Three Categories of Disciplines

While trying to explain why a particular field of study was doing things wrong, I formulated the following outline of a distinction.

There are three categories of thinking about a topic:

1.  Formulaic.  Do step 1, step 2.  First, measure.  Second, measure again.  Third, cut.
2.  Explanatory.  A happens because of B.  The butler did it BECAUSE of repeated slights over 20 years.
3.  Disconfirming.  B has been subjected to attempted disconfirmations .  Greed as an explanation for any new phenomenon in economic behavior (gouging)  is worth less than the breath expended to utter the word.  The prices were low, and the companies were greedy.  The situation changed.  The prices are high, and the companies are still greedy.  Any invocation of greed when referencing the high price is absurd. True is not an option...just predictive.

My claim...
Most human activity (the way I wash dishes, for instance), is formulaic.  
Most of the rest of human activity is explanatory.  Basically all political discourse is at this level.  My experience says that most of social science is too.
Only a few disciplines (most of physical science, most of engineering, some of IT, and some tiny bits of MBA-land --econ/business) are done as disconfirming disciplines.  Effectively, due to human cognitive limitations, this ONLY appears in disciplines where new stuff is being tried, and the costs of being wrong are large and obviously traceable to being wrong. 

Here's the difficulty:  Explanatory activity is mostly good for making the rationalization hamster feel good...it takes real quantitative attempts at disconfirmation before you get real predictive ability.  On the other hand, almost everyone wants to talk about topics from a single-factor analysis, with confirming, rather than disconfirming behavior.  And that just doesn't work to get a decent picture of the future. 

If we were rational animals, then the basic response from a disconfirmer to someone trying to use explanatory thinking should be:
(a) what's your probability distribution?  Don't have one?  Go away.  Said much nicer, of course.
(b) what new cheap test should we do that would be likely to change your probability distribution? See Doug Hubbard here on applied information economics.

Of course, we're not rational animals, and the basic human response to silly explanatory statements is to argue with them.

I don't post current news, but....

Chilean Earthquake @ 8.8.
Same basic place as the 1960 one @ 9.5
200 Miles away a parking garage collapsed, and a freeway overpass.
Tsunami to attack most of the pacific.  Hawaii on notice.
Lessons from the 1960 post-quake Tsunami.
Chaitén isn't happy either with all this shaking.

Mostly from Tyler Cowen and Instapundit.

Looks

We've been trying, me and my wife, to figure out what I look like with my current rather full beard.
I keep making suggestions:
Grandpa from Heidi.
River Phoenix.
Pa Ingall's buddy from Little House TV show
Another year from ZZ Top.

My wife keeps saying I have beard envy.

We are, however, agreed that I'd probably fit right in with the Amish if I dressed right, or the Hasidic Jew community.  However, we settled finally that I'd fit right in if I got a penis-bomb.

Nudge, nudge

So economics is known to some as the dismal science.  I'd argue that a great deal of it's reputation could (though it probably isn't accurate) be ascribed to the fundamental ideas propounded by Adam Smith:

Price is a real feature of the world, that is basically not substantially improved by legislation.
Price caps create shortages, or quality deficiencies (Rent Control).
Price floors create massive surpluses (Milk, anyone?).

The aggregate demand curve and the aggregate supply curve mathemagically create a price.  And if you change the price legislatively, you get shortages or surplusses, not what you wanted.  Unless you're a dairy farmer who is guaranteed a price for milk, and who is producing 47x as much milk as is needed at market prices.  That person is getting what they want. 

Fundamentally, legislation of prices cannot get results that are better for everyone.  Basic basic result in economics.  Mostly, they're worse for almost everyone.  The proof left as an exercise to the reader...or you can look it up in any intro to Micro text.  

Since econ, like physics, one should expect the proof to hold darn near anywhere, just like gravity applies to apples and the moon.  So...what's the deal with jobs?  If you have artifically high prices for jobs (legislated taxes, worker's comp, minimum wage, insurance, etc.), you MUST get fewer jobs.   Though the people who have them will clearly be better off.   Basic high-school level micro guarantees that government regulations on labor help existing workers, but hurt people out of work, as they become more expensive to employ.  These are basically transfers from the very poor to the middle class.  If that's your cup of tea, ok.  Not mine.  In fact I hate it.


