensityDuck says:

                Please provide evidence DD.Report

              • Avatar Simon K in reply to DensityDuck says:

                The nordic countries report very premature births as “live births” and also have very low infant mortality of 3.5 per 1000. The US has an infant mortality of 7 per 1000 and a similar policy. This is only slightly above average (6.1), mind you.Report

              • Avatar greginak in reply to Simon K says:

                There is also a large difference in infant mortality rate based on income in the US.Report

    • Avatar DensityDuck in reply to NewDealer says:

      “I also don’t think there is anything wrong with a government encouraging healthy lifestyles”

      Like, say, consuming marijuana?Report

      • Avatar NewDealer in reply to DensityDuck says:

        I think marijuana and MDMA should be legal. People should be able to grow their own marijuana like you can grow basil.

        I am more uncertain about harder drugs. Heroin and Meth are pure poison. Meth can also be a serious health and environmental hazard and make land uninhabitable.

        However, addicts and mere possessors should not be sent to prison.Report

        • Avatar Kimmi in reply to NewDealer says:

          meh. we outlaw indiscriminate use of mercury, despite our vaunted freedome of religion. by all means, ban meth!
          Opium/heroin has its uses, one supposes…Report

        • Avatar Glyph in reply to NewDealer says:

          NewDealer, I think yours is an eminently reasonable position, but would ask you to consider that even heroin and meth (well, at least its ancestor speed) do not need to be pure poison if manufactured under proper (legal, licensed) conditions, in known doses and purities. We used to have a lot of addicts able to manage their lives and habits relatively safely, pre-prohibition.

          And the environmental damages of meth production are in part a result of this, and their clandestine manufacture.Report

          • Avatar NewDealer in reply to Glyph says:

            I think Portugal and the Czech Republic have rather good policies towards narcotics.

            They are much smaller nations than the U.S. of course but I would like to see their policies emulated here.Report

            • Avatar Glyph in reply to NewDealer says:

              You and me both, brother. Any chance of it happening in the near ever?Report

              • Avatar NewDealer in reply to Glyph says:

                The cynic in me says no but who knows. Things are slowly beginning to change.

                I think that the Boomers and older generations have to become irrelevant in politics for any change to occur.

                Even then it is an open question. Marijuana is basically not taboo anymore but it is still subject to great hypocrisy. There is no real reason to fight for legalization in the Bay Area because it is de facto legal here. I see people lighting up in public all the time without impunity including high school kids playing hokey. In other places, middle class and above white and Asian people can get way with smoking it in the safety of suburban cul-de-sacs. It is the poor and minorities who are arrested and jailed.

                Other drugs are still taboo. Hash might get legalized along with marijuana if and when that happens. Maybe MDMA will come next. Cocaine, Crack, Heroin, Meth, and abuse of drugs like Ritalin and OxyCotin are still taboo. Opium and others are too rare. I know people who admitted to cocaine use. I don’t know anyone who openly admitted to heroin use though I probably know people who have used the drug. Maybe one person hinted about experimenting with narcotics beyond marijuana, hash, MDMA, LSD, and shrooms.Report

    • Avatar Roger in reply to NewDealer says:

      I agree with your desire for robust safety nets, New Dealer. I do wonder whether you are being fair in your assignment of blame for booms and busts, modern or historical. I’m not sure capitalists are really always to blame,as much as the system itself seems to shift between extremes as it increasingly grows more prosperous. Indeed, it could even be that the boom and bust cycle is just the way the system tends to work BEST. I don’t really pretend to know though.

      I guess what I am saying is that the capitalists don’t really run it. Nobody does.Report

      • Avatar NewDealer in reply to Roger says:

        I don’t thin capitalists are always to blame per se.

        However, this does not mean that ordinary folks are too blame. It was Wall Street that created the NINJA (no income, no assets, no job) loan and then went looking for takers. The government was also to blame for encouraging homeownership in irresponsible ways.

        It is mainly hypocritical moralizing that I object to, not risk and speculation. There are plenty of people from all levels of education and socio-economic background who are still suffering because of the financial crisis. How are the students from the classes of 2008-2011 at fault?Report

        • Avatar Roger in reply to NewDealer says:

          But who is blaming ordinary folks or students? Are you really just complaining that when the system breaks, regardless of how or who broke it, we can all suffer? If so, I agree. We also all gained by the existence of the system in the first place. Absent it, we would be poor, illiterate and short lived like our ancestors.

          As to the most recent bust, we allowed the complex adaptive system to be monkeyed with. We incentivized and even required loans to be made to those unable to pay them, and protected banks from the ramifications of mistakes. Once the rules of the game had been changed, the players just played out the cards. From the standpoint of the Financial Firms, it isn’t even apparent that they were ever truly punished for their folly. In other words, they appear perversely rational. That has to make us all stop and wonder.Report

    • Avatar James K in reply to NewDealer says:

      I don’t think we disagree all that much New Dealer.

      I agree that treating market outcomes as if they reflect desert in some cosmic sense is misguided. Equally I have no objection to safety nets. My ideal version of healthcare policy is different to what is advocated on the left, but still takes seriously the idea that people should not be ruined by an expensive illness or injury.

      I also think a good welfare state combined with relatively light regulation is a good compromise.

