Thoughts in the shower

A number of years ago a relative with progressive leanings presented me with a Christmas present in the form of John Rawls' “A Theory of Justice.” She told me that this the book sketched out the philosophical justification for redistributionist social policies, as she learned it from her classes towards her degree in social work. I read it. Ultimately, in the distribution of material goods, a just society was measured by the condition of its least well-off members. This criterion contrasts with redistributionist theories like communism, since it allows that inequalities may be just if they are necessary to give a greater benefit of the least advantaged. It is about height of the bottom than the height of the top or the gap between. Whatever you may think of the theory, it is studied by progressive policy makers. Hilary Clinton is a fan of his. When you hear the term “Social Justice” in America, it refers to Rawls.

Occasionally It has been observed that the wealthy 1% are getting wealthier as observed by this article. In particular, the author notes that

With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. [Italics mine]

Are the salaries of such people (presumably in the top 1%) just as long as they provide a better social safety net? According Rawls’ theory, yes. If a small number of JPM guys can serve the poor better than a large number of state administrators, then have at it. Maybe it is possible to refine the arrangement such that their compensation produces less inequality than it currently does, but I’d guess not by that much. So this example brings up an interesting case where social justice might very well encourage some of that very wealthy 1%. The exercise of state power through a small number of highly compensated financiers is no more nor less just or efficient than through an army of mediumly compensated bureaucrats, more commonly envisioned.

The idea that it may be socially just to concentrate power in the hands of a few elites has been noticed by other progressives. Ralph Nader’s new book “Only the Super-rich Can Save Us!” fictionally explores the possibility that a financially well-endowed elite with a sense of noblesse oblige might be the most efficient means of improving the world. Might JPM not be an shade of Nader’s Super-rich fantasy? There is no hypocrisy in getting rich while raising up the poor. Walmart does this every day. Additionally, at least according to Rawls, there is nothing wrong with becoming rich by raising up the poor on the dime of the tax-payers. Of course, the taxes must be born by someone, and it will not be the poor people being helped or the super-rich people administering the help. One could build a pretty nice empire helping others through the government, I think.

And thus we find ourselves on the Road to Serfdom.

Every student of one of the modern Western religions knows the story. To recap, the angels visit Lot, disguised as humans, to see the city and learn about its inhabitants. Lot takes them in, giving them food and lodging. At some point, the citizens of Sodom demand that Lot hand over his guests to be raped or molested (translations differ) by them. Lot instead offers them his daughters, with the selling point that they are virgins (which gives evidence for the “rape” translation). However, that doesn’t satisfy the crowd, and they try to break in. In the end, the angels reveal themselves, save Lot, and destroy the two towns.

People take this story in different ways. To some it is a clear condemnation of homosexuality (though why it isn’t merely condemning homosexual rape, I do not know). To some it is a clear indication that the Old Testament God is an immoral creature, since he saves a man who offers his own daughters up for gang rape instead of these strangers (maybe there is some feminist angle on the value of women versus men). But I say the story is about neither. The story is really about commerce.

In particular, the story is about hospitality. The hospitality angle itself is not a new idea and considered a learned interpretation. Why is God so fired up about it though? And what is so important about this story that it has been retold for over 2000 years? In light of some reading I did of Hayek about economics and culture (see The Fatal Conceit), I can more fully appreciate it. Let’s think a moment about what hospitality has to do with commerce, since this might seem like a foreign idea to us. In ancient times, when a great many different cultures with different traditions and standards lived cheek to jowl, a man in a foreign city was taking a great risk that could easily get him killed by xenophobic natives. The act of a native, in this case Lot, taking in these guests was not merely a question of throwing a dinner party. It was about providing safe haven and safe passage, for strangers in a strange land. A tradition of hospitality is ultimately to the benefit to both guests and hosts because it provides them a means of passing along goods and services as well as knowledge, which was in very short supply in those days. To the extent that travelers can go about their business in foreign lands, they provide the collective population with a “nervous system” of considerable value.