But that's not pessimism yet.  Pessimism starts when you realize that, just like economics is subject to rational analysis, but not meddling (most of what you can change makes things worse), so too is politics.  If politics is subject to nearly the same rigidity of rules as economics, then we're well and truly screwed. 

Economics is a question of what is...not what should be.  Nudges might work occasionally.
Politics, done right, is also a question of what is...not what should be.  Again, nudges only. 
If you want to be really pessimistic, you can go even further.
Individual human beings are mostly a pastiche of rationality over a social-monkey core.  A big part of the conscious mind's job is to rationalize decisions already made by subconscious processes.  So...an awful lot of personal activity is NOT deciding what to do.  Rather it is predicting what you will personally do in a situation, because your subconscious processes do most of the work.  Most of what you can do is nudge which situations you get into.  (usually by picking situations when there's low social pressure, not by changing how you'll act in the situation). 

Hanson's question

Robin Hanson finds a study that high IQ predicts liberal positions:

Adult intelligence predicts adult espousal of liberalism, atheism, and sexual exclusivity for men (but not for women)

Childhood intelligence at age 10 significantly increases the probability that individuals become vegetarian as adults.

Robin then, after outlining the authors positions on why it might be true, characteristically asks the hard questions:

The results are interesting and worth pondering, but it is still far from clear to me why the modern world should push smart folks in these directions.  Is it that smart folks are more open minded and willing to adopt new beliefs?  If so, why do they differ only on some topics but not on others?  Is it that some beliefs are newly rewarded in the modern world, and smart folks are faster on the uptake?

 Aretaic theory seems as if it can answer the question:

There are 3 possible positions that people can hold on various issues:

1.  Never thought about it.  I agree with the general culture, but will not admit that's why I believe things.
2.  I thought about it, and my analysis says that the historical position doesn't make sense.
3.  I thought about it, and concluded that the problem is so complex so as to be beyond the capability of deductive human logical analysis to solve.  Trial and error might work, nothing else will.

Basically, no one besides crazy Hayek/Deming/Boyd acolytes (like me) or believe position #3 or the Harris defense (HT: Isegoria) of traditionalism.

So...who is more likely to believe #2 vs. #1?  Clearly, and obviously it's the liberals.  Indeed, every position listed by Robin falls nicely into this category. 

I should be atheist -- Religion makes no sense -- no matter whether it helps massively with social cohesion.
I should be vegetarian -- before the last couple years, not only did vegetarianism seem kind, it also seemed healthy. 
I should be exclusive -- That's the logically right thing to do.
I should be liberal -- The party of thoughtful solutions, rather than (stupid) traditions.

Not only does this set of opinions nicely cohere in the Sowellian unconstrained vision, it also then begins to take advantage of our pack/status monkey-nature.  So not only do we have strong initial liberal tendencies when you're 1-step of smarter than average, we also the get a capturing equilibrium.  This holds especially, because regardless your intelligence, people like to hang with other folks of similar IQ. 

Overall, three answers. 
1.  The unconstrained vision makes better sense than tradition for people with moderately higher than average IQ.  This should be testable by checking the strength of the association as IQ rises past +3sigma.
2.  Assortive association: People hang with people with the same IQ.  This is not even open to discussion any longer.
3.  Social conformity.  Once you're in a +1-2 sigma group, since they're all liberal, you become that way too.

QoTD

Fabulously predictive from a commenter on instapundit.  How do we know the who won yesterday's debate?

1. It’s not the lead headline on CNN.
2. It’s not the lead headline on the NYT.
If this had turned out the way it was supposed to, it would be leading both of those sites in 60 point font.

Krugman

Eric Falkenstein summarizes the Krugman bio-piece better than anyone.  Best line (strongly consistent with the sympathetic summary:

[...]he has trouble seeing things from other's perspectives. Thus, everyone who disagrees with him is 1) an idiot or 2) evil. He can't imagine it otherwise.

This is the fundamental sin in discussion.  Anytime someone operates from that assumption, they're (1) wrong, and (2) usually costly, rather than beneficial to talk with (though may be worth reading).