      And I also don’t think there is anything wrong with a government encouraging healthy lifestyles

      Define “encourage”.Report

    • Avatar DensityDuck in reply to NewDealer says:

      “However, the biggest suffering tends to be among non-investors. Ordinary workers who are just trying to get through life and provide for themselves and their loved ones. These are also the people who recover last.”

      I read this, and I see the government buying private companies’ bad debts. I see TARP going to pay the salaries of bank managers and “shovel ready” going to prop up failing pension funds. I see “too big to fail”.Report

  4. Avatar Chris says:

    I wonder, James, why you limit “socialism” to “central planning,” which as I’m sure you know is only one theoretical and historical manifestation of socialism. Do you think your arguments apply to other breeds of socialism that rely less, if it all, on planning?Report

    • Avatar Murali in reply to Chris says:

      I think its because its central planning which is the “enemy” right? What would a spontaneous socialist order look like and why would libertarians be opposed to it?Report

    • Avatar James K in reply to Chris says:

      When I talk about socialism, I am referring to either A) Centrally-planned economies and/or B) Collective control of the means of production (which functions like central planning because production decisions are still being made through collective decision-making). I know other forms of economics are often called socialism (especially by the Republicans), but I don’t think of them as socialism.Report

      • Avatar Chris in reply to James K says:

        James, central planning is a relatively late version of socialism, and your B) is orthogonal to it. There are all sorts of versions of socialism, not necessarily “spontaneous,” as Murali describes them, that don’t involve central planning in any sense. Hell, there’s even market socialism.Report

  5. Avatar Michael Drew says:

    This is a very productive and clarifying post, James. Appreciated.Report

  6. Avatar Liberty60 says:

    The sum of the post is “central planning doesn’t work for reasons outlined”.

    Ok, fine. Work to do what?

    To form a more perfect Union? Establish Justice? Ensure domestic Tranquility? Provide for the common defence? Promote the general Welfare? Secure the Blessings of Liberty to ourselves and our Posterity?

    It seems to me that central planning- top down, hierarchical, Soviet-style bureaucracy works pretty well in the Pentagon in that it has protected us for generations.

    Social Security has acheived its goal spendidly in minimizing elderly poverty and providing for the general welfare.

    The Federal Interstate Highway System, Food and Drug Administration, Commerce Department, banking regulation, and more besides have done a terrific job of binding our national economy together in a more perfect union, all the while securing the blessings of liberty for ourselves and our posterity.

    Or did you mean to say that central planning doesn’t work as a universal always applicable governing principle? If so, then you are entirely correct.Report

    • Avatar James Hanley in reply to Liberty60 says:

      Primarily, “promote the general welfare” through promotion of economic growth and the widespread distribution of its benefits.

      But I will quibble with you on this:

      It seems to me that central planning- top down, hierarchical, Soviet-style bureaucracy works pretty well in the Pentagon in that it has protected us for generations.

      I think what’s protected us more than the Pentagon’s hierarchical bureaucracy (and of course all bureaucracies are hierarchical) is that the U.S. is relatively geographically isolated from the rest of the world and shares borders primarily with relatively friendly countries. The Pentagon has naught to do with the fact that we have the world’s longest undefended border (with Canada).

      But look what the Pentagon bureaucracy has brought us–military spending on a scale that no reasonable person thinks is actually necessary to protect us. I’ll not blame them for most of our foreign adventuring, since that’s been more the president than the Joint Chiefs, but without such a bureaucracy that foreign adventuring would be a damned sight more difficult. So I’m not sure this is really an example that works in your favor unless you’re a real right-wing hawk.Report

      • Avatar Liberty60 in reply to James Hanley says:

        Actually, I agree with your points, all.

        On the other hand, a centrally planned military has always been proven to be a pretty good fighting machine, such as in WWII. In fact, I can’t think of an effective, proven modern military that doesn’t follow this model.

        Which is the larger point- central planning actually is a pretty good method of doing certain things in society.Report

        • Avatar Patrick Cahalan in reply to Liberty60 says:

          > In fact, I can’t think of an effective, proven modern
          > military that doesn’t follow this model.

          Depending upon your definition of “effective”, the insurgency in Afghanistan and Iraq seems to qualify.

          Cheap and decentralized seems to be doing a bang-up job of costing the occupying force orders of magnitude much more per diem than the home crowd, to the extent that it doesn’t appear to be logistically possible for said occupying force to accomplish its goals in a reasonable time frame for reasonable cost.

          Admittedly, you can’t be very *offensive* with that style military…Report

        • Avatar b-psycho in reply to Liberty60 says:

          …since when is ability to facilitate killing on a large scale a point in favor of central planning?Report

          • Avatar Roger in reply to b-psycho says:

            Interesting way to put it… It does seem that central bureaucracies are very good at destruction and quick catch up copying. They are pathetically bad at innovation. As someone who sent decades working around bureaucracies, the explanation is pretty obvious.Report

      • Avatar DensityDuck in reply to James Hanley says:

        “look what the Pentagon bureaucracy has brought us”

        …the Internet? Microprocessor computers? Navigation accurate to centimeters? Accurate weather forecasting? Air travel?

        Tell me again about wasteful military spending.Report