Saturday, June 20, 2009

The utility of this blog... now approximately zero. Epsilon can be important, but I have delta's to catch.

I'm closing up shop - Arare Litus was an enjoyable and useful study for me.

The goal of 100 posts on the blog will soon be done (this, #99, is my last post - #100 is a guest post responding to my coalitions & democracy arc).

I've used "Arare Litus" to try to improve my writing/arguing a bit, to consider economics in more detail, and, in general, as as a "living experiment".

Time for Arare to go back solely to the Platonic realm.

Goodbye Arare, sweet dreams.

litmus test

Pete Boettke discusses 21st Century Economic Methodology, where he is critical of the positive science approach to economics.

This seems to be an idea litmus test of Austrians - what do they actually believe, and what support do they have for it. I've taken the position of positive science - easy to do, since I really believe it - and I am attempting to get clarifications of just how Austrians break from this: this is the litmus test, where do Austrians stand? It appears that they are simply taking a reactionary and stylistically critical stance against positivism, but is this simply unclear communication and "they" have clear and productive (positive?) and informed methods other than positivism up their sleeves? To me all the useful and communicable (i.e. meaningful) fruits of Austrians are their positive efforts. Are Austrians lagging due to an unproductive fascination with metaphysics?

I look forward to understanding Austrians better - they are an interesting case study....

Thursday, June 11, 2009

Coalitions & Democracy: Final Cut

The final cut on the coalitions & democracy arc:

There are two ways in which coalitions change things - first of all, they are only effective if they bind the behavior of the parties entering into the coalition, or "new party".

This points towards a key flaw in opposition - instead of acting and moving decisions forward, they peacock and posture. They consider "optics" and bray like jackasses, they do anything but constructive work - after all, anything moved forward would be a possible "point" for their arch nemesis, the sitting government.

This suggests that there is a huge reward for politicians when they grandstand - they find this behavior so rewarding that they must enter a contract in order to prevent this!

While this reflects poorly on the current situation - the system has evolved where the opposition does nothing but whine and bicker - it is a plus on the coalition side in terms of expediency: the general stance of a coalesced party will be similar to the previous parties (or, more accurately, the particular representatives/proxies sitting in government). However, note that the "evolved" norm that says it is okay to be an ass and sacrifice the preferences of ones constituents for ones personal gain and pleasure in being an ass could also be more directly confronted: after all, democracy mandates that representatives represent the interests of ones constituents.

The second, and final point, I have on actual consequences: political decisions are "pruning" decisions, they most often address common actions where we take one action, pruning off all other possibilities. When a new party/coalition is formed they will make a new platform, pruning off many of the particular planks to form a coalesced "average". This is key: once pruned, the particular choice possibility on the tree of choices is pruned off - it is possible to bring them back, but unlikely. So this is the an effective change: by pruning the tree early this limits possibilities. In process management (i.e. process, comp. sci, project management, etc.) there is a key rule of thumb: delay all binding (pruning) decisions until the last possible moment, often stated as "don't optimize too early". This keeps one from mistakenly putting efforts into the wrong direction, and allows choices to be considered with all the data that one uncovers as one works. A particular pruned choice branch may be the sole reason someone voted for a proxy, and keeping options open is inherently good.

So this is the lowdown:

- Coalitions are fraudulent, and thus puts the governments legitimacy (and the particular system as a whole) into question. This is, at best, not good, and at worse - dangerous to a functioning wealthy society.
- People - both voters and politicians - believe coalitions have effective consequences
- One consequence is a reflection of selfish behavior on the party of politicians, which is actually against their entire mandate: the politicians must bind themselves in a contract in order to prevent each other from being chumps
- A second consequence is early pruning. While "expediency" is thus ensured, going in the wrong direction fast is not a good thing: better to be a bit less expedient and actually consider which option is best - once made societies resources as locked-in, resources that may be better used.

Thus ends my initial thought arc on coalitions. I find them fundamentally undemocratic, and it would be healthy to actively prevent them - forcing a general election in order to get a "mandate" from the electorate.

Wednesday, June 10, 2009

Coalitions & Democracy: Take II

Democracy is expedient collective decision making. Aggregates of people, defined spatially (i.e. by neighborhood), select a proxy to represent them in making decisions that effect all the neighborhoods in the collective we call "country".

The proxy, aka scumbag or politician, is chosen for various reasons by various people. Many people do not bother to vote, being happy with the status quo or realizing that their vote is not significant (the weight is typically 1/N, where N is a big number - even if most don't vote) and thus not worth the effort. Everyone casts their vote, the votes are counted, and some rule is applied to select the winner(s). We now have a set of proxies to decide for us - most of whom we never heard of prior to their political life, who we never see or talk too, who often have not lived in a community or have anysort of meaningful relationship with that community, who "lead" a "community" that is most often hetrogenious and mobile, have not grounded themselves with serious considerations of social, historical, and economic facts and ideas, etc. So very imperfect proxies, but those are the proxies we have.

What are the bounds on these proxies? There are a few - social norms and the media are two important ones. Parties are another important one - most politicians align themselves with a party in order to signal what they stand for. This party affiliation bounds the behaviour of a politician, mainly through the power relationship of the party (which will punish them for failing to follow the broad sweeps, as well as nitty gritties) but also through "optics" - breaking social norms, such as "flip flopping" on key principles and platforms of ones party, is also punishable by voters, by politicians peer groups, by becoming a legitimate target for mocking in the media, etc.

So the situation is this: we have a group of M contenders viaing for N (N lessthan M) highly valuable political positions, these contenders group themselves in parties, and after posturing voters select N to fill the positions. Then N consists of various factions, which are bound by the parties they are in, which must posture and fight and showboat their way forward, making (mostly costly) decisions of various sorts. We all pretend that they have our interests at heart, and hope we don't get too screwed.

So - given that negotiation must occur to decide various outcomes, does it matter is politicians switch parties post elections. i.e. form a set in coalition. After all, the politicians are aligned with a party, the party makeup is now set, and is various parties coallesce together does this make any functional difference?

The answer must be yes - otherwise the parties would not bother to coallesce.

In addition to this observation, we must also confront the fact that we are not averaging together parties in order to come up with a new party that accuretly reflects those parties. Instead we are averaging together members of parties, who are only partially constrained and defined by the party. Those members will define the new party in their best interest, yes constrained by "optics", but since the ruler is living by party platform and most voters are partially (to not at all) informed there is ample wiggle room.