True, whether it's the Ann Coulter crowd on liberals, Paul Krugman on anyone who disagrees with his position-of-the-moment, Murray Rothbard on everyone else, any of the legion of liberals who can't believe anything positive about conservatives, or Moldbug's recent obsession with futarchy. 

It displays a deep misunderstanding about how people think...and clothes the misunderstanding in moralistic error, and attempts to call the error a virtue.  My suggestion: adopt Aretaevian epistemological sensibilities.

Libertarians are NOT conservatives, part 88

Arnold Kling grades the Republican and Democrat Healthcare proposals:

Issue	Democrats	Republicans
Costs	D+	F+
Insurance Reform	F	D
Deficit	F-	F

They both suck.

Neo-Libertarian thinking

While still impressed with the strength of the summary by Taylor, it was on my list this morning to try to synthesize what I consider moderately obviously true, and what consequences follow, politically.  I noodle for a long time, here, before concluding

Evolution + HBD:
People are animals, therefore evolved.
Evolution prefers cheap and just-good-enough, so the brain is a collection of moderately connected modules, with a strong illusion of cohesion.

Status/envy:
Most evolution was competing for reproductive success among tribesmates
People are top-predator social/pack animals, therefore most competition was for status.
Relative status/Envy is (as expected) a primary psychological drive in humans.
While there is massive benefit to ingroup niceness, almost all of that is due to repeat-interaction game theory consequences. 
To further solidify this we have a brain-module that supports ethics is internalized fear of social disapproval.


War + Violence:
While ingroup competition was status based, outgroup competition was no-holds barred, violence based.
Just like chimpanzees (and primitive tribes) of today, murder, rape, slavery, and genocide (of other tribes) was the natural/normal state of affairs.  Outgroup psychology is still like this.
Violence in young men, has also always been the primary method (despite its dangers) for young men to raise their status, often to a point of prohibiting entry (to war) to lower-status boys.  Still massively selected for (Military, Football, Gangsta, etc.).
Young men are naturally violent, and young women are attracted to violent/dangerous men.  Both of these may be true also of older folks, but the strength of the association falls over time (with hormone levels).

Economic Growth:
While people are made happier by relative status, people are made better off by absolute wealth.
However, absolute wealth has ZERO impact on happiness after some level ($5-$20K annual).
Absolute wealth is generated by economic growth.
Economic growth is roughly 100% composed of knowledge growth.
Knowledge, of the kind relevant for growth, is composed of about 99.86% detailed, local, how-to, on the ground knowledge, and 0.14% high level, general, know-that, abstract knowledge.

Also, almost all growth has occurred in non- or poorly- economically protected sectors.  English textiles, modern IT, industrialization, guild-free suburbs, were all frontiers where either laws were non-existent or ignored.  

Politics/Public Choice:
Politics is, regardless the nominal system, the means by which the selectorate (the elites) decide who will be the boss.  Almost universally it is coalitional, with winners and losers, and also almost universally, it doesn't matter what nominal system exists when picking coalitions.  Monarchic succession, for instance, often has many claimants to the throne, with politicking, subterfuge, and war ultimately deciding the final leader.  Certainly, there is some constraint, but nowhere near as much as seems to be imagined by the moderns. 

Aside: Castes
There are now, and always have been (since at least agriculture), 5 castes of people in society

• Brahmins (priests/scholars)
• Kshatriyas (warriors)
• Vaishyas (merchants, entrepreneurs)
• Sudras (laborers/masses)
• Out-castes (uncleans, criminals, )

As per economics, the merchants are responsible for about 800% of the wealth production in modern societies, while the Brahmins and Kshatriyas decrease that by about 700%, capture half the remaining surplus for themselves, and give 0.05% of the surplus to the Sudras, while continuing to stress the uncleanliness of the out-castes.


In our modern, western world, the Brahmin caste is entirely composed of mostly godless neo-Unitarians, who are intellectually the same tradition as the god-ful Unitarians who founded the United States.


The vaishyas can often be broken (less than perfectly) into two categories...there are those that negotiate with the leaders in order to gain or preserve privilege...and those that attempt to compete on a fair playing field.  Most small enterprises everywhere are forced to compete fair, for lack of access.  Most large enterprises, again, almost everywhere, work harder for privilege (monopoly, charter, regulation) than they do at creating value.

