Archive for December, 2010

Why I am not a Saint

Consider these two men, both named Thomas:

The first carried out persecutions; the second gave shelter to the persecuted. The first wrote political polemics; the second wrote liturgy. The first burned his opponents at the stake for heresy; the second was burned at the stake. The first was a lawyer; the second was a bishop. The first was a consummate politician; the second had no guile. The first tried to equivocate between his monarch and the Pope, and was executed; the second was executed because he rejected Catholic doctrine. The first received a fair trial, where he denied all accusations – then confessed his guilt after confession; the second was tortured into a confession. The first went quietly to his death; the second denounced his persecutors, recanted his forced confession, and placed the right hand that had signed it into the heart of the fire so it would be burned first.

Naturally, More is called a saint and Cranmer is not. Now I’m no Christian, but I know whose life seems more Christ-like to me. Of course, this is is the Catholic Church we’re talking about, so perhaps it’s best not to even think about it. The Church of England has only ever canonised one saint, so Cranmer has to do without.

The reason I bring up this comparison is to show the way that certain groups hijack history. It’s almost always small, highly motivated groups who the rest of us are too nice to criticise for reasons of cultural sensitivity. Next up, the ongoing project to demonise the greatest Briton of the second half of the 20th century.

Barnacles Through History

In my previous post (see also the comments) I talked about the emotional baggage that has built up around various issues and words. The metaphor I used was barnacles crusting the hull of a ship. When the barnacles become too thick, they destroy the steering impossible, and the issue becomes a third rail, the word becomes meaningless. Was WW2 a just war? Don’t even think about it.

Sometimes people deliberately try to put barnacles on words or issues – a large part of Political Correctness is campaigning to make certain words unacceptable (e.g. retard). And it’s not always a bad thing. Indeed, I argued that a large part of Iraq’s problems have been due to the failure to put enough (positive) barnacles around certain issues of national identity.

But what really hurts is when barnacles build up around an issue that are contrary to all fact and reason. Imagine, for example, a religious fanatic who rose to power in the army and used it to purge the elected assembly of anyone who disagreed with him. But even that wasn’t enough, so he abolished the assembly altogether and ruled by martial law, as a complete tyrant. His regime was one of constant terror and violence, he persecuted the majority religion of the people, and is generally thought to have committed genocide.

Now realise that man has a statue commending him as a champion of democracy.

For over a century, Cromwell’s name was mud – his rule was too well remembered for a revisionist project to take place. He always had a small knot of supporters, however – those who spoke of the “Good Old Cause.” Fired by the radicalism of the French Revolution and with his memory passing out of the popular mind, they were able to reshape our historiography and remake his life into something heroic – not without a struggle. “The man – it is ever so with the noblest – was greater than his work” is Gardiner’s famously bizarre attempt at praise. When you have to commend a ruler for the kind of person they are rather than the things they actually did, you might want to give up the project.

But Cromwell was not merely rewritten this way as a petty project by a bitter few. Partly it was an Orwellian “He who controls the past controls the future.” But mostly it was a genuine admiration of the man by what we would now call the Left. Of course a military dictator who banned people from playing football “for their own good” was attractive. Of course using the awesome power of the state to stamp on what the government deems “immoral” was attractive. Of course abolishing that bothersome “rule of law” was attractive. These were the people voting for Gladstone! And Lloyd George, and Attlee, and Wilson, and Blair… This is exactly what they want in a leader. Oh, they wouldn’t like it if they got it, but now they had sufficient distance from what he wrought, they could perform a whitewash.

So with the academic elite having provided the cover, there was a sudden explosion of Cromwellian memorials in the second half of the 19th century, which of course say less about Cromwell, and more about the Victorian radicals. Even now, he remains a favourite, and the only real damage to his reputation is from his deeds Ireland. He tyrannised his own people too – but the left don’t care about that. It was for their own good, after all.

Why I am not Emotional about Emotion

Robin Hanson writes:

Vivid images of direct visceral effects [are] overwhelming less direct and visceral considerations. “Near” tends to displace “far” in policy… we don’t so much emphasize the seen over the unseen, as the feeling over the unfeeling, to signal our vulnerability to such feelings.

It’s an interesting post, read the whole thing.

But how true is it? One of the examples he gives is prison standards. But being cruel to prisoners is a sure vote-winner. Here we see direct effects about which we might tend to get emotional (prisoners suffering) versus hazy indirect effects about which it is harder to get emotional (future crime rates). Indeed, if you say to people that we are brutalising prisoners so much that it’s making future crime rates higher, they don’t care. They still want to make things as hard as possible on the prisoners.