I previously argued that perception of legitimacy would be seriously harmed, and this is one key problem with allowing ex post redefinition of parties: in business changing a product after a contract was negotiated is fraud, and I don't see how this is any different here. Some will say, but this is inconsequential - its like you require a car, and negotiated red, but you got the exact same car but it was blue. Is that really "fraud" [1] But I think things go even further, and there are actual choice consequences - the path society will travel changes. As noted above, the parties joining a coalitions definitely believe so - otherwise they would not do so.

It is hard to come up with a clear example the demonstrates this - the fact that coalition is being considered at all demonstrates that the politicians believe there is a difference in outcomes. The fact that people support this based on "expediency" suggests that deep down they do also - after all, if there is no difference in practice it is just as expedient to simply ban set coalitions and you loose nothing - as nothing would have been gained from allowing it. This demonstrates a belief. But in a vague complex system it is hard to come up with a nice clean demonstration of this.

So as of now, I have the following:
- coalitions are fraud: to some this fraud is so inconsequential that it doesn't matter, though to others with different preferences it may be huge - thus basic legitimacy is called into question, and this may have very negative implications for society
- both coalition members to be, and people in general who argue pro-coalitions, implicitly believe there is a functional difference: otherwise there is no point in doing so, in particular there is no positive to overweight the (possibly small, but possible large) legitimacy issue.

The hardest part - coming up with a clean example - will have to wait for some sort of inspiration....

[1] Yes. What people think is important and their preferences are often vastly different, and we can't predict or sense how important things are to others, unless we really know them well. For some the colour is completely unimportant, for others that may have been a key selling feature. For me the expediency argument of allowing coalitions - we must make decisions and it is a waste to go back to the polls! - is an implicit statement that others preferences are not important. To me red/blue is stupid, and it is "expedient" to move on - the basic car features and where we are going define expediency, but to someone else perhaps the red is key - they reconize that all cars are basically the same, and pick based on colour as this will make the trip more pleasant, or allows them to feel good about investing in the upkeep of the car, is the truely important distinction between their top two choices, etc. They may not be fine with averaging together red and orange, even though the colours are "very similiar" and are "quite different" than blue.

Thursday, June 4, 2009

Coalitions & Democracy: Take I

Democracy - it is all about expedient collective decision making. Ideally "we" would discuss things, come to some common agreement, have different options for different people, have various voluntary and free flowing groups that form and dissolve to address needs and wants. But who has the time for all of this? What about dealing with the chumps who never listen and don't think, and therefor will never come to an understanding with others, or who are actively coercive? How about groups of such people?

It seems the simplest way of dealing with this in a good enough way is democracy - we make binary group decisions, based on some proxies who "we" select to make decisions. The most important decisions are protected in a constitution, which is very difficult to change, and then there is a spectrum of increasingly easy to institute decisions - from super majority, down to bare majority. The outcome isn't perfect, but possibly the most effective approach - democracies are on the whole very rich nations, with people who are relatively free, and that are fairly stable from dissolution due to external/internal violence. i.e. democracies seem to be a decent way of dealing with the intrinsic social aspects of people, and that take a handful of fundamental facts about people into account: time is of the essence (we don't live forever) so decisions must be "good enough" (our wealth and relative freedom is a measure that decisions in democracies are, in fact, good enough), humans are violent (anarchy is a nice limiting condition [1] to consider but, given violence is intrinsic and basic evolutionary ideas, dealing with violence is the first and most important order of business), and specialization is key in modern societies (this relates to "good enough" decisions ).

So what is done? People vote for proxies: typically based on personality, party, ideology, looks, whim, chances of success, feeling good, social pressure, to prevent worse options, etc. Essentially a huge complex bag of reasons. After voting the votes are counted, some rule is applied, and out come our fearless leaders.

Those professional decision makers then try to write and pass various rules for society to live by - mostly dealing with who pays, how much they pay, and who gets the collected cash. Predictably many problems arise - for one they will tend to listen to organized voting blocks (rewarding with direct money, less taxes, or favorable rules). But putting that to the side, how do they operate? How to we predict action and hold politicians accountable?

A key aspect of politicians is their party. The party is the group that the politician works within, and thus gives structure to their actions. The party will have some platform that lays out the nature of this structure, i.e. bounds on the political actor, which includes some ideological aspects (i.e. their vision of long term utopia) as well as various specific "planks" that the party wishes to focus on and implement in the short term. Post election we have a group of various proxies, bound by parties, which then propose and vote on various specific decisions. Parties often will "whip" their members into taking specific decisions, so the party will vote as one. If the ruling party doesn't have enough votes to force decisions they will negotiate with others to come to a common ground and move decisions forward.

Okay, enough of a setup. Here is the question to consider: in a minority situation (the nominal leading party cannot force decisions) does it matter if, post election, various parties form a coalition in order to become a majority and lead? Is this any different then what will happen anyways - since decisions must be negotiated and moved forward, does it matter if all the negotiation happens up front and then specific decisions made versus a one by one negotiation and decisions?

I believe the answer is "yes" - it makes a large difference, others believe "no" - effectively nothing is different. To clarify language coalitions are NOT the common even-based coalitions that are required in minority (or free vote, the ultimate in minority) situations but are instead are campaign coalitions - essentially a new party that is set up, either for a given timeframe, or for good.

In this first take I will only address one issue: what people voted for.

To be legitimate, a proxy should be the proxy that one selected. When picking your proxy you look at many things. For example, I may vote for the NDP knowing full well that they will never lead the country - judging that if in power they would do enormous financial damage to the country, but believing that they will constrain my expectation that the Conservatives will be in power. What happens then if the NDP & Liberals form a coalition? Perhaps not much - after all the NDP & Liberals are somewhat similar in nature [3]. How about if the Liberals and Conservatives joined together - what then? This happened in the outbacks of Saskatchewan [4]. Since what I decided to vote for is changed ex post, is this legitimate? For some people they will have no problem, but for some they will see a huge problem - their entire reason for selecting someone will no longer be true: in business this is called fraud.

This reason alone, ex post change of a party, seems to make things illegitimate - yes, everything changes ex post anyways: depending on the specific makeup of government the path taken may change significantly, but if an ultimate reason for voting is broken, even for one voter, is this not fraud?