Due to the intermingling of rich merchants with rulers, almost every business regulation ever built is a regulation that hurts smaller businesses (much) more than it hurts larger businesses.  Similarly with any legal hurdles...they tend to be fixed costs, which can be distributed among more sales, as companies get larger...but small companies can't afford them.   This is intentional on the part of the larger businesses.  Indeed, the primary money-making activity of larger businesses is to prevent competition by erecting regulations that prevent it.  In the absence of government enforced rules against competition, business profits go to zero (average rate, really) rather fast.  Any time any (modern) company has >market profits for long, it is because there are rules against competition.  Long is a variable number.

Because the current state of the system is dominated by elites, one should expect that all changes to the system will have to pass through the elites, and will not dislodge them.

Corellary: Government's actual activity has very little to do with voting.  Mostly, it's preserving and expanding elite privilege.  Regardless, by the way, of what it says it's doing. 

Examples: Software and media are profitable due to government enforcement of copyright/patent.  Medicine and Law are profitable due to government restriction of entry into the field.  Oil and (some) automotive are profitable because of government regulation of competition (CAFE, seat-belt, ....).  Transportation is profitable due to government subsidies of rail/highway and prohibition of types of competition.  Airlines were profitable before deregulation hit. 



Poverty:
The modern 3rd-world urban poor are the greatest casualty of regulation, as the cost of complying with regulation has placed them largely outside the reach of the law.  They tend to be fabulously entrepreneurial, but incapable of complying with the law.


Error:
Most new plans fail.  Something is not considered, and reality is more complex than the theory.  Success in endeavor tends to be most highly correlated with how one recovers after failure, than with the almost entirely impossible idea that you get it right the first time. 

Law:
Historically, nearly 100% of the law was "discovered".  People made a social contract as a group, and then continued to live by it, and it changed a bit.  New people, new location, new local social contract.  Formal law that integrates all the social contracts is new.  Declarative law that hands down new law that is decided instead of discovered is shockingly new.  Due to error considerations, declarative law is a tremendously bad idea, and probably the source of all evil. 

Almost every progressive-touted legal improvement (minimum wages, labor laws, end of serf-dom) has followed general practice, not led it.  On the other hand, "improvements" like rent-control were entirely handed down.

Ethics:
The ethics of the Brahmins and Kshatriyas are very similar in structure...both call for obedience, and out-grouping.  The ethics of the Vaishyas are sizeably different.  The tops of the three pyramids are the elites that usually comprise the selectorate, and thus the leader.

What we should wish to do is to keep separate the status hierarchies (military, church, merchant), and allow merchants to compete on merchant virtues (cheap, quality wares),  scholars to compete on church virtues (citation count), and warriors to compete on warrior virtues (marksmanship, touchdowns).

However, money is a tool of exchange of value, and a tool of comfort, and we can't separate the realms.  Since the advent of real economic growth, the merchants, who are looked down upon by both warriors and the church, have made the whole world fabulously wealthy in ways unimagineable 300 years ago.  They have made flowers bloom in the desert, and (in Bejing) changed the weather.

But some of the merchants have also become fabulously rich, and in our envious human ways, we (especially our priests) feel the need to cast them back to the place they belong, status-wise, as lowly merchants.

Overall, our current era, much like any other, is consumed with issues of inappropriate status (marked by money) accruing to people who don't "deserve" it.  The unique part of our modern world is that the efforts to normalize status are also damaging to the actual improvement in standard of living, as the merchants really do drive almost all increases, and marginal incentives matter.

Futurism:
The future looks as if, provided enough sand isn't thrown in the gears, there is some sort of massive (industrial-revolution/agriculture or better massive) positive growth trend in the next 30-50 years. 


Summary:
These problems seem almost insuperable. 
At the core, there are several issues.