Even if it requires the rape of his daughters, hospitality was too valuable for Lot to give up (whether one would make such a comparison today is beside the point). This is an important part of the lesson. If, in the story, he hadn’t made this counter-offer, the lesson would be “all other things being equal, be hospitable”, and that would not be the same lesson. Of course Lot did not want to see his daughters raped. What father does not possess the primal instinct to protect his children? But his primal instinct is, according to the actual lesson, inferior to his good manners. A people who give priority to their primal instincts must eventually return to a primal state of development. That would likely happen over a long time. In contrast, protecting the family from harm is a more timely concern. This story, whether myth or fact, promotes the conditions of commerce at times when such conditions are inconvenient in the short term.

Did the ancient Hebrews know this? Good traditions don’t have to come from someone thinking up things like “let’s all be nice to strangers” and getting other people to go along. It can also be that cultures that did not treat strangers well simply tended to die out (or their traditions changed) because their inferior nervous systems could not cope, in competition with others, with the ever changing world. The survivors pass on their traits and traditions. A distrust of strangers is no longer a trait of most Westerners. We give directions to strangers without knowing why they are here and what business they have there (though a traveller in Boston might sometimes encounter a cultural throwback). I think we have learned this lesson of Lot’s so well, that we no longer recognize it in the story. In genetic terms, this trait has more or less swept our cultural genome, though I’m not sure each of us would sacrifice our own children for it.

Moreover, the concept of hospitality is itself much like an organism that reproduces itself in the minds of its receivers. Like a virus, hospitality is contagious. You take a guest into your home and he will learn a little bit about you and you a little about him. In the process, you exchange some ideas about how to behave, either by abstract discussion or by example. Hence, the concept of hospitality has a chance to hop from one mind to another. “Kill all strangers” is much less capable of propagating itself, unless it actually provides real protection from your predominantly evil neighbors.

Finally, the automatic selection of good traditions versus bad can merrily proceed without even a single mind understanding what’s so good about them and why. In fact, the moment someone stops and thinks “I see no basis for this rule, I will change it” (a cultural mutation), he must be very careful that he is not, in some small way, condemning his people to the dustbin of history.

* As a disclaimer, I do not suggest that I personally value manners over the rape of daughters or condone the level of punishment inflicted upon those coarse people.

I don't think there would be any need to talk about poor ways to talk about the economy if they weren't so popular.  Every so often I have read an article in which I see some odd analogy in the popular press about the economy, and, this morning I think I figured out how these misrepresentations are organized.

As any Mises reader knows, the economy is the sum total of the actions of many individuals.  These actions do not occur all at once, but in response to other actions through time.  Hence there is always some feedback loop.  I think it could be summarized by a three phase cycle: perform -> observe -> think -> perform and so on like that.  The performance phase is the point where people make a choice selecting one option and excluding others, doing something.  The observe phase is time when results of the performance appear.  We could also call this the "results" phase.  In the think phase, which could also be called "learn", the actor weighs his previous knowledge and his observations of his performance and changes whatever predictions, ideas, and choices will guide the next performance.  In other words, he learns.  I don't intend to say that these phases are cleanly separated or don't even overlap within the same individual as her performs multiple actions.  I would just like to use this cycle as a schematic for the feedback loop that is acting man.

Feedback loops are more challenging things to analyze than one way progressions A -> B -> C.  I think that a good deal of way in which the economy is misrepresented in the popular press comes down to cutting out one phase and unrolling the action loop into a progression, and thereby ignoring one feedback link.  This results in three popular misrepresentations, based on where we cut the loop.

The weather economy: observe -> think

There is no coupling between what the economy is doing and what people do.  Like the weather, we can only look at the sky and decide whether or not to have a picnic.  Our picnic won't change the weather.  In this view, the economy is like the weather.  Some days the sun shines, and we all run and play.  Other days the economy is dim, and we all huddle indoors, waiting for it to pass.  The important thing about this view is that the economy itself is not a result of human activity.