Democracy is all about expediency, which is a hard thing to make clean cut ethical arguments about, and some will say - yeah, whatever: the effects will not be very different, and we have to move forward. Coalitions are expedient. Move on, suck it up, live with it, not a big deal.

I sense there will be a large difference in outcome, but must think further. But in terms of fundamental choice - the ultimate reasons people chose their proxies change under a coalition, for some people there will be a big difference. If democracy is effective in part due to its ability to make people feel okay about decisions this is important, quite important: to the extent that people are embittered and divided and feel illegitimacy [5] there will be "negative externalities". We simply do not know how large this is, if there are thresholds, if this is a positive feedback problem, etc. Given how terrible most of the world is, do we really want to do an uncontrolled experiment here?

I am against ex post formation of parties, as I feel that this changes things, and as this will definitely make some feel "ripped off" and color the system as fraudulent in their eyes. In terms of perception there will be negative, and likely inestimably, effects; in terms of actual legislative effects - that is an argument for another day....

One final note here: the question is not whether this is "legal" or not, but if it is legitimate. Slavery was once legal. Force feeding acid to animals to make MSDS sheets is both legal and mandated (even though we get no useful information here... anyone can predict the effects, and anyone who "uses" an MSDS knows how useless they are - they are effectively a buracratic neccessity). In terms of legistlation this may be legal, if only because this falls outside the rule set and the precedents are allowed to stay, in terms of common law it is questionable, in terms of what is just - that is the whole point of discussion here....

[1] I tend to favor "proxy anarchy" - democracy where all decisions made by politicians are "free votes", i.e. parties cannot force members to vote in a certain manner. In Canada we do not have this system, with parties setting a common line and forcing their members to vote as such. In the US I believe the system is closer to free votes in congress - and as the US is much more socialist [2] than Canada one can see that perhaps my preference does not work in practice.

[2] This is the reverse as normally claimed - but considering that in practice there is little difference between the US & Canada, that the official tax rates are basically the same, and that the US has a further tax component that is debt funded (i.e. a tax on even unborn people - or spending peoples money that are not even alive yet, if socialism is spending other peoples money this is the ultimate in socialism!), i.e the US effectively taxes at a higher rate than "socialist" Canada, it seems that the US is more socialist. Of course there is nothing wrong with socialism, I'm using the term to describe negative socialism - the misuse of other peoples money.

[3] This is the perception at least, it appears to me that the Liberals and Conservatives are actually more similar, but since people tend to call them "Left" and "Right" people think they are vastly different. Perhaps better to call them "middle + delta_minus" and "middle + delta_plus", and call the NDP "middle_if_ the_world_was_still_in_a_time_that_communism_was_intellectually_viable").

[4] My previous footnote may seem to undercut this - but now we have two aspects, 1) the perception of small differences joining, but in fact somewhat large, versus 2) the perception of large differences joining, but actually not that difference. Some votes will perceive no problem, but some will perceive a problem, for both of these situations. Going back to the NDP/Liberal/Conservative split - of course things are not very clean cut, it is like paper-rock-scissors, there is not clean ordering of who is closer/further, so this confuses the issue further. Some people may be OK with a NDP/Liberal coalition, some with a Literal/Conservative one, because what they care about is common. Others will have the opposite preference. Others would hate either. It depends on the voter.

[5] Some would claim we are already there, with many people not voting. Of course the opposite conclusion is also possible - if one didn't vote one is okay with the status quo. After all, if one really thought the current situation was horrid it would be more reasonable to walk over and spoil your ballot (as long as this is an option; which I think is an important one to keep). If everyone who hates the system wrote "destroy the system" on their ballot everyone would know deep changes are required.

Wednesday, May 27, 2009

word of the day: publicani

Roman times, contractor to the state. Seems like a useful word to bring back for public discourse...

Thursday, April 30, 2009

In praise of BB&T

In praise of a bank?

I first heard of BB&T through an Econtalk podcast, in which John Allison spoke about values.

I was highly impressed by John, and after hearing mention of the company reading list in the interview, and not being able to find any information on this in the aether, I contacted John. In short order I received the reading list and some material from him. I was quite struck by his taking the time to respond to me - even a small personalized note that was signed by him, not a "digital" signed stock letter.

Later, I noticed that there are BB&T chairs to help support free market economics research programs.

John's message resonates, and the actions of BB&T are where their mouth are.

BB&T is a great business in the classic sense - they maximize not solely and abstractly profit, but value. The cartoon version of maximizing only profit falls flat under a moments consideration, as profit is linked to so many other aspects of behaviour and cannot be "cleanly" pursued (and life would be boring if it could be!).

If BB&T had a branch near me I would move my business to them - if you have the option, I suggest you consider BB&T: what one wants in a bank is prudence and integrity. All the evidence strongly suggests that BB&T has just those characteristics.

I think I will re- listen to the EconTalk podcast discussion with John. On a personal note I listened to the podcast during a particularly difficult time in my life, and John's message - and his response to my inquiry - struck me in a very positive way, it will be interesting to see how the discussion sounds on a second listen...

Thank you John. Enjoy your retirement!

Tuesday, April 28, 2009

Simonian position

I find Julian Simon's position to be somewhat contradictory: humans are the essential resource, check, and using ingenuity will come up with creative means to gain in the face of scarcity, check.

But he seems to take a view that naturally imposed constraints will naturally be overcome, while artificial (i.e. chosen) constraints are bad. Will not all constraints lead to creative innovation? Is this not one of the key findings of economics? Is it not true that the past is not prologue - and we better not bank on overcoming a given problem?

I understand that additional constraints seem like the last thing we want - nature is niggardly enough, but is it not worth being open about potential gains?

We can all agree that the intended effects of constraints are often not what occurs, but are Pigou taxes and regulation bad by default? For example, many free marketers seem to want to say that constraints on trade, for example, lead to poor outcomes across the board. I agree, mostly, and we also have to be careful and clear in discussing things, as many are prone to dislike free trade and other economic principles and hold on to their biases. But consider the example of France/Britian trade barriers on wine - this lead to both great British beer and excellent French wine. The lesson seems to be that a constraint can be overcome and add value, one may question if the overall effect was worth it and the loss in wealth overcomes this tasty benifit. But there it is.

