Right Reason

Thoughts on the Minimum Wage

 

In The New York Times, Arindrajit Dube, a celebrated expert on the economics of the minimum wage, has commentated on the recent study from the University of Washington on the effects of Seattle’s increased minimum wage. In short, Mr. Dube argues that the study’s conclusion that there were big job loses is much more opaque than public commentary would have one believe. I agree with his general sentiments: Empirical claims about something as complex as the minimum wage can only be evaluated at the level of the overall literature, not a single study. By itself, the UW study proves nothing. One study can never prove a broad empirical point. Only a broad population of studies can do so.

 

However, it is not Mr. Dube’s general argument that draw my interest, but his conclusion:

 

"Putting all of those together, along with our evidence from past increases, will give a much more complete picture of how high the minimum wage should go to improve the lives of people at the bottom of the wage scale without throwing lots of people out of work."

To me, this is quite the startling admission: That the minimum wage will throw some people out of work. After all, “throwing lots of people out of work” implies that “throwing few people out of work” is a marginal improvement that is acceptable for public policy. I entirely disagree. Let me quickly go through my reasoning:

We can be reasonable confident that among those people who can no longer find jobs will be among the least advantaged in society. For instance, the people who are going to be priced out of the markets are not the children of the rich who can afford to be sent to unpaid internships to build their resumés. Instead, they are going to be the children of the poor who have no way to build their resumés, as there are very, very few unpaid internships for, say, being a clerk or plumber. There may even be a few poor people of working age whose skills simply do not add enough at the margins to be employable at the minimum wage. Whatever the scenario, I think that it is very unlikely that the marginal effects of increasing the minimum wage do adversely affect some of the most vulnerable in society, for among the most vulnerable will be people whose skills cannot add a lot of value to a business at the margins. They will be at the chopping block first, in the name of economic efficiency.

Moreover, the economic profession have not been able to agree about how much benefit is accrued to society as a result of minimum-wage policies. It is telling that the economics profession has not been able to agree about the effects of an increase in the minimum wage in its literature.I don’t think we should blame this problem of measurement on politics. Instead, I think that we should see the labor market as being so complex and so adaptive that any attempt at measuring the effects of this variable are fraught with difficulty and are also going to reflect local circumstances that will frequently vary from local to local. So, the average effects of the minimum wage are uncertain and we should expect them to always be uncertain, given the limits of measuring complex systems.

 

To me, combining these two considerations lead to the crux of the minimum-wage debate: The minimum wage harms some of the least advantaged people in society for uncertain benefits to others who are more advantaged. How can we pretend that's just? Economic policy is not only a matter of average effects, but also of justice and of who pays the costs at the margins. Contra Mr. Dube, I don’t believe throwing a few people out of work is good enough. Those people also deserve the right to sell their labor and thereby improve their lives by virtue of a natural right to self-preservation. A just minimum-wage policy throws nobody, let alone some of the least advantaged, out of work; hence justice calls for a $0.0 minimum wage.

Remarks On France's Totalitarian Secularism

 

From The Economist's "Muslim attire: The state and the veil":

France is different. The roots of French political secularism, known as laïcité, go back to the revolution of 1789 and to an anti-clerical campaign in the early 20th century. By 1904 some 10,000 religious schools had been shut; thousands of priests fled France. 'We have torn human conscience from the clutches of faith,' declared René Viviani, a Socialist minister.

Anti-Muslim sentiments in France is a symptom of a much more deep-total totalitarian secularism. The fact is that faith, genuine faith nourished by good deeds, cannot simply not a private matter. France's laïcité laws force a rather totalitarian view of society upon its citizens in which they have to all but renounce their faiths in order to be French.

 

France's laws against practicing Islam in public therefore isn't just a matter of Islam in particular, but a matter of how French law treats of religion in general. Laïcité forces public atheism upon French citizens who do no harm to others and is therefore, as a matter of general principle, contrary to human liberty. It's one thing for citizens or France, or any other nation for that matter, to vote for a woman who wears a veil in public, on account of such practices being against what they believe their national characteristics to be, it's quite another thing to ban such a practice. 