The hallucination economy: think -> perform

Here we sever thought from observation of results.  That is, we think of human action the result internal moods and animal spirits and not of any data on the ground.  An economic depression is literally a psychological one as well.  The economy works because people think it works.  It's magic.  This misrepresentation suggests that positive thoughts can goad people into expanding production, resulting in wonderful prosperity, if only we can create the right motivation somehow.

The behavioral economy: perform -> observe

Its essential feature is the separation of learning from performance.  What people know or the expectations they have are hardly relevant in this economy.  People do things according to predictable formula.  They do not adapt to the conditions when it comes to making macroeconomic predictions:  this policy change is supposed to produce that result, as verified by some historical statistics.  In other words, experts can trick the economy in a variety of mechanistic ways, and no one catches on.

The next time you're reading some pop economics piece, you might consider whether the author is a weatherist, a hallucinationist, or a behaviorist.  It might make more obvious the shortcomings of the analysis.

(No, no, not that button...)

There is a movie in major release called The Box, which is a retelling of a 1980s Twilight Zone episode called "Button, Button", based on an earlier short story by the same name.  The basic story is that a couple, who has fallen on some hard times, receives a visit from a mysterious stranger who brings a box into their home containing a big red button.  "If you push this button," he says.  "Two things will undoubtedly happen. The first is that somewhere in the world, a person you do not know, will die. The second is that after pushing the button, you will receive a briefcase filled with 1 million dollars."  It's a nice open premise for several story variations with lots of philosophical wrangling over the pushing, the inevitable pushing (rules of drama dictate that it must get pushed), and a number of possible surprise ending twists at the end.

What is the nature of  button proposition?  Would you sacrifice a stranger for a million dollars?  More generally, would you have X taken away from a stranger to receive Y?  You get a "good", and he gets a "bad".  The attractiveness or horror of the proposition might shift depending on how big the bad and the good are.  Would you have $1 million taken from a stranger for your life?  Would you have $100 taken from a stranger and you get $50?  Does it make any difference if the good is greater than the bad or less?  In some parts of the world or in the right circumstances, $100 might mean life or death for the stranger, while to you $50 buys a nice dinner.  Then again, I might need $50 more than the stranger needs $100.  Interpersonal comparisons of happiness are pretty thorny.  Some strangers might rather have $1 million that they could leave to their families than their own lives.  The world is full of different people in different circumstances.  But it is safe to say that the only way to get an exciting movie out of it is for Y to be something really big and for X to be something even bigger.

Now, what if the polarity were reversed?  For the reverse-button: "Two things will undoubtedly happen. The first is that somewhere in the world, a person you do not know, will be saved. The second is that after pushing the button, you will be sued for 1 million dollars."  You get the bad and he gets the good.  What?  No way!  Obviously no pushing, right?  Are you being greedy and selfish for not pushing?  Is not pushing the reverse button that different from pushing the regular button?  Don't you still weigh a stranger's life against your financial comfort?  Now, if you could save a life for $10, and $10 didn't mean as much to you, you might very well push it many times.  You might push the button to give your life to save the lives of million strangers.  What makes this palatable, however, is your decision to take the "bad" is in your hands, not in the hands of a stranger who is thinking primarily of his "good".

And what of the stranger angle?  Part of the temptation to push the button (and the apathy towards the reverse button) has to do with the fact that the losses (or gains) are suffered by "a person you do not know".  You have the opportunity to commit a perfect crime, anonymous and untraceable.  With no connection to the victim, it is quite understandable that anyone would feel less guilty than if the victim were a friend or a neighbor.  Thousands of people have terrible misfortune's every day.  What's one more statistic?  The real genius of the button proposition is the diffusion of the loss into the nameless masses and the concentration of the gain to yourself.  The stranger premise naturally dilutes the "bad" in the equation.

Let's consider a slightly different button (in some places a lever, in others a touch screen,...):

If you push the button two things will undoubtedly happen. The first is that the taxes of people whom you don't know will rise. The second is that your job will be saved, and you will get a raise.