Now onto resource scarity - we all know oil is a dwindling resource. We also know that the "oil revolution" made huge HUGE impact for the better on our society. It is hard to clearly see just how much oil has improved our lives, and every day I learn more and more amazing things related to this, and things fundamentally related to oil that I didn't realize (i.e. consider the huge amout of chemicals and fertalizers and other materials made cheaply from oil, we also can see a "chemical" revolution in our society that is dependent on the supply of cheap oil). Oil is literally like manna from heaven - it sustains our society and is exteamly energy dense.

We have no viable means to replace oil. Yes, we may find something(s) to do so. But oil is probabally the single most valuable resource (other than people and the fundamentals, i.e. food, etc.) to our society. Oil is literally wealth.

Is it not reasonable to at least consider a Pigou tax on oil, to help spawn efforts to replace and preserve it? Neccessity is not the mother of invention, opportunity is. Might it not be in our best interest to increase the amount of time that we have the opportunity to find a relacement?

The state is not going away any time soon, but if we shifted from income/business taxes to "carbon" taxes in an (attempted) neutral manner we would have incentives placed to spur innovation on preserving and finding subsitutes. Best is the enemy of better - a Pigou tax on carbon is better than an income tax. Perhaps no tax at all would be best (though this is really an undecidable thing until post play analysis - expectation value would suggest a Pigou tax would be in our best interest) but better is important, and doing what is viable and better is what one should push for. Even getting people thinking about Pigou taxes would shift attitudes towards taxes - post a "Pigou revolution" would people be as willing to incure income taxes, or other taxes not justified in and of themselves? Forcing political classes to at least pretend to justify things would be an important development. Seeing just how hard it is to actually justify a tax would make more people aware of the complexity of society, and perhaps some appreciation of liberty and just how sweet we have it right now.

Consider just how much oil has impacted our wealth - how much we gain from this. It is a mind boggling blessing. Now consider human ingenouity in overcoming constraints. Perhaps it is time to shift the incentive structure to reward ingenuity where it matters in an extreamly important and deep way to humans - perserving and extending the great wealth we are blessed with at this time in history.

Simon made very important contributions - and his view is positive and productive, but the view - as often presented - must be nauanced with some hard truths: we may not get suitable subsitutes for oil (need and desire does not influence outcome), and self imposed contraints are often good in the long run (such as the student who forces constant study instead of assuming an all nighter will get them by). Yes, yes - many people are overly pessimistic, but lets not try to get a realistic average by being naively optimistic, many people discount economics before even pretending to listen and trying to understand, but lets not undercut our position with policies and statements that don't feel right because they ignore truths most feel. And yes, those self imposed constraints have real costs. But would you counsel a student to study?

We can sip one of our excellent choices in beer (or wine if you prefer) and think on this - should we constrain ourselves intentionally?

Saturday, April 25, 2009

Sexy Accents

Why are accents sexy? Why is "exotic" sexy?

It may simply be novelty, but I'll make up a just so evolutionary story:

Gains in trade are extremely valuable - and are a great positive. However, the asymmetry of "hard come, easy go" [i.e. it is very hard to build things up, and very easy to smash them down] makes fear of outsiders and violence a prudent behaviour, a behaviour that is detrimental to trade.

However, if your tribal group becomes linked via family and marriage to another group the risks go down and the benefits of trade and exchange can be more easily achieved.

Thus, any group that found outsiders sexcellent would marry into other groups and gain the tools, ideas, and products of others in peaceful and mutually advantageous exchange. These advantages would lead to better survival odds and thus select for the trait of finding difference and other cultures sexy.

The legacy of this is our love of foreign accents and other "exotic" features.

Wednesday, April 22, 2009

The blog song

Sung to the tune of the classic Ren & Stimpy "Log song"

"What goes down with a snurl alone or in plural
Goes over your neighbor's noggin?
What's great for a shake and fits in your break?
It's Blog, Blog, Blogging!

It's Blog, Blog, it's words, it's thoughts, it's bytes.
It's Blog, Blog, it's better than bad, it's alright!
Everyone wants a blog! You're gonna love 'em, Blog!
Come on and get your Blog! Everyone needs a Blog!"

Tuesday, April 21, 2009

Abortion & the Bible

The debate around abortion is highly polarized and has degenerated into unhelpful mottos. One side chants "pro-choice" while the other chants "pro-life", and the discussion doesn't move far from there. Who isn't for choice and life? Emotions run high, as the perceived stakes are huge: either we are removing the free agency of women by not allowing something that is essentially equivalent to using a condom, or we are removing the free agency of a fetus in the strongest possible way by killing a full fledged human. In this polarized view we are either supporting slavery or holocaust. What a choice.

The same act viewed from completely opposite interpretations. But what are these interpretations based on? They are based on wants and beliefs. If a woman finds she is pregnant and is not ready for a child she definitely wants out of the situation. If this situation happens to someone else you definitely want them to do "the right thing". What choices are available? What is the right thing? The question of what is right comes down to how we define human. The idea of human rights now seems common sense to us and we intuitively "know" that one should not coerce and infringe on person-hood. Of course we must set limits on rights - clearly someone does not have the right to rape or kill others and we remove these options from the menu of choices. But we also should not remove something from the menu without reasonable justification. Most of us think slavery was a clearly immoral idea, especially if justified on the amount of a chemical present in the skin. In hindsight the preposition that slavery is okay, or even moral, is ridiculous and we wonder how anyone, let alone a whole collection of societies, could buy into this. Removing the choice available to others from the menu for a subgroup is clearly wrong, removing a choice from the menu for everyone can be equally wrong. So the question is this - should abortion be on the menu?

It comes down to who we include in the camp of human, a shorthand for worthwhile life from societies perspective. Pro-choice? A fetus is a blob of tissue. Pro-life? A fetus is human. This fundamental difference makes discussion difficult, especially when each side tends to discount the other and even begins to see them as evil. What can one do when our basic definitions and assumptions are in such conflict and collide in a realm where the actions take on weighty emotional and moral dimensions? One thing we can do is try to honestly look at the evidence in existence and consider it and be willing to change what we want and believe to better reflect what is.

As abortion is, for many, a religous driven view, let us look towards the Bible.