Some Thoughts About Casuistry and Healthcare Policy

 

One of the fundamental problems with talk about healthcare in politics today is casuistic: Commentators start with the hard cases and try to craft policy based on hard cases that pull at the heartstrings, rather than straightening out the easy cases of daily life first. Americans should be more concerned, say, with the fact that the word 'insurance' has lost its economic meaning in healthcare, that laws require, for instance, women to still have expensive prescriptions to purchase birth-control pills, and that a command-and-control regulatory structure stymies entrepreneurial experiments in healthcare, both in medicine and in its organization, than in Jimmy Kimmel's son.

 

The former three are problems that millions of Americas deal with in their daily lives and are the "easy cases" having to do with an efficient allocation of resources and technologies that make the most out of the scarce wealth people have. The latter case is the hard case about what happens when an individual's wealth is overwhelmed by catastrophe. However, when we start off with the hard case of when a person's wealth isn't enough, we immediately assume away matters of trade-offs and efficiency that should inform any market and therefore make ourselves entirely unequipped to grab reality with both hands.

 

How we approach policy is going to be determined by the questions we ask and the tools we use to answer them. Concerns for beneficence must follow after concerns for justice, lest we get our principles into a muddle. If we cannot count on our principles, then we are entirely lost here. The fact is is that our emotions are simply not adapted to solving the problems of achieving an efficient allocation of resources and technologies in a complex society. Instead, of first tackling issues of life and death, American healthcare policy needs to first address issues of daily convenience, lest we get policy that, despite working for no one, still achieved the goal of receiving moral approbation when it was passed.

David Brooks writes about Western civilization

 

Over at The New York Times, David Brooks has penned an article titled, "The Crisis of Western civilization," about the rise of illiberal threats to Western civilization in the past couple of years. Although Mr. Brooks wisely begins by noting that the West is successful because of its ideas and institutions, he quickly degenerates into identifying the West with its heads of state.

If the West had been defined by its heads of state all along, it would not have been so successful. If the West could only be identified by its heads of state today, it would not not worth defending.

Here is the real crisis of Western civilization: Intellectuals and the clerisy are panicking about heads of state even as they neglect their duty to teach and defend the West's intellectual and moral foundations. Barack Obama and Angela Merkel are not the West. Greco-Roman philosophy, Christianity, the rule of law, the scientific method, and the honest pursuit of income are.

Mr. Brooks is right that intellectuals need to regain faith in Western civilization, that they need to once again identify themselves as thinking within a particularly 'Western' tradition of thought. However, to have a reasonable conversation about Western civilization, we have got to stop beatifying heads of state we like, be they St. Obama or St. Thatcher, and talk about the ideas that inform the particularly Western tradition of thought. The West is not "Obama, Cameron and Merkel" and the anti-West is not "Putin, Erdogan, el-Sisi, Xi Jinping, Kim Jong-un and Donald Trump." (Side note: Does Mr. Brooks even recognize that Mr. Putin was President of Russia and Mr. Erdogan Prime Minister of Turkey before Mr. Obama was President of the United States? The world really hasn't changed that much...)

We should not prostitute Western civilization to serve our current political ends and fashionable social movements. I fear Mr. Brooks does both in what started as an excellent article. Then again, suiting the fashions of The New York Times' readers, Mr. Brooks couldn't even type 'Christianity'; instead, he typed the thoroughly bland and uninformative neologism: 'Age of Faith,' as if it did not matter if the Age of Faith were a Pagan, Christian, or Muslim Age of Faith. 

The Blood of Martyrs Irrigates the Egyptian Soil

 

St. Mark's Cathedral in Alexandria, outside of which a bomb exploded.

 

2017 Holy Week is a Holy Week of Christian unity. More often than not, the Western and Eastern churches celebrate Easter on different dates and so their respective Holy Weeks do not coincide. It is not the case in 2017, in which both the East and the West will celebrate Easter on April 16th. It is thus particularly tragic for Christians that there were two terrorist attacks orchestrated against the Coptic Church on Palm Sunday, yesterday.

The Economist reports:

 

WHEN Islamic State (IS) claimed responsibility for the bomb that killed nearly 30 worshippers at the Coptic cathedral in Cairo in December, it vowed to continue its “war against apostates”. When IS murdered seven Copts, as members of Egypt’s main Christian sect are known, in northern Sinai earlier this year, the group said there would be “many more [attacks] to come”.