That's a button many seem keen to push.  A diffuse loss to be borne by others and a concentrated gain to oneself.  The perfect crime.

What would the State look like if I hadn't been brought up in it?  Alternatively, what would happen if the proverbial "man from mars" came to Earth and had a look at the State, having no such experience?

I think an old Star Trek episode, "A taste of Armageddon", gives a good answer (you can also watch it).  Kirk and the crew visit a planet involved in an interplanetary "war", only it's not really a war, and it is not really a peace.  You could call it a "clean war".  There had been a real war once.  The governments of Eminiar and Vendikar, using interplanetary missiles and such, began devastating each others' cities 500 years ago.  But soon after the war began, their governments reached an agreement.  Since bombs and missiles were creating far too much collateral damage on either side, and since their governments still wanted to destroy one another's people, they agreed to spare each other further property damage by fighting their war through a computerized simulation, which could accurately compute the casualties inflicted by the imaginary bombs from the other side, and exterminating their own citizens as casualties (reducing unnecessary transportation costs, I suppose).

The landing party beams down to Eminiar, and they see a calm and peaceful planet with a high standard of living.  They meet with the Eminiar leader, Anan, who tells them that despite appearances, they are still at war, as they have been for 500 years, with casualties ranging from one to three million per year.  Then an alarm goes off, signaling and incoming attack, and the leader and his generals spring into action, manning some equipment with flashing lights.  The attack results in "a hit" nearby.  There are no explosions, and no radiation is detected, as no missile has actually struck, but the Eminiarans are somber, and the leader bemoans the casualties of this attack -- a half million people.  Additionally, the Enterprise itself was wracked up as a casualty of this attack, creating the essential conflict of the episode.

The leader explains: "Understand captain.  We have been at war for 500 years.  Under ordinary conditions, no civilization could withstand that, but we have reached a solution...Our civilization lives.  The people die, but our culture goes on."

Kirk: "You mean to tell me your people just walk into a disintegration machine when told to?"

Anan: "We have a high consciousness of duty, captain."  In other words, yes they do.

Later, Kirk interviews Mea, a recent "casualty" who must report to a disintegrator within 24 hours.  "Don't you see," she says.  "If I refuse to report, and others refuse, then Vendikar would have no choice but to launch real weapons.  We would have to do the same to defend ourselves.  More than people would die then.  A whole civilization would be destroyed.  Surely, you can see that ours is the better way."  A "State or Chaos" false choice lies behind her attempt at suicide.

Some people must be sacrificed for the sake of avoiding real war.  Mea's logic is eerily reminiscent of calls to sacrifice made by our Earthly governments.  Can you imagine our government reaching some version of a clean war treaty, purchasing peace through the sanitary sacrifice of a small fraction of our population every year?  In some ways, our State already does this in numerous domestic wars it fights on our behalf.  Is the Eminiar/Vendikar treaty that unimaginable?  As war is the health of the State, the governments of Eminiar and Vendikar probably experienced a substantial growth in their own power over the people when their interplanetary war started.  Perhaps they just didn't want to give that up and agreed to their clean war instead of peace.  Maybe, in the interest of an economic stimulus, our governments will recreate the allegedly salutary effects of world war II through a clean war.

In his final speech, defending the virtues of their way of life, Anan says:  "You will be responsible for an escalation that will destroy everything.  Millions of people horribly killed.  Complete destruction of our culture here, yes, and the culture on Venikar.  Disaster, disease, starvation, horrible lingering death!  Pain and anguish!  ... Don't you understand captain?  We have done away with all that.  You are threatening to bring it down on us again.  Are those 500 people of yours more important that the hundreds of millions of innocent people on Eminiar and Vendikar?  What kind of monster are you?"  The people of Eminiar and Vendikar have managed to go beyond institutionalizing theft within the apparatus of their States.  As a more "advanced" people, they have institutionalized their war.  Just as our federal tax withholding program makes for a civilized theft, so do their disintegration boxes and firing computers make for a civilized murder.  To them it is duty.  It is patriotic.  It's clean, but it really isn't civilized.