The Bible actually does not say anything (directly) about abortion, but there are a few passages that are banded about and interpreted as being against abortion. Perhaps the most familiar is from Jeremiah, "Before I formed you in the womb I knew (or, chose) you, before you were born I set you apart...." (Jeremiah 1:5, New International Version). The implication is pretty clear - person-hood precedes birth. The next step in interpretation is: therefore abortion is murder. But wait. Can we make this next step? Lets pull out the Bible and pull out another quote, one that I haven't heard used in the abortion debate, yet is more directly relevant: "If men who are fighting hit a pregnant woman and she gives birth prematurely (or, she has a miscarriage) but there is no serious injury, the offender must be fined whatever the woman's husband demands and the court allows." (Exodus 21:22, New International Version). The implication of this is that a fetus has clear value but that this value is not on the same level as an adult life. Here the value seems to be as measured by the family, as moderated by society.

Of course even this is not very clear and one can read this passage in a number of ways and arrive at totally different interruptions - someone could claim that "no serious injury" does not speak to the womans physical health, but instead to the fetuses/babies. This however seems a dishonest reading - would something so irrelevant be placed in the bible? Considering justice at the time is this interpretation consistent at all with Judaic thought? Careful and thoughtful reflection on what we know about the society of the time - even from solely a biblical reading, let alone other pieces of knowledge - strongly indicates that this passage is speaking about the death of a fetus and the fitting punishment for this.

The translation is vague as interpreting the Hebrew is vague, which could mean either a fetus is not that important in the scheme of things, or that it is so important that it is not worth qualifying and making the subject explicit - we don't go around stating the obvious. What can we then say? The Bible seems pretty opaque on this issue and perhaps the only thing we can do is say we have no direct guidance. If one believes God is timeless and the Bible is his word, then this lack of guidance for us should say something deep and subtle to you. In any case, pulling quotes out of context isn't very useful, but further reflection on the Bible doesn't seem to get one much further.

Well, the Bible doesn't seem to get us very far. We can interpret it to mean what we want, and since we all want to think certain things this is dangerous. But considering Judaic courts and justice in the time of Exodus strongly suggests that actions that lead to the killing of an fetus was bad, but not as bad as modern Christians tend to state.

For the true Christian, one who actually challenges their faith and understanding and growths with it, this is food for thought - how much does ones community and their beliefs affect your understanding of God? To you I ask you to reflect on Romans 11:33-36, to carefully reflect on the Bible, and to study the culture at the time to help interpret what is meant.

Sunday, April 19, 2009

Boettke Austrians

From my reading/discussion a “Boettke Austrian” is simply an honest, engaged, curious economist who takes inspiration from Hayek/Mises (& is thus interested in 3 “black boxes” of economics namely: processes of change & adjustment, development & progress, and institutional adaptation & evolution). An inclusive definition focusing on productivity and fruits.

Hard to take issue with this, as it is a positive & “light” definition that does not worry about details and irrelevant arguments (and makes room for different strains - like bakers yeast it is functional, and full of various types of yeast). A good operational definition. However, to me, the distinction between “Austrian” and “Good” economics seems to be near nonexistent, in terms of "products", and is one of chosen community and identification (specifics that lie behind production of a given work). i.e. a paper one would judge to be "good" could be written either by an Austrian or someone else, and while you could perhaps guess correctly much of the time (Mises reference - yes or no? Hayek? Other Austrian signatures?) the distinction could only be truly made by asking the author.

I can see the value, and in particular the motivational and functional value of taking on the Austrian label, so defined. After all, we must all connect with a community in order to challenge and support each others growth, find mentors, inspiration, have a reference group, etc.

I guess the only problem with the label is that it can signal either "Boettke" or "Crackpot" Austrian - but to the extend that a positive, productive, and inspiring message (i.e. Boettke Austrian) is promoted and propagated by Boettke & his academic offspring/friends the crackpot version will become increasingly weakened and Austrian will take on a positive light.

From an outsiders perspective, Boettke & other "positive Austrians" still has work to do on this end, but judging from his work and many of his students (After Arg!) the label may be salvaged. Since community is important, while I see little value in the Austrian label in terms of "products" (good economics is good economics) I see potentially great value in the "label" on a personal level, or rather the community behind the label.

Thursday, April 16, 2009

tax heaven

Freudian slip - I mean tax haven. It seems that the G20, as part as their plan to save the world from total financial meltdown, is cracking down on tax havens, as the tax revenues are needed in this time of hardships and some claim that "culture of banking secrecy had worsened problems in the global economy". Is this a slippery slope which will reduce freedom? Unlikely, for to paraphrase the UK stance "tax avoidance may comply with the letter of the law but not with its spirit." No wait, never mind.

Is the stationary bandit learning to walk?

But I must agree with this crackdown, for several reasons I will list below. Before reading further: take a minute or so to consider - is this crackdown good or bad? Why?

An informal poll taken on this blog indicates good idea (1 vote) is overwhelmed by bad (3) and evil (2), with nobody saying "who cares?" (0). Small sample size, and not a random sample either, but interesting. My first reaction was between "evil" and "bad", but I further considered and arrived at "good" - here is why.

If someone is a citizen of nation X they are bound by the rules of nation X. Most free countries (all of OECD nations?) allow you to give up your citizenship - if you don't want to pay for the benefits of citizenship, and you are ultrarich, then perhaps you should give up your passport and rights and get citizenship in whatever country you are parking your cash in. They will likely be happy to take you in. Most nations like people with money, and people with lots of cash are the only ones who really do have the freedom to walk away. They also have some power to change things - if they are forced to feel the pain that others feel they may take more of an interest in changing their nations for good. This "walk" argument is somewhat weak and overused, but here both the consequences (positive change in laws) and the current situation (often active law breaking) suggests it is legitimate to make.

Also on the pro side, we will perhaps see
hypocrites like Bono and many other "left wing" proponents get their just deserts and have to pay taxes for the programs they petition governments for - instead of their current situation of tax avoidance and simultaneous pleading for people and governments to help the needy. Shake some of your pocket change out Bono. This is a small, but entertaining, benefit.