So there was little doubt who was responsible for the explosions that tore through two Coptic churches on April 9th, as worshippers celebrated Palm Sunday, a week before Easter. Within hours, IS claimed responsibility for the attacks. The first blast hit St George’s church in the city of Tanta, 80km (50 miles) north of Cairo, killing at least 27 people and injuring 78 more. Hours later a second blast hit the main church in Alexandria, where Pope Tawadros, the leader of the Copts, had just celebrated mass. At least 18 people died and dozens were wounded in that attack, according to the health ministry. Pope Tawadros was unharmed.

'The Copts make up about 10% of Egypt’s population, which is mostly Sunni Muslim. Tension between the communities has long been high. After Abdel-Fattah al-Sisi, then a general, now president, booted the Muslim Brotherhood from power in 2013, the Islamist group’s supporters burned dozens of churches. Mr Sisi, a devout Muslim, promised to heal the wounds, and he has even attended Christmas mass. But the violence has not stopped. Last year Pope Tawadros, who supports Mr Sisi, said Copts were attacked about once a month. Others say that the rate is higher.

The attacks on Palm Sunday come at a particularly bad time for Mr Sisi. On April 28th the president is scheduled to welcome Pope Francis to Cairo. The visit was meant to show progress in the relationship between Christians and Muslims and, according to the Catholic archbishop of Egypt, act as a sign that Egypt is safe.

 

After the supposed Arab Spring, the Levant has become a land irrigated with the blood of minority martyrs. Maybe Western commentators shouldn't have been so blindly in love with their obedience to democracy and so willing to foment revolt in nations with entirely different histories than those of Western commercial societies.

However, even as Arab Spring has turned to to Arab Winter, Westerners’ willingness to foment revolt has continued in the form of sympathy towards the rebels in Syria and talk of régime change in the nation. However, if we are to learn from the history of the Middle East and the experience of the Copts in Egypt, it’s that the military may be a force for liberalism in the region and that military-dictatorships may be a progressive force. Western commentators need to take seriously the fact that Arab Spring may have done more harm than good by stirring up illiberal movements in the region.

Liberalism is not democracy and democracy is not liberalism. Democracy may be a necessary ingredient to a robust liberal society, but it can also generate illiberal outcomes. Western citizens do not enjoy the liberty they do because they get to elect their leaders. They have liberty because of the rule of law, the protection of individuals’ private spheres against encroachment, and the enforcement of commutative justice in general. In short, they are free because of the idea of Adam Smith’s”obvious and simple system of natural liberty.” Democracy is a means towards that end, not an end per se.

Furthermore, this is this about the treatment of Christians in particular. If we are to take John Stuart Mill’s argument in On Liberty seriously, then one of the barometers of liberalism in any nation is how freely minorities may go about their lives. The violence against Chrsitians, Yazidis, and even Shi’a in the aftermath of so many Arab-Winter revolutions evidence their illiberal nature.

 

The West can actually do something here for Western nations are not entirely innocent of foul play in the region. To help the region, Western nations can stop supporting Saudi Arabia and House of Saud. The problem isn’t ‘radical Islam,’ the problem is the Wahhabist and Salafi factions that House of Saud has actively supported in the region. Due to their support of a, frankly, evil régime, Western nations therefore deserve some of the blame in the rise of Wahhabism in the region. Even Canada’s politically correct Trudeau-administration has not refrained from selling weapons to the nation. Making matters even worse is that the hostility that should be pointed towards Saudi Arabia is instead pointed towards Iran, further cementing Western support for the Wahhabist régime.

Rather than actively trying to make the situation across the Levant better, Western nations should think about removing the harmful impact they now have on the region. 

Punitive Attacks in Syria

 

Vox reports: 

The United States has just intentionally bombed a Syrian regime target for the first time since the country’s civil war began in 2011. So far, it has been a limited cruise missile strike targeting one Syrian airbase, causing an as-yet-unknown number of casualties.

"Dozens of Tomahawks were launched against a single Syrian regime airfield,” a Department of Defense official told Vox.