Now you may say “Ah yes, but they are emotional about vengeance,” but I think that proves too much. I might reply that they are rational about justice. How do we separate an “emotional” reaction from a “rational” one? And even if we ascribe it all to emotion, how do we form rules about which emotions win? We care more about justice than suffering when it comes to prisoners, but more about suffering than justice when it comes to hostages (people want to pay the ransom).

Ultimately, I don’t think politics is reason vs emotion, it’s almost always emotion and reason vs emotion and reason. Hanson’s “solution” is presumptuous, people do frame issues in emotional terms, on both sides – and they always have. In the minimum wage laws example he gives, people do frame opposition to minimum wages as being pro-poor. But this doesn’t catch on with most people.

What’s really going on is that policy issues have baggage, which is accumulated over time like barnacles on the hull of a ship, and affects the steering. So Americans have somehow convinced themselves that if everyone owns a deadly weapon, they’ll all be much safer. There’s no evo-psych or signalling model here, it’s a social factor particular to American society. There are no arguments or framings for or against gun control that are made in the USA but not elsewhere. It’s just the barnacles.

Force, Power and Consent

Arnold Kling quotes Murray Edelman:

Force signals weakness in politics, as rape does in sex.

I’m less interested in the sex analogy; I question the assumption. To me, it depends on who is using the force, why, and in what circumstances. A government using force on its own citizens is normally weakness, because it means that its soft power was insufficient to deter. Perhaps this was the only kind of political force that occurred to Edelman’s imagination.

But there are other kinds of political force. For example, the paramilitary violence of the SA showed the strength of the Nazi party. Far from showing them as weak, it showed they were a challenge to the Weimar Republic’s monopoly of force. However, once Hitler took power, the street violence of the SA would have indeed been a sign of weakness, which is why he crushed it.

And then there is the use of force against those who could not be expected to comply. The Soviet tanks rolling into Prague, or the terror of the Khmer Rouge, these were not shows of weakness. They were shows of pure strength, of having the power and the will to subjugate utterly. “Soft power,” ultimately, is a bluff, and you have to be prepared for your bluff to be called. This is why the West cannot pacify Afghanistan – because they are determined to do so by consent. That is not how you pacify a hostile country – you have to break their will to resist first. If instead you try to conciliate those you are trying to pacify, they quickly realise that you will reward rebellion. And no, I am not suggesting that we go the Hiroshima route on Helmand, I’m suggesting we withdraw.

I’d also add that using force is not the only way you signal weakness in politics. Another way, far more common in the West, is to use the law – for example, a US President shows weakness when he uses his veto. But politics is not a source of power in itself, it is a game played on top of the true sources of power – money, law, force, popular support, etc. Using them directly may make your politics look weak in Murray Edelman’s terms, but sometimes it might be worth it.

Belief and Terminology

One of the things I amusing is the way words get mangled between Britain and America. So Americans can write insane things like “Nick Clegg seems to be a centrist, but actually has some good progressive policies…”

The mainstream American left is divided between moderates and progressives (aka liberals). However, the mainstream British left is divided between progressives and socialists (aka Old Labour). Yet British progressives and American progressives have basically the same outlook – i.e. internationalism, environmentalism, moderate wealth redistribution, the rhetoric of positive human rights, technocratic rule, etc etc. In America, this is one end of the political spectrum, but in Britain this is the middle ground. Interestingly, I suspect Blue Dog Democrats would be happier with Old Labour. What determines the political spectrum is not just policy preferences, but policy priorities.

British and American progressives are so similar because the humanities faculties of the world’s major universities are international in outlook. British progressives occupy the centre-ground because they control so much television and radio output, and almost all TV and radio news, via the BBC. This gives them huge power. But interestingly, where there is a free market in news, the progressive newspaper, the Guardian, finds itself on the far left of the spectrum. The middle-ground newspaper is probably the Mail.

Of course, the other word that gets lost in the mid-Atlantic is socialism. I have absolutely no idea what Americans mean by socialism. In fact, I think the word has lost all meaning. Certainly it bears no relation to the policy positions espoused by those who actually call themselves socialists. What makes it particularly funny is that many socialist viewpoints are mainstream in American political discourse, e.g. the closed shop, collective bargaining, etc.

Why I am not a neo-Newtonian

Imagine if physicists were divided into rival camps; in one corner, there are the neo-Newtonians, who follow a model of the universe as set down by Newton and then modified by Einstein. They insist that the universe must be determinate, claim that the Bell inequality “disproves” quantum physics, and claim that there’s is the only science with testable results. Meanwhile there are the Feynesians, who use a quantum model. They claim that the Born probabilities are the fundamental law of the universe, mock the neo-Newtonians for their bizarre belief in this “gravity,” and claim that there’s is the only science with testable results. Both sides spend their time trying to advance their own models and tear down the opponents, and fight for public recognition and institutional power. The two sides have been locked in a death-match for over 30 years, and the relative strength and weakness of the sides changes based more on fads and fashion than any new evidence.