1. Violence (primarily against outsiders) is inherent in humans--protection against (outsiders') violence is a/the core of all human social systems.  Finding a way to channel the violence (not stop it) in a status-positive direction may be the greatest challenge ever (and still) faced by humans. 
2. The human rationalization-hamster universally finds patterns, whether or not they exist.  Oddly, the patterns all indicate that the ingroup (political, religious, national, sports-team) is more deserving than the out-group.  Answers which quiet the hamster are necessary to human existence, and the job of the church/academy.  Currently, the church is dead, and the academy is dying  (it's first line of defense, news media, is already dead).  What comes next is confusing.
3. Top down planning fails almost univerally, both in regulation, law, and economic matters, but distributes status "correctly" to current elites. Trial and error, bottom-up improvement often to usually eventually gives great solutions, depending on the strength of the feedback system, but it sucks royally as a status mechanism, because the wrong people get the right answers a lot. 
4. Economic growth through creative destruction, entrepreneurialism, and permitting participation in the economic arena almost universally improves human well-being, but distributes status very badly to current elites.
5. Status is currently primarily attached to money, which is a universal method of transferring value.
6. Relative (not absolute) Status matters to people more than (almost?) all other topics.
7. By definition, current elites control the current system, and politics of ANY sort, monarchist, totalitarian, or democratic, is primarily about satisfying said elites, as per public choice/Bruce Bueno de Mesquita. 

Solutions:

The Romer and Friedman suggestions address some of these issues, but Seasteading ignores the fundamentality of violence, and Romer's suggestion is susceptible to both elite-protecting lockin, and the very error (non-evolutionary law) that he is explicitly trying to solve

The anarchists/agorists address some of the issues, but ignore the status game entirely, which dooms them to failure.  The value of a stable legal agreement (apparently on the order of 15% in poor countries.  More here) is also understated.

The Moldbugian approach seems to fail in its idealization of monarchic politics, and the extent to which it fears the current dying academy.

Everyone except the anarchists seem to think that designing law, rather than permitting law to evolve works some of the time...when in reality it never works.

Hansonian futarchy doesn't provide status gimmes to the elites. 

People who hope for change through voting are just deluded.

No one else even seems to be addressing the correct set of problems.

YASAC

Peter Taylor, linked from Isegoria's post, is wonderful as well:
Titled "why we need Yet Another Space Alien Cult", it closes with the following bit:

We know enough about the sociology of religion to identify a number of key properties that a good religion should have. A successful religion will inevitably have scapegoats; ideally these scapegoats should be beyond human capacity to harm, and should also be unlikely to inflict harm on humans as a result of being vilified. Gods or god substitutes (demigods) are also pretty much unavoidable, for reasons that are outside the scope of this essay. (See Paul Bloom regarding people's cognitive biases, but also Laurence Iannaccone on the advantages to practitioners of the supernatural of having gods on whom to blame their failures. Supposedly irreligious people often project semi-divine qualities onto the State.) A low religious Herfindahl index is good for society, so it is desirable if a religion forms schisms easily or can be given features that limit its market penetration to a few percent. It is desirable for a new religion to have a cosmology that is compatible with its target audience (we need naturalistic demigods, not supernatural ones, to attract scientifically literate converts). A spectacular eschatology (ie. fire and brimstone) is also nice to have to add color and purpose. Any scientific claims that an attractive religion makes should be at least as plausible as global warming catastrophism.

In short, I want YASAC to be at least as plausible as secular romanticism, but less destructive by at least an order of magnitude. If YASAC results in the deaths of more than ten million people, I will consider it a failure.

And finally:

 19. The point of the above reasoning is not that space aliens exist. Nor is it that we should believe in space aliens whether they exist or not. The point is merely that the world would be a better place if large numbers of adherents to the radical Enlightenment would abandon current intellectual fashion in favor of joining relatively harmless space alien cults.

 

Isegoria is on a roll

He just keeps posting excellent stuff.  Maybe his best so far, and not just because he references me.  One-upping Moldbug, he argues (or at least, I read into his argument) that the problem is not the anti-Royalism, but Protestantism itself.  Catholicism is a stable form with many virtues.  Isegoria eugooglizes thusly:

[It] reminded me that we may have torn down much of what the Church stood for, but we haven't done a good job replacing it...

Really well done summary of a dozen threads, all in one place.

Absurd claims about philosophers

A major portion (IMO, the important portion ) of philosophy is about how you know.  And for claims about how you know, there have been only 5 positions on the stage in the history of philosophy.  Everything else is commentary.