The decision to attack was a direct reaction to the Syrian regime’s Tuesday gas attack that claimed 85 lives, including about two dozen children. Images of the Syrians who suffocated to death seemed to shock President Trump, who spoke Wednesday of the “beautiful little babies” killed in the attack, which he described as “an affront to humanity.”

 

Although ill-advised on the Founders' enduring principles of foreign policy, I think that the Trump administration's response makes tactical and, in more general, game-theoretic sense for those who share the administration's end of enforcing treaties prohibiting the use of certain weapons.

I don't think the United States' policy should really care about another power's use of chemical weapons. But if one think American policy should care, this is the kind of punitive response that should be used: Sudden, gratuitous, and clearly tied to the behavior being punished. It is the kind of policy that one can expect a military to actually be able to successfully carry out. Saving Syrian children? No so much. 

The perverse irony of Trump's punitive attacks in Syria is that they coincided with American entry in the Great War. These kind of policies are not only ends-means compatible with a Wilsonian world-system limiting national sovereignty through international treaties, they are necessary for sustaining such a régime. 

 

However, in my thought about the tactical nature of the president's decision, I should not neglect to point out that it is unconstitutional. GMU's Ilya Somin provides commentary:

Earlier tonight, the United States launched cruise missiles against a Syrian military base in retaliation for the Assad regime’s brutal use of chemical weapons against civilians. Assad’s atrocities are appalling. Perhaps they even justify US military intervention. Nonetheless, it is essential to remember the constitutional requirement that initiating war requires congressional authorization. That is both legally necessary, and the right choice from a prudential point of view.

Article I of The Constitution very clearly reserves to Congress the power to start a war. The Founders sought to avoid a dangerous situation in which a single man could take the nation to war. Even Alexander Hamilton — the strongest supporter of sweeping presidential power among the framers of the Constitution — recognized that “the Legislature have a right to make war” and that “it is . . . the duty of the Executive to preserve Peace till war is declared.”

The situation would be different if Assad attacked us first. In that event, Trump would be merely waging a war already begun by the enemy. But for all of its many sins, the Syrian government was not previously at war with the United States, and Assad did not attack us. Indeed, just a few months ago, Donald Trump spoke of cooperating with Assad and his Russian allies in waging war against ISIS.

 

A Rant on Deceptive Market-Failure Arguments

 

 

 

 

Over at the Niskanen Center, Samuel Hammond has written one of the worst articles I’ve ever read on mutual-aid societies and the welfare state. So let’s begin my rant:

The conventional libertarian argument has always been a bit hand-wavey, pointing to eras in history where, yes, government was smaller and mutual aid societies were bigger, but where poverty was nonetheless widespread and abject.

Yes, people were a lot poorer in the late 18th and 19th centuries. By our standards, poverty was indeed "widespread and abject" during that period because society was *a lot* poorer. We're simply not comparing apples to apples when we compare the effects of a 1950's style welfare state with 1890's style mutual-aid societies. A lot has changed in the meantime, including a substantial increase in the standard of living having very little to do with either the welfare state or mutual aid societies.

It would have been honest to point out that poverty would have been "nonetheless widespread and abject" even if there were a welfare state. Alas, as we shall see below, there is a lot of deception going on in this article.

Furthermore, we should count this post as yet another example where someone uses 'market failure' as pseudo-scientific code for 'markets not producing what I want:

Thus the reason all modern economies have some sort of pension system is not because private charity comes up short, or to steal from the rich to give to the poor. That’s a category-mistake. Rather, it’s because there is endemic market failure in the private annuities market caused by adverse selection and information asymmetry (among other things, you have a much better idea of how long you’re likely to live than an insurer).

Before I even discuss the theoretical problems with this sentence. Let me point out that it is obvious Mr. Hammond hasn’t even read the source he cites to support his market-failure hypothesis. To lend academic credence to his argument, he cites Jonathan Gruber’s Public Finance and Public Policy, who argues that the market-failure rationale is not the reason why most modern economies have social-security programs: “While annuities market failure is the classic economic rational for Social Security, the true reason that most policy makers favor the program is pateralism; that is, they are concerned that individuals won’t save enough for their own retirement.” So clearly Mr. Hammond couldn’t be bothered to read his source when he claimed why these kinds of pension-systems exist!