In the narrow sense this, the tax haven crackdown, will reduce freedom - but of (mostly) the most free people in the world. In addition, the "loss of freedom" comes from a process of anarchy (international relationships is one of anarchy) and one of voluntary behaviour that does not use force (tax havens are "merely" excluded from benificial trade if they do not conform - standard free market stuff), and, to repeat, if the ultrarich people and companies are forced (by their nations) to pay outrageous taxes in their countries they will either (1) start pushing to change them, or (2) walk, both of which will tend to improve tax structures and freedom.

I do not (sadly) know any strong libertarians, but I suspect they will find it hard to argue against this crackdown - they may think that taxes are a moral evil, but anarchy and noncoericive methods are behind the crackdown, and if they are consequentualists they will have to consider the force for positive reform that will occur - unintentionally this move could reduce tax rates.

So start cracking away G20!

Efficiency? Is it meaningful?

Robin Hanson, arguing for efficiency versus liberty in economic policy: "Each person's dollar value of a deal is (minus) the compensation he or she would need to become indifferent to (i.e, not care to choose) this deal plus compensation package, relative to the status quo. This says how much he wants the outcomes produced by this deal (and may or may not agree with what he says he wants). The sum of such dollar values says how efficient, or good, is the deal; if it is positive, the deal is good; else it is bad. "

Does this not make a key implicit assumption, that is most likely not true?

That is, doesn't this simply assumes that each person will have valuations that are comparible - such as ones that are close together? If 10000 people have a dollar value pro, and one person $9999 anti this summation would say do this. But a buck is almost nothing, money is not a linear scalable - for example, a penny is nothing, most people do not even bother to pick them up, but $100 is something. A buck versus $9999 valuation is a huge difference, one that is lost in this summation process. One can say, yeah but we can set things up so that there is a cash transfer so the guy valuing at $9999 will get paid. Then one asks in retort: how about hold outs? Those who are indifferent can simple misvalue, also - as it is difficult to place value - a "multidimensional measure" - on a single index (money), so isn't the whole process somewhat ineffective for complex issues (where one would want to use this)? And how about close to unbound valuations (i.e. very personally felt issues)? Especially when they are opposite?

Valuations will be highly personal and difficult to accuratly price and extreamly nonlinear - so comparisions will only be meaningful if values are close together, were we can assume (more correctly) that, say your $80 valuation and my $95 valuation can be contrasted. A linear summing process on one metric seems a downright silly thing to do on something that is highly nonlinear, multifaceted, and different for each participant (and potential participant) involved.

The basic liberty vs. efficiency argument comes down to this: distributed free choice, or aggragated bound choice. Not having aggragated bound choice may limit what is possible - but given that some minority will most likely always be bound by an "efficient" outcome (otherwise what are we arguing? If not bound, then this is simply a way to pick among different "liberty" choices, and Hanson is simply saying - "here is one metric to help us compare": who doesn't agree with this? After all, we can ignore the metric, or take it into account - if cheap to do, why not? Information is good.) that they don't like picking the efficiency approach is picking to hurt a few for the many.

I look forward to more postings (and possible release of the taped version) regarding the debate: the questions of choice & exchange & interactions is what makes me interested in economics. Without further information I can't say too much on this, but as it sits I can't tell how serious Robin Hanson takes efficiency.

To me the question is a deep & difficult one - how do we make aggragate decisions? A simple linear summing of a single index seems useless for any important issue. Efficiency arguments are useful at the margin, for selecting choices that are similiar and where participants have similar tastes - here they can be effective in finding better solutions, added up this can offer a lot of wealth and value. Beyond that, i.e. for anything we actually care deeply about in life, they are not so useful.

Liberty as a policy is also limited, but in trying to pick "just one" it would be the more valuable as a starting point. If Hanson disagrees with this, would he not think that debate and discussion - which assumes honest actors whos choice and understanding can be influenced- is not as meaningful as simply polling people? After all, debate and discussion is based on, for me at least, a liberty perspective - we are looking for understanding and treat our "opponents" as intelligent free agents who can change our minds (or the audiences). We do not force the issue by taking a poll and saying "yes, efficient outcome says that 52% agree that liberty is the winner so that is... wait a minute, what does this mean?!!".

By entering the debate format, didn't Robin automatically lose? Didn't his action suggest he actually does believe in liberty? ...of course this assumes that debate is related to liberty, which perhaps Robin does not agree with?

Tuesday, April 14, 2009

Economics & Math

"People who go into economics, in modern times, tend to be people who are good at math but didn't want to be engineers or physicists, and if you have that talent, what do you do? You go into economics. You can't get a Ph.D. without going through an intensively mathematical program. That's the hurdle you have to pass. It's kind of like a hazing to get into the profession."
-- Robert Shiller

Friday, April 10, 2009

In praise of ad hominem

"Feel superior. Feel smug. Feel clever." - Don Boudreaux against cheap shot ad hominem attacks.

There is no doubt that ad hominem accusations are fun and tempting - even rhetorical masters, such as Deirdre McCloskey, lean on this tool and pencil "opponents" into association with bad company.

But presumably there is more behind such attacks than simple smugness - we have finite resources & facts, so taking in the whole situation that the argument is embedded in is one additional source of information. Yes, often overused, yes often without thought, or without even trying to address the underlying issue - instead sweeping generalizations and insults are used. But I believe there is some information there, sometimes.

For example - professors, including those promoting free markets, have tenure. In one sense - big deal. We live in a society that has tenure as a characteristic. But it means that a tenure holder can focus on the long run without being as concerned about the short run - one of the key reasons for tenure, and in this case this fact is of interest as the free marketer prof does not have to worry about the pain of job dislocation involved with change. This is a fundamental fact - one that can be overblown, but there it is. Surely this is a legitimate consideration, is it not?

Strong libertarians also claim taxes are a moral evil, but the actions of strong libertarian professors suggest that the use of "evil" is hyperbole: they live off taxes. This suggests they think taxes are BAD but probably not EVIL. It makes it sound like they overstate things on purpose, or at the very least have not thought through their actions (or have a very low threshold of what "evil" is - diluting the use of the term). As such, it weakens the speakers statements in other regards: are they overstating again? Or do they really have righteous anger here? How much should I discount? In particular it undercuts their specific claim, in general it calls the level of their language and appeals into serious questions - like the person calling everyone a Nazi, racist, and homophobe: who takes them seriously? Have they actually met a person who actually was one of [insert hateful/hated group X]?