1.  Moses -- You know by divine revelation
2.  Plato/Pythagoras -- You know by pure reason
3.  Heraclitus/Locke -- You know by your senses.
4.  Hume/Positivists -- You don't know.
5.  Sophists/Nietzsche -- Knowledge isn't the big deal.

Of these, they are roughly in order of least to most radical.  

At this point, I'm sitting somewhere between Locke, Hume, and Nietzsche.
Truth is the wrong idea.
Predictivity  is the right idea...you've got statistics and your senses....and you'll be wrong a lot on anything even marginally complex.

Applied Epistemology

In another regular installment on epistemology, I will again argue that in general most positions are, like free will and determinism, actually orthogonal to one another, and that a decent understanding of LUE requires the partial acceptance of multiple theories. 

Supposing for a moment that most smart people are NOT sheep, it is not uncommon to find a situation in which the following is true:

Person A: You can predict the presence of interdimensional entities using crystals.
Person B: You can predict the presence of interdimensional entities using a dowsing rod.

Supposing for a moment that we have independent evidence of interdimensional entities...what should we do?

Should we argue extensively about which method is better, and get into arguments over probabilties, and standard deviations?  Or should we apply both sets of reasoning when feasible?  Use both crystals and a dowsing rod, you are likely to have a better chance of finding your entity than using either separately.

Rules of thumb, used for prediction, like, say, "Harvard is a Seminary" are useful as predictive tools.  However, like most predictive tools, they have only decent correlation coefficients.  While this makes them useful, it means that like in the crystals and dowsing rods example above, it is also useful to use other predictive mechanisms.  The Robin Hanson/Eric Falkenstein people care about relative position/status/envy goes an awful long way towards explaining the behavior as well.  Is this a better theory than the Seminary theory?   Gosh...hard to say.  What says we take both of them seriously, and trust predictions better when they align with both methods? 

Approaches that assume that complex phenomena like the behavior of professors are best explained with one theory are poor predictors of reality.  Maybe in simple cases in the physical sciences, but not elsewhere.

Of course, status/envy theory says that people won't do this, because opinions exist as status markers, not truth-determinants.  Church of Harvard theory also says that people won't do this, because church is about the revealed truth of Freud, Marx, and Robespierre, not about predictive capacity.  But I trust that my readers, as well as the readers of other anti-church anti-status writers may opt towards the path of compatible predictivity.

Of course, this whole approach sits on the idea that pursuing predictivity is better than pursuing some eternal truth.

Health Care by Kling, short

Arnold summarizes the reality of health care costs in a post titled Health Care Summit Pre-Mortem:

There are two ways to approach reducing the use of high-cost, low-benefit procedures. You can have the government tell people what they can and cannot have. Or you can have individuals pay for a larger fraction of the medical procedures that they consume. It really comes down to those choices.

Advocating either one of those is political suicide, and talking about anything else is a waste of time. The Democrats will not advocate government rationing, and the Republicans will not advocate scrapping most of our current system of third-party payment in medicine. Instead, the summit, like the entire "health reform debate" this year, will be a waste of time.

Human Nature and education

I probably at this point have a reputation as having a rather strong tendency towards the tragic view of human nature (Hayek, Sowell, HBD).

I would, however, like to show the other side from time to time.

At a very deep level, I'm an individualist..."swearing eternal hostility" and perpetually edging towards anarchism.  Right now, of course, de Soto's book has pushed me well past the edge, in demonstrating the extent to which the state's efforts to participate in folks lives were largely ignored throughout history...but I may come back soon.

I am also an educator, with more lifetime hours spent teaching than being taught (at 19 years in school, that's a lot).  While I normally like to talk about the mechanics or theory of education, I'd like to at least nod at the core of my optimistic beliefs about the topic.

There are 5-ish important factors in learning. In order of importance, they seem to be

1.  Practice (quantity and quality and feedback)
2.  IQ
3.  Desire (this can create practice)
4.  Self-efficacy (I think I can do it)
5.  Conscientiousness


The interesting part of this (I'm going to ignore IQ and self-efficacy for today) is that dilligence in practice can be managed by EITHER conscientiousness or strong desire.  I played the piano for an hour a day for a year because I loved it...not because I was supposed to.  Other people practice an hour (or 6) a day because they're disciplined.