Now onto matters of first principles: Markets are non-teleological. That markets evolve towards ends no one intends is a basic lesson of economics that should be drilled into every high-schooler’s mind by teachers so that citizens don’t fall into this fundamental error.

Being non-teleological systems, they don't fail when they don't accomplish what we want them to accomplish. Instead, hey fail when they systematically don't realize potential mutual benefits to specialization and trade. What Mr. Hammond describes isn't a market failure because it simply isn't profitably for insurers to insure everybody. That isn't a market failure because there isn't mutually beneficial trade being left on the floor. It's just that the mutually beneficial trade is exhausted before Mr. Hammond is willing to say the market is doing whatever job he believes he has the authority to tell the market to do.

In a perfectly free market for insurance, some people might not be able to find insurance. But the reason why they cannot find insurance is probably because there is no mutually beneficial opportunity for them to buy insurance. Free and self-interested agents want to manage their risk-pooling so that they maximize their own benefits. Some people may therefore be too unhealthy to ever find a health-insurer willing to insure them or may be too dangerous of a driver for a car-insurer to do the same. That those high-risk people are not insured is not an evidence of a market failure. It’s evidence that there’s no opportunity for mutually beneficial trade.

 

 

Mr. Hammond calls for the government to fix something he perceives as wrong in the markets. This is an example of what Nassim Taleb has called lecturing birds on flying. More specifically, Mr. Hammond is lecturing birds on how they should not be able to fly. HE comfortable lecturing us about how insurance is broken, and clearly has ideas about what insurers should be doing. But, as of my knowledge, he has no actual experience in the market for insurance. If Mr. Hammond, and others really think that there are $20 bills strewn across the floor in the market for insurance, they should become entrepreneurs and use their knowledge to get rich by picking up all of that money.

However, we clearly see that Mr. Hammond is not actually all that good about thinking about insurance when he makes an attempt at demonstrating how asymmetric information might destroy the realization for opportunities for mutually beneficial trade. He writes: "among other things, you have a much better idea of how long you’re likely to live than an insurer." However, there’s no reason to actually believe this. Insurers probably actually know better than most people how long they will be likely to live because they know how to analyze actuarial tables. Whereas most people are likely to self-delude themselves as special when computing how long they are likely to live, insurers will just use an actuarial table and will probably get a better answer!

Of course, Mr. Hammond may proclaim that the problem is insoluble, but I’m not particularly convinced. Just because someone with no experience in a market can write some article about ‘moral hazard’ and ‘adverse selection’ does not mean that entrepreneurs don’t solve those problems on a daily basis, even if those articles had called the problem insoluble.

 

Mr. Hammond may want there to be insurance provided to people deemed extremely risky by the markets. He may want different outcomes than the ones generated by the market process. However, that isn’t evidence of a market-failure. A market-failure would imply that there are Pareto improvements to be had, here there is not.

As used, the entire language of market-failures is deceptive: Under realistic assumptions, there isn’t a Pareto improvement to be had here. Some people *are* going to be made worse off and, in a free market with exit options (I repeat myself), those people would have an incentive to leave the ‘social insurance’ scheme and create their own association that pools their low-risk people together. When those people are pooled in with higher-risk people, they are going to have to pay higher premia and are going to be worse off. The language of ‘social insurance’ and ‘market-failure’ obfuscates that some people will be worse off, and that maybe those people want a better deal than the one Mr. Hammond wants them to accept.

 

I could then rant about how the author mistakes regression estimates as averages and not as differences at the margin, but that would be clearly getting too pointy-headed for a criticism of think-tank's blog post. Looking at a regression coefficient as an average and then using it to compute a counter-factual at the scale of the entire whole is simply a gross abuse of statistical reasoning. In a complex system such as human society, regression coefficients only work at the margins because of a ceteris-paribus assumption. However, when we assume that an entire magnitude is going to disappear, there simply isn’t any certeris to hold paribus. Everything is going to change and the statistical model is no longer going to be a good estimate.

 

Some Remarks About Constitutional Conservatives...