In short, physics would be almost as bad as economics.

Don’t tell me that the problem is that no-one has a proper working model of the economy. The two major scientific breakthroughs of the 20th century are general relativity and quantum physics, and the two theories are at present incompatible. Yet both model the world brilliantly. Physicists say that’s fine. Both are valuable but incomplete theories, and let’s try and find out more. Same should go for economics.

What I like about this Recalculation concept is it shows how major (infra-marginal) economic disruptions combine with modern business models to frustrate economic transitions. Very few workers are directly making widgets, and it’s quite easy to increase widget production without taking on more workers. When human capital is so important, and so many workers are using that human capital to make not widgets but organisational capital, economic transitions are extremely destructive of capital. Yet I think one of Keynes’ most valuable insights was the one Keynesians are reluctant to talk about, these “animal spirits.” Note that he was not talking about “consumer confidence” – a term we hear far too much about – but rather investor confidence. And note that what is needed to fix a Recalculation is precisely that investor confidence; for investors to use trial and error to work out new business models and methods of production to profitably satisfy consumer wants. And sure, demand for money matters too. And sure, Real Business Cycle theory probably matters too. And rational expectations might matter too. And so on.

I don’t see anyone claiming that Recalculation is a complete theory of all recessions. It is not even beholden to any particular theory of what caused the housing bubble. It’s the people who claim they have a complete theory of everything who are almost certainly wrong.

Scarcity

I was told an objection to the Robinson Crusoe/Friday example I gave is that it does not express the scarcity inherent in a modern economy. Specifically, just because Robinson Crusoe doesn’t want to decorate his hut with Friday’s flowers, it doesn’t mean that they’re suddenly worthless. Someone else will buy them for hut decoration at a slightly cheaper price, or they will be used as a product in making flower garlands, or something. More specifically, demand is in some sense robust, and products can be substituted. Now, this is all true, but I was creating a very simple economy to illustrate one idea. But contrary to what was said, the idea of Recalculation does not depend on ignoring scarcity.

Suppose we have a modern economy at equilibrium. There is however much wheat being produced. Then, a few people don’t like bread as much, meaning less demand for bread and hence wheat. Well, this means the price of bread and wheat falls slightly, and because the price is lower, a few people buy a bit more bread that they otherwise wouldn’t have. Also, a bit less wheat goes into making bread and a bit more into making beer. Hence all the wheat is sold, and we are at equilibrium at a slightly lower price. Scarcity makes things robust. Note that things are REALLY robust, because as a second order effect wheat farming has just become a little less profitable, so in the long term farmers will produce a little less wheat and a little more barley, and this will push the price of wheat up a little. So the economy easily finds a new equilibrium, with a marginally lower price for grain.

But notice that all this analysis is at the margin, and substitution is very easy. This is not always the case, particularly in terms of production, i.e. the second order effect. You can turn a wheat field into a barley field quite easily, but if you want to turn your car factory into an iPod factory, then so much of your current plant is useless. And if the transition is hard for the physical capital, think how much worse it is for the human capital. If there is a little less demand for accountants, accountancy firms recruit a little less and fire a little more, salaries go down a little, a few accountants use their skills to transfer to other fields, the lower salaries mean slightly fewer people study accountancy, all is well. Now imagine that demand for accountants falls in half. Suddenly there are mass redundancies in accountancy, and recruitment stops entirely. It was fine for a few accountants to find related work in other fields, but hundreds of thousands can’t do this all at once. If this a long-term thing, these people need to retrain, which will take a very long time – they have permanently lost a huge amount of their human capital. And in fact, these people do not even know if the problem is short-term or long-term. For now they are paralysed.

In a modern economy, where so much of the capital is human capital, and even organisation-specific human capital, this difficulty is therefore huge. And it’s made worse by the extremely complicated ways that products are brought to market these days. That’s why I laugh at the idea that scarcity is an objection to recalculation. Unlike what Bill Woolsey thinks, the problem is not that the bricks, lumber, and so on that used to go into housebuilding can’t be put to other productive uses within the framework of the existing economy. Of course they can! The problem is the construction workers, estate agents, surveyors, mortgage analysts, etc etc. They’re much harder to switch over, and there aren’t proper price signals for seemingly ZMP human capital because of co-ordination problems.