Right Reason

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. 

Inequality, Stagnation, and Video Games, Among Other Things

 

 

An innovation soon to increase the wealth of middle-class gamers Q4 2014. 

 

The New York Times interviews Tyler Cowen in "Tyle Cowen on Inequality and What Really Ails America", I like how Mr. Cowen approaches inequality in the first two questions:

Inequality is running amok. The richest one percent of Americans pull more than a fifth of the nation’s income. The top 10 percent take half, more than during the Roaring Twenties. President Obama seems to believe this is “the defining issue of our time.” Is it?

“Income inequality” consists of at least three separate issues: 1) the top one percent is earning more; 2) the relative return to education is rising; and 3) economic growth is slow, and thus many lower- and middle-income groups are not seeing their incomes rise very much over time. The third of these is arguably the defining issue of our time. Grouping these issues all together under the broad heading of “income inequality” I view as a big intellectual mistake.

So should we worry at all about the chasm opening up between the income of the rich and the rest?

I worry about stagnation in the middle and towards the bottom, not the income gap per se. A lot of the income growth at the top has come from globalization; for instance, Apple now sells a lot of iPhones to China. That’s not something we should be worried about. Rather, we should celebrate it.

 

Arnold Kling's idea of the Great Factor-Price equalization is of interest here.

 

What I find unconvincing, though, is Mr. Cowen's assertion that people haven't benefited as much from innovation today as much as they did from 1890-1930:

But aren’t soaring incomes at the top and stagnant wages in the middle connected, driven by the same forces?

Those two problems are not always the same. If today we had a rate of technological innovation comparable to say 1890-1930, the middle class and the poor would benefit tremendously from those new goods and services. Income inequality might go up or down but we could stop worrying so much about it.

That earlier period brought such innovations as electricity, the automobile, radio, the airplane, basic advances in public health, and much better fertilizers, among many others. In more recent times we’ve had a lot of innovations in the manipulation and storage of information, but this just hasn’t benefited ordinary lives as much.

I think that the innovations in the manipulation and storage of information have greatly benefited the middle class, and shall greatly change how people in the middle class, especially the younger middle class, live their lives. Though innovations in electronics and information technology hasn't resulted in as drastic a change in how society looks as the innovations of 1890-1930, they are drastically changing how people spend their time, and how people define who is in their social circle. The Economist humorously illustrated the former point with "The hidden costs of Gangnam Style": 

That's just one silly YouTube video. Imagine if The Economist were to make a similar chart about the amount of time playing Call of Duty or World of Warcraft online. Modern innovations are greatly changing how people in the middle-class spend their most valuable resource: their time.

 Call of Duty and World of Warcraft are silly games, you say? Well, the only thing separating junk from wealth is the value people impute to it, and people certainly demonstrate that they greatly value the those two frivolous means of entertainment. Yes, not everyone is going to value those games, but that's also an important thing about actual innovations: Not everyone is going to adopt them. We are all trying to discover how we should live our lives given new innovations, copying from those we see adopting innovations well and not copying those don't see doing it well. 

 

The people who we see mostly earnestly adapting and therefore benefiting from today's innovations are the youth. They are the people playing Call of Duty, they are the people interacting with their social circle with Skype and smart phones, and they are the people who couldn't think of their life without the internet. They are the people whose lives will serve to most gain from the innovations of today because they are the people who are aggressively adopting them. The young middle class today are the people whose lives will demonstrate, contra Mr. Cowen, that the middle class isn't stagnating compared to the middle class of 1890-1930, it's flourishing on its own terms. 

Fortunately, it doesn't matter what people thing about innovation. Innovation will continue on all the same. From how I see it, the innovations Mr. Cowen talked about from 1890 to 1930 largely gave the middle class more liklihood of living and more time to live. People now work eight-hour work days and don't have to worry too much about dying before they are seventy or so. The innovations today, like high-definition televisions, smart phones, and video games, are then changing how people choose to spend the time that they now have. Call them less impressive them you'd like, but I'll still elect to choose them impressive and life enhancing. Life enhancing in all the subtle ways that will be missed by those looking for innovations that they think should happen.  

Klein and Cowen on Hannan's _Inventing Freedom_

I've already written about my own approval of Hannan's grandiose yet surprisingly sensible claim, but don't take it from me alone. Both Daniel Klein and Tyler Cowen have both written about how they think the book is more important than one might expect prima facie. 

Klein from "Cafe Hayek":

I’ve finished reading Daniel Hannan’s Inventing Freedom: How the English-Speaking Peoples Made the Modern World. I think that it is a very valuable book, and in many ways; it really should be read and discussed.

Like Jonah Goldberg’s Liberal Fascism it is a book that I do not always agree with, but which teaches a lot and is quite persuasive in many of its central messages. As wide-frame as Goldberg’s book is, Hannan’s is much much wider. I learned a great deal more from Hannan’s book.

Here is the awesome 3-min 2009 video of Hannan to Gordon Brown.

Here is Hannan’s recent 30-min presentation of the book at Heritage (followed by some Q & A).

Here is an informative WSJ review of the book.

Here is a 10-min interview at the Institute of Economic Affairs (London).

Hannan is clearly a strong proponent of individual liberty and free markets. But some libertarians will object to Hannan. My sense is that Hannan is not really very militaristic (here is a blog post where he says Britain probably should have stayed out of the First World War); he is for at least moderate liberalization of drugs. In the Heritage talk he flatly tells the audience to favor immigration.

 

Tyler Cowen from "Marginal Revolution":

That is the new book by Daniel Hannan and the subtitle is How the English-Speaking Peoples Made the Modern World.

Oh how one can mock those subtitles about the making of the modern world, heh heh!  Yet this subtitle has a plausible claim to be…true.  Even more shockingly, the subtitle accurately describes the book.

Every time my plane lands in England I shed at least a tear, maybe more, out of realization that I am visiting a birthplace (the birthplace?) of liberty.  This is not a joke and during my trips there I never quite snap out of that feeling, though I am also well aware of all the problems those people have foisted upon the world as well.

I found many parts of this book to be superficial, or perhaps well-known.  Yet often they were superficial and…true.  Here is one excerpt:

To put it another way, the distinction was not between Catholic and Protestant individuals, but between Catholic and Protestant states.

Here is from an Amazon review:

"Author Daniel Hannan is a person of English ancestry who was born and raised in Peru then relocated to the United Kingdom as an adult and made a career in politics, including becoming one of the U.K.’s representatives to the European Parliament. His global experience has shown him how unique is our 'Anglosphere' heritage of representative democracy, protection of property rights, the sanctity of law, and the inalienable rights of the individual."

This is in some ways an important book, though I do not think it is a book which will satisfy everybody.

For the pointer I thank Daniel Klein.