 

 

 

If there is one benefit that the Trump Administration has brought to the United States, it has been the nomination of Neil Gorsuch to fill the late Antonin Scalia’s seat on the Supreme Court. For better and for worse, Mr. Gorsuch’s nomination has provided the opportunity for commentators to discuss the late Supreme-Court justice’s judicial philosophy of originalism. Over at Vox, Sean Illing has argued that Scalia’s originalism was less a purely judicial philosophy and more a wider political ideology:

Scalia’s philosophy is hard to square with the reality of the constitutional debate. The implication is that the meaning and intent of the framers is perfectly clear, and that judges should adhere rigidly to that.

Mr. Illing goes on to quote Barack Obama’s Audacity of Hope’s discussion of this aspect of legal philosophy:

Anyone like Justice Scalia, looking to resolve our modern constitutional dispute through strict construction, has one big problem: The founders themselves disagreed profoundly, vehemently, on the meaning of their masterpiece. Before the ink on the constitutional parchment was dry, arguments had erupted not just about minor provisions, but about first principles; not just between peripheral figures, but within the revolution’s very core.

I must admit that I find it difficult to charitably reproduce the argument that, because there was disagreement when a law was written, that something was agreed to when the ink was put to paper, that the written law therefore does not contain some resolution or synthesis of that disagreement.

 

 

As a Catholic, I am reminded here of canon law. Canon law is the internal ecclesiastical law that governs the Roman Catholic Church, derived from Roman law, and it is the longest continually legal system in all of Western civilization. Canon law states (749§2) that: “The college of bishops also possesses infallibility in teaching when the bishops gathered together in an ecumenical council exercise the magisterium as teachers and judges of faith and morals who declare for the universal Church that a doctrine of faith or morals is to be held definitively…” However, anybody who has a bit of knowledge about the Catholic Church knows that ecumenical councils, although they promulgated written dogma, scarcely ever settled conflict in the generation in which those debates raged. One need only examine how long, say, the Arian controversy lasted after the Council of Nicaea lasted to see that written dogmas frequently failed to content partisans at odds with those controversies.

However, no canon lawyer would argue that, because there was disagreement about the Arian controversy after the Council of Nicaea, that the Nicaean creed is a “living creed” that may be adapted to the arbitrary opinions of subsequent bishops. Instead, the Nicaean creed said something. Even if contemporary Arians might not have been persuaded, it was the responsibility of future canon lawyers and theologians to exactly figure out the meaning of those words and enforce them. Fast forwarding to the 20th century, for this reason, the Second Vatican Council won’t be fully appreciated until long after the death of its partisans so that canon-law jurists may impartially read and interpret the documents that Vatican II produced without having to worry about the debates that generated those documents (and which those documents resolve) still being a matter of living memory.

When one takes a historical view of legal systems, that people disagree with what a law says within the generation in which that law was put to ink is to be expected. That disagreement certainly does not imply that the written law has no meaning, it only means that jurists of subsequent generations need to be cautious about how they interpret that law. Partisans may disagree about what words say, but that does not absolve jurists of their duty to pin down what the written words of law mean and imply. Ultimately, I don’t think that disagreement does not give warrant to the introduction of a jurists’ arbitrary views into those words.

 

In another article at Vox, Ezra Klein has argued that Mr. Gorsuch is “is an extremely conservative judge at a moment when an extremely conservative judge makes a mockery of the popular will.” However, the popular will is not an element of law and should have no place in a jurists’ reading of the law. Popular will has other places to express itself in the political system, from voluntary associations to the election of Congress. Indeed, that the House of Representatives, which is probably that portion of the federal government that best reflects the popular will of the American people, is overwhelmingly Republican is evidence that the popular will desire a Supreme-Court nominee who, in Mr. Klein reckoning, is “extremely conservative”! Of course, we needn’t forget that Mr. Klein had written, back in October, that “Hillary Clinton crushed Donald Trump in the most effective series of debate performances in modern political history.” So maybe Mr. Klein should be taking a hiatus about talking about the popular will of the American people during the Trump Administration.