If taxes really were EVIL a strong libertarian would work for a private think tank, not a public university - they have the ability to do so, they write well, they have the bona fides, they are smart. But they choose to live off taxes as the position they have is very nice - their actions says "taxes bad, but not evil". Sure, they grudently pay taxes - otherwise serious consequences come down - but if they really believed it was EVIL they would not live off it. Instead they see the position of professor as sweet and rewarding to them, and the fact that it is tax funded a sad reality of our society but one that we must live with. I see no evidence they really belief in the rhetoric of "evil" they slopply use {if I am wrong, please let me know}.

For these reasons ad hominem is valid, sometimes, it brings in the context of the argument and adds information. True, the fact it is easy and fun makes this too often used, but as we have few resources and little data should why not use this - carefully, and prepared to explain the attack (which, if legitimate, is a shorthand for a bundle of evidence that can be pulled into the light for further discussion), like we judge and use all other data?

Discounting ad hominem is very "un-Hayekian"; Hayek recognizes that we should use all the information we can, and let the many consider all the information they have in judging. Ad hominem - when used honestly - is a short cut to pulling in the context. Like all rhetoric it can be misused, overstated, blah blah blah. So what? Isn't this a complaint about the listener (either who you are arguing against, or some 3rd party "listener" or "reader"?) and their intellectual honesty - not the tool as such?

I like ad hominem, when used honestly - and I think this is one reason that people tend to use it, they implicitly know that this brings in the context and more information. As long as "the shorthand" of ad hominem is backed up, when called on, this seems like both an useful, and legitimate, tool.

Note: this post is a slight mutation of a comment to the "Cheap Shot" Cafe Hayek posting mentioned above.

Tuesday, April 7, 2009

What is Austrian Economics? What is it's future?

What is Austrian Economics? What is it's future?

The first things that struck me about "Austrians" are - a nice subset of very interesting people (many of who dropped the label and moved on - such as Bryan Caplan), a larger pool of crackpots (note: this post evolved out of my comment to above link), "whats up with the name? Seems crankish.", and a strange focus of a sizable subset on defining themselves to the exclusion of creating themselves via works.

Basically, a small set of very productive, interesting, thoughtful people in a group of not so much. But is it even meaningful to call this subgroup "Austrian"? Do Austrians have a good definition of themselves - it does not seem so, despite the efforts, and little work seems to be focused on creating evidence to discriminate between "orthodox" and "Austrian". We are in a golden time, in terms of a lot is happening socially and economically, where is the public and intellectual muscle?

What appears to discriminate "Austrian" from "orthodox" economics seems to be mostly the personal history and interests of practitioners: many Austrians come into the field from a philosophical rather than technical perspective - they care about deep and subtle ideas and reality, not cranking out technical machinations. As such we can label Austrians as being more of this type, but from looking at the apparent large subset of Austrians that don't seem to challenge themselves and instead focus on intragroup peer acceptance, this seems a poor labeling - there are also many people like this in "orthodox" economics, and indeed, there is a subset of the curious and engaged in all fields. In addition we can identify a tradition of libertarianism, some key figures (von Mises & Hayek & others) and their bodies of work, and a few key theories. But these anchors of Austrianism are somewhat arbitary, as others can and do read them, and many who do not identify as Austrian are inspired by those and other works. And the theories do not seem to be very distinct, or correct. This is also an insufficient labeling scheme.

I look at Austrianism as forming two components: a "core economics" that is not actually viable as an alternative, at least Austrians themselves have not demonstrated that it is, and as a community that attracts those interested in deep ideas, people, choices, actions - philosophers in the good sense. These people are influenced by "Austrianism", and may even label themselves as so, but they are merely curious and engaged people who are intellectually honest (the opposite of crackpots).

I see the future of Austrianism as being dictated by the subset of Austrians I would not label Austrians - either they will actually distinguish Austrian Economics in a meaningful manner, or they will continue to engage other intellectuals with what is essentially not exclusivly Austrian methods and approaches and Austrianism will wither as a meaningful community.

Right now, to an outside observer, it appears that Austrian Economics is a community that grew out of a failed, but important experiment, and "top Austrians" are actually "just" intetellecually curious and honest economists who have come through the Austrian community (and continue to self-identify with the community).

"Interesting Economist" = (economist|"intellecually curious & honest")

where "intellecually curious & honest" = subset of (Austrian community, "masonomics", philosophy interest, basically any group....).

Some Austrians seem to think they have an exclusive niche on "intellecually curious & honest", but they are just one of many communities, people, backgrounds, and disciplines that are (or rather, a subset of Austrians, like a subset of other groups, are part of this niche). "intellecually curious & honest" does not equal "Austrian Economics", and to an external observer it seems that as time goes by "intellecually curious & honest" people will have to increasingly strain in order to stomach the label of Austrian Economics (unless something fundamentally changes, and the programme because a viable possiblity again - so far the experiment seems to have failed, the evidence suggests moving on).

If and when that time comes that Austrian Economics wimpers into the trashbin of history, will we lose anything? I don't think so - we always will have a subset of the "intellecually curious & honest", and they will always tend to find each other and work together. In the medium run GMU and other current departments will will hold the mantle that Austrian Economics once did (I see it as an ember, now dying), in the long run other groups with spark up, carry the mantle for a while, and then die. There are markets in everything - it is not the particular insitutions we care about, but the availablity of the "products". The market for likeminded honest & curious minds will remain, and insitutions will evolve, grow, and die in meeting this want. That is the beauty of the market.

Holding onto Austrian Economics seems like trying to prop up GM or Chrysler - release the resources to productive ends already. Stop blowing on the ember and accept the evidence at hand.


The Sapir-Whorf hypothesis: a language's nature influences the thought of its users.

Apparently Chomsky's Universal Grammar (underlying universality of language, due to brain structure) has reduced the "popularity" of the Whorf hypothesis. I believe some lefties (in the political sense) also do not like the idea, as it hurts their feelings of equality.

But is this not common sense that the hypothesis must hold? In terms of computer languages we can say that any Turing complete language is theoretically equivalent, but anyone who has done assembly versus any higher language coding knows that in practice there is huge differences - in theory you could write everything we currently have on a computer in binary, in practice you do not and could not. Language makes some things easier, and coders pick languages (in part) based on what they make easy to do. The fact we have pretty constrained resources (puny brains, limited time, etc.) suggests the language we use will have a profound effect on what we think and do. This should effect how a culture evolves, as language and culture play back and forth on each other.