On top of their effects on practice, both desire (to learn) and conscientiousness have other effects.  People who are really interested in a topic are known to learn substantially better than people who are not, given that IQ is controlled for.  Conscientiousness leads one to do things more carefully, which also often leads to better outcomes.

I am a general believer in the rationalization hamster, though, and in human weakness...so I tend to believe that in general conscientiousness-driven learning fails over time.  Instead, interest-driven learning may wane, but doesn't fail in the same way. 

So what...well...it means that I tend strongly towards supporting interest-focused learning.  In practice, this mostly means unschooling, in the John Holt, Sudbury Valley tradition.  Allow humans to pursue what they're interested in learning, because as human beings we're wired to find learning almost as interesting as sex.  However, and I'm stealing from a friend here, just as sex, when forced, becomes highly unpleasant, and causes emotional scars...so too does learning.

In addition to my belief that forced learning is somewhat akin to mental rape,  I also find that almost all of the curriculum taught in schools is either pure propaganda, or is simply make-work.  I buy the usefulness of the 3 R's (Reading, wRiting, and Reckoning), and indeed, I'd broaden it a bit...I think that communication (verbal and written, sent and received) and quantitative skills (arithmetic, algebra, statistics, maybe Calculus), and programming (write, err, debug, test, debug again, etc.) are useful for life, and will be ever more increasingly.  I think also that micro-economics, methods-of-science (observation, hypotheses, data collection, statistical analysis), and history (of science, of religion and philosophy, of war and politics, especially of changes in real standard of living) are useful also for thinking, but not necessary for day to day living.  I'm also inclining towards a course of study on dealing with life (tax filing, checkbook balancing, changing diapers, proper use of a saw or hatchet, proper use of a handgun or shotgun for self-defense, basics of cooking, sewing, how to wash clothes, etc. )

However, those are my inclinations, not solid ideas...and I'm not really into art, while others are.  Indeed, I have a hard time arguing for the study of Algebra over the study of Painting as a useful skill, unless you want to be a scientist/engineer.  Not studying algebra AT WORST makes the study take a little longer (It took around 1 extra year of community college math for my mathless, unschooled friends who decided they wanted to be engineers [God knows why] ), before they ran off to get their 4-year programs.


If it's not useful, and it's akin to intellectual rape, why should you do it?  One of the Sudbury supporters, himself a college professor, reminds us that at least all kids from educated households, going to a free school with other kids from educated households eventually learn to read(HT: Wife).  Much of the time with no formal instruction at all.  Would this work if the childrens' homes were not filled with books, and their peers didn't read either?  Probably not.  But so long as we're talking parents who like books, and a literacy-friendly social environment, kids ALL teach themselves to read if left alone.

Someday I'll kid-blog and tell the stories of how each of my kids started (or is still @4) learning to read in this unschooling environment.

Best arguments against this position?  Practice.  Parental costs.  Thousands of hours of practice stack up, and stuff you don't start early, you'll never catch up, most likely.  Of course, if it's not a race...then who cares?  And if IQ dominates practice after N hours, and N is smallish, then unschooling is clear.  Parental costs: 1 parent at home with kids.  that's half (40%, assuming some inequality) your potential income.

If human nature is learning-positive, most of what's taught in school is worthless or worse(duh!), you're not keen on the lord-of-the-flies social environment in the schools, and you can handle the costs (above), you might consider home/un-schooling as well. 

Book Report:

The Mystery of Capital may be the best book I've read in the last 5 years.  And I've read a lot in the last 5 years.  I finished it this morning and am still reeling.  I am not confident that I am coherent to write about the book, because I am so overwhelmed.  That won't stop me from trying.

The book attempts to answer the question of why Capitalism works in the G8, and doesn't elsewhere.  It then answers the question by saying (roughly) most theorizing is wrong.  15 years of in-the-field research gives a set of conclusions that is both tremendously powerful and has HUGE implications...well outside of de Soto's purpose.

Thesis (I hesitate to call it a thesis.  It's correct...and anyone who doesn't agree is simply underinformed):

1. Capitalism rests on the existence of Capital.
2. Capital is (in reality) a legal agreement about ownership, not the actual stuff.
3. The poor (in reality) have no access to the law, and so have no capital.
4. In the West, and the US in particular, the legal agreements governing property were effectively ALL built by private mutual defense associations in violation of formal law, and later incorporated into formal law, well after the system was functioning.  The government was willing to follow the lead of the people on the ground.  
5. Modern third world poverty is CAUSED!!!! by the high transaction costs of interacting with the law.