 

 

As far as I can see, constitutional conservatives might be the closest things to true liberals in American politics today and best vehicle for advancing the general welfare. They understand the rule of law and the primacy of the abstract. They are well-read in the intellectual fonts that influenced the American Founders, including John Locke, Montesquieu, David Hume, Adam Smith, and Edmund Burke, and whose wisdom still provides the intellectual foundation for any free society today. I have once been skeptically of many of their views on the powers of the presidency, which at time seem quasi-monarchical, but I have since been convinced by Eric Nelson’s book, The Royalist Revolution, that those views are in-line with the Founders’ ideas for the executive branch.

Those intellectual fonts, as well as the American Founders, had a confidence that, once broken free from monarchical privilege, that the wisdom of common people could secure the felicity of their society. However, they also understood that liberty cannot exist outside of the rule of law. Thankfully, breaking free of monarchical privilege does not imply the breaking of the rule of law, and constitutional conservatives are aware of that. In a world where only the dose makes the poison, constitutional conservatives have a proper skepticism of experts granted privilege that has turned into an excessive populism in the Western world today.

 

Real-World Competency and the Pretense of Knowledge

 

Tyler Cowen has recently authored an article considering the implications of William F. Buckley’s famous quip that he would rather be governed by the first two-thousand people in the Boston telephone directory than by the two-thousand people on the faculty of Harvard University. In that article, “Sometimes the people need to call the experts”, Mr. Cowen argues that there are some aspects of government in which we should prefer the first two-thousand people in a phone-book and other aspects in which we should prefer Harvard University.

Sola dosis facit venenum, only the dose makes the poison. Mr Cowen is right in arguing that technocracy and popular politics aren’t all-or-nothing affairs, but aspects of politics that must be matched to the problem at hand. However, Mr. Cowen’s framing of the issue obfuscates many of what I believe to be the most salient aspects of the problem at hand. The world is shaking from a populist insurgency and I don’t think a good way of framing the issues involved is a thought-experiment of fine-tuning government between some happy medium between the binary of technocracy and populism.

I found the most incisive part of the article was when Mr. Cowen argued:

when it comes to the nuts and bolts of governance, typically I would prefer to be ruled by the Harvard faculty, even recognizing the biases of experts. They understand the importance of applying expertise to complex problems, and they realize many issues do not respond well to common-sense fixes. The citizenry usually cannot make good decisions, or for that matter expert appointments, when technocracy is required.

 

To begin with, there is the real-world competency angle. For any expertise that is traded for money on the free market, there is a feedback mechanism that ensures that consumers actually value the expertise being offered. That feedback mechanism is the market process. An exert, say a dentist or a mechanic, can only maintain his business if he proves that his expertise maps to real-world competency. No real-world competency, no customers. Profit and loss provides a feedback mechanism that, by and large, ensure that the expertise being offered on a market maps to competency at doing the tasks.

Mr. Cowen seems to trust in an invisible hand working in academia to select the best experts. I am not nearly so trusting Academia certainly does select for very smart people who are able to frame problems as clever models and who are then able to solve those models. (This mode of thinking has even infected philosophy with all of its trolley-cart thought-experiments.) However, what is the guarantee that such talent will map onto real-world competencies? Does being able to solve for a general equilibrium model necessarily bring one enlightenment about the nature of the economy? Probably to some degree, but how much is that degree? I am very doubtful of the mapping of academic success onto real-world competency.

 

To begin with, there is the real-world competency angle. For any expertise that is traded for money on the free market, there is a feedback mechanism that ensures that consumers actually value the expertise being offered. That feedback mechanism is the market process. An exert, say a dentist or a mechanic, can only maintain his business if he proves that his expertise maps to real-world competency. No real-world competency, no customers. Profit and loss provides a feedback mechanism that, by and large, ensure that the expertise being offered on a market maps to competency at doing the tasks.

Mr. Cowen seems to trust in an invisible hand working in academia to select the best experts. I am not nearly so trusting Academia certainly does select for very smart people who are able to frame problems as clever models and who are then able to solve those models. (This mode of thinking has even infected philosophy with all of its trolley-cart thought-experiments.) However, what is the guarantee that such talent will map onto real-world competencies? Does being able to solve for a general equilibrium model necessarily bring one enlightenment about the nature of the economy? Probably to some degree, but how much is that degree? I am very doubtful of the mapping of academic success onto real-world competency.