An interesting question is - are all languages "Turing complete" (in the sense that all cultures can represent ideas from other languages) or not? Are languages even close to Turing complete in a functional manner? Persumably, languages can be close or far apart in ease of transfer of ideas - do "they" have a map illustrating the relative positions to each other?

Are some languages functionally more orthogonal relative to each other? (i.e. if I want to expand my capability to think, what language should I pick as my second language?) What is the most limited and easy to learn language? Pirahã? Rotokas? Klingon? Are there good books out there that teach minimal languages, that evolved in the "wild"? Is it worth someones time? English is the Borg of languages, so it is very rich and useful, but what should one pick to supplement it? Perhaps a "clean" language like latin or Haskell brings more to the table than any real language (i.e. more logical, structured, mathematical, closed (well defined, and essentially static, base), and "clean" then the messy, wonderful, evolved, and crazy language that is English - and therefore nicely orthogonal.). Is Englishes "borg like" tendancy one feature that has lead to Western societies strength? Can we measure this?

Are there people who try to predict political situations and reactions based on language (and other insitutional) constraints? Is there a team of neat people in some think tank or militiary group that analysis how the Chinese may react to things to gain predictive power? Are the Chinese doing this to us? (sorry for the bad pun) I suspect the Chinese are doing this, and Western nations are not, possibly in part due to the nature of our insitutions which makes for some easier predictibility (though, apparently not by most of us...) and the fact that our society tends to focus on short term (think tanks and universities being partial exceptions).

Notation, language, logic, mathematics - very interesting stuff, very deep stuff: if anyone can recomment a great book on linguistics that works through a lot of the ideas, with examples and practical applications in it, please post on this ("Contemporty linguistic analysis", by O'Grady & Dobrovolsky, is decent with a wide survey of stuff including "Bee language" and I have vague happy recollections using this book for an intro class, but I would like something similiar but with a few "case" studies threading through the book - for example, learning Rotokas or some small or subset language to really illustrate things).

A final idea - I liked Star Trek as a child, but do not know the backstories, how intelligent the writers were, etc (TV is very limited for addressing "big ideas"). But is "Worf", the Klingon, a hat tip to the Whorf hypothesis, with his language being warlike and having a feedback effect on his society? It seems quite plausible - does anyone know? Have the writers spoke on this? Have the rabid fans declared this? Have linguists chuckled and wrote about this as a nice tie in to connect with the "general public" and leverage the zeitgeist in promoting their ideas?

Update (8 April 2009): The cover of "Lognet" had a cartoon regarding this...

Sunday, April 5, 2009

Inflation - yes or no?

Now seems to be a good time for "heterodox" economists to show their stuff: we are in the midst of a time of turmoil, a time when solid statements can be made to demonstrate utility of ones framework.

From what I read from Austrians & other heterodox economists they seem to think that inflation will increase shortly - but they also seem to hedge their beliefs by being overly vague and making no real claims. Will inflation kick in? Yes or no? Do Austrians have some sort of estimate? Time frame? If not, what exactly is the power (read: use) of "heterodox economics"? We can bicker about complexities of the world, but if you cannot make statements that are distinguishable from other points of view, what exactly distinguishes your viewpoint?

I will lay out my belief - no significant inflation will occur as we transition out of our current mess. I say this, knowing that the money supply has recently (roughly) doubled. Will an Austrian counter this claim?

Saturday, April 4, 2009

The gilded & the austere

We love to project things onto one axis, then collapse the spectrum along that axis into to extremes - sure, this is limited and often a bad fit to reality - but it focuses thought and helps think about reality.

What is surprising about this tendency is not that we do it (simple models and generalizations are good), but that people seem to actually believe that models fully describe reality, or (just as bad), that using such models is "bad" (the irony of labeling the use of simple binary models as "bad", as opposed to "good", is pretty sweet).

Here is my gross attempt at simplifying reality.

"So two guys walk into a bar, one gilded and one austere..."

I have never understood transsexuals. Some facts are: the feeling of being the wrong gender is real (often beginning in early childhood), crossing is costly and risky - financially, socially, and physically. It is also fairly rare, likely highly accentuated due to the costs, so I have not been able to strike up a close enough relationship with a transsexual to discuss this.

Thinking on transsexuals, I also realized I do not understand some (read: most) strains of feminists, "high church" types, high brow literary wonks, .... In fact, I do not understand anyone who strongly identifies with a group, or in general, with archetypes and archetypal thinking. It seems that some people strongly identify with conceptual models of the world, that are archetypal, highly ordered & structured & developed, and, well, gilded, in nature. I call this type of people the gilded.

Another type of person is one who does not identify with conceptual models of the world, tends to discount theory, see models as highly stylized, and takes a stance towards the world as a place that is unknowable, in the sense of a consistent model, and full of high variation. These people weakly identify with conceptual models of the world, and instead of building more detailed models that are overarching, consistent, and gilded, they take models as limited, cartoon like, helpers that are more one-shot and limited in scope and application. I call this type of people the austere.

It seems that the gilded and the austere perceive and feel reality quite differently from each other. I literally cannot understand why someone would "feel" their gender (or any other group identification) as them, as defining and making, in large part, their character, why it is such a big deal.

I imagine that operationally the gilded & the austere will hold many of the same beliefs about the world, as measured by actions, predictions, and statements about workings of the world, since both the hobbled together models ("the bazaar") and the overarching model ("the cathedral") are tempered by reality: objectively there will be little difference (in areas where we can get a good gripe on the world). However, I also imagine that subjectively the gilded & the austere will be in high disagreement.

As both personality types have their feet held to the fire of reality they should converge in factual understanding of the world; given enough time and dedication to overcome mistaken priors, one could test them on objective reality and get no difference. However, questions relating to subjective reality would be in high disagreement. Given our limited time and honesty (i.e. dedication to the hard work of thinking about and correcting "priors") I imagine that, to the extent that people can be accurately described as being gilded or austere, we will have highly divergent beliefs about the world, both on "factual" (objective) questions and on "personal" (subjective) ones.

Given that what is most interesting and important about the world is the subjective this suggests that, well, not much - we already know the world is beautiful and complex.