 

However, the problem is not just that I’m doubtful. I might be wrong, after all. The problem is that there are no impartial feedback mechanisms for selecting out the best expertise, or to even ensure that the so-called ‘expertise’ is competent at its real-world task. The praise of other Harvard PhDs does not strike me as an impartial feedback mechanism.

Along these lines, I think that Mr. Cowen articulates his argument through the old-fashioned lens of “who should rules?” Instead, I think that we should articulate our thoughts about populism and technocracy in institutional terms that pays attention to the fragility of the system in question to bad rulers. In The Open Society and Its Enemies, Karl Popper notably argue along these lines when he wrote that we should “replace the question: Who should rule? By the new question: How can we so organize political institutions that bad or incompetent rulers can be prevented from doing too much damage?” (p.121) In “Of the independency of Parliament,” David Hume suggested a maxim when considering political questions: “ that, in contriving any system or government, and fixing the several checks and controuls of the constitution, every man ought to be supposed a knave.”

Popper and Hume wanted us to think about the robustness of institutions to their rulers and therefore to their experts. I’d like to go further: I’d like to consider whether institutions can be antifragile to bad experts, that is can the variation introduced by bad experts actually improve a society? I do think that is a possibility. What we need is a more decentralized system that allows for more experiments in technocracy and allows for unsuccessful experiments to actually fail. That way, the real-world competency of technocrats can be proven in the field, so to speak, in a way that provides social evolution with the chance to select for the best experts.

So yes, I do agree with Mr. Cowen that maybe we need to call the experts. However, I think that the institutions surrounding technical expertise in government today have fragilized society. Experiments in government requires a more antifragile system, a system that is benefited, not harmed, by variation.

 

President Donald Trump’s administration will certainly be a brave experiment in government. The tragedy will be that the United States is so centralized that if President Trump fails, so too will the entire nation. The nation is too sensitive to variation in those that rule it. What is needed is a nation in which President Trump’s administration can fail without being the apocalypse predicted. That requires more freedom, more subsidiarity, and, ultimately, a more antifragile society. ‘Freedom’ here doesn’t merely mean the freedom to succeed. It also means the freedom to fail, and for your ideas to go extinct with your failure.

Framing the issue as one of technocracy versus populism attracts attention away from the institutional question we should be asking: How do the institutions select the experts? No one should reasonably be denying that expertise is necessary in running a successful administration. However, we should be doubting whether the experts we currently have have enough real-world competence to actually do so. And we should also be thinking about whether the institutions those experts inhabit are too fragile.

 

Sola dosis facit venenum. Maybe the populist insurgence’s insistence on real-world competency might make our institutions less fragile. 

Justin Wolfers: Better than a Witch-Doctor?

How does one react when one's predictions have been falsified. Well, let's get an example from Justin Wolfers trying to explain why the markets did not crash when Donald Trump was elected: 

 

My own view is that last week’s stock market gyrations reflect a more fundamental market failure.

Call it a failure of imagination. Investors simply failed to imagine how they might feel when they woke up to President-elect Trump.

....

This failure to fully imagine the implications of the new world is not rational, but it’s very human. I know that my thoughts in the days after Mr. Trump’s win are different than those that dominated my election-eve conversations.

 

Mr. Wolfers' explanation assumes that we know what the markets are communicating and that we, being the educated economists that we are, know the possibilities of a Trump administration better than traders do, hence the invocation of market-failure theory. Reading the tea-leaves that are market sentiments is fraught with danger. It is more the purview of warlocks and witch-doctors, whose rituals offer them perception uninhibited by time and ignorance,  than serious economists.

Market agents foresee and adapt. When they fail to foresee and adapt, market agents lose their money and their ideas go extinct. No practicing economist should be invoking market-failure theory to credit himself with greater clairvoyance than the markets. Then again, maybe practicing economists are no better than warlocks and witch-doctors. One may have been better listening to one rather than Mr. Wolfers!

The market process is there to check the errors of market agents. There is no such check on the error of economists, they may read the tea-leaves all they like without reality ever asserting itself.

I think we are better off trusting people with skin in the game than commentators massaging their own egos with incantations of market failure.