Interesting bits:

All of these are false:

• all people who take cover in the extralegal or underground sectors do so to avoid paying taxes
• real estate assets are not held legally because they have not been properly surveyed, mapped, and recorded
• enacting mandatory law on property is sufficient, and governments can ignore the costs of compliance with the law
• existing extralegal arrangements or "social contracts" can be ignored
• you can change something as fundamental as people's conventions on how they can hold their assets, both legal and extralegal, without high level political leadership.

Further bits throughout the book:
Peru has 5x the total valuation of the Lima Stock Exchange tied up in illegal housing that cannot be converted to capital due to poor legality.  all other studied 3rd world countries are similar or worse.

In reality, and through the mid 1800s, the social contract was not a theoretical construct, it was the reality on the ground for how people lived on frontiers.  You signed an anarchic "claim-holders association" mutual defense contract, and that's where property right came from.  Later, governments caught up, and recognized existing property claims.   Modern poor folks are in the same place, except they're living in a place where the formal law is at odds with the informal law.  Incidentally, this also causes gangs and terrorism.

Locke was wrong.  Property rights are socially constructed and vary by group, and result from the social contract.

Everyone else is wrong too.  Property rights are the core of everything. And they exist with any voluntary
association, not from law. 


Theories of law which suggest that we create law instead of discover law are basically wrong.  Wrong as in don't work in 15 years of on-the-ground research, rather than wrong as in not theoretically justified.

Favorite statistic ever!!!!:

for every percentage point increase in the number of lawyers in the labor force, economic growth is reduced by [between] 4.76 [and] 3.68%

Unrealistically powerful book.  Read it. 

Agorists should read it -- Agorism is the state of >50% of humanity, who live in extra-legal arrangements.
Reformers should read it -- Law needs to be discovered (what is currently working) not handed down.
Property rights lovers should read it -- property rights are the reason to make governments
Social Contract theorists should read it -- The social contract is real, and you can find and read it, but only in societies where the government hasn't taken over.

Wow.  I should beat any of my friends who have read it, but haven't made me read it with a long, wet, rubber hose.  I'll be staggering from the thought-ramifications of this for a long time.

Incidentally, the theoretical (and empirical) work here contradicts Gregory Clark's thesis that standard capitalism explanations don't account for the industrial revolution.  Usable/convertable property rights for the relatively poor are very recent, and not present in pre-1800s England.

Also, this lends massive support to Arnold's "most wrong belief" that modern market economies did not exist until very recently.  Short version: formal ownership of property as applied to the not-rich is a new thing. 

Again, read this book.

Evening Discussion

A private discussion last night had me unable to sleep due to the following thoughts:

Context: Only some people want an explanation of LUE to fit into a Grand Unified Theory (GUT).
Aretae: This applies to that whole group of people (like us) that Tyler Cowen wants to call Autistic
Friend:  It's true.  I NEED that.  When I don't have that cohesion between data, and a mental structure with which to understand the world, I get ancy/jumpy.  Data that doesn't fit my theories is nearly painful.
Aretae: I completely understand.  I'm there too.  Makes us sound Autistic...needing everything in it's place, and screaming if it's not, but only in the mental realm...with the physical realm not mattering much at all.
...
Wife: There's a problem in diagnosing that as Autistic.  It's a problem that appears to happen to very smart people...and a lot of super-high-IQ folks are also Aspergers/Autistic spectrum, which means that the diagnostic criteria differences between high-IQ and Aspies seem rather weak.  We should really leave Autism discussions for the low-functional parts, not the high-functional logical-organization parts.

QoTD

Beating out the gray discussion by a hair:

Creationism: n. The (false) belief that large, innovative software designs can be completely specified in advance and then painlessly magicked out of the void by the normal efforts of a team of normally talented programmers.  In fact, experience has shown repeatedly that good designs arise only from evolutionary, exploratory interaction between one (or at most a small handful of) exceptionally able designer(s) and an active user population --- and that the first try at a big new idea is always wrong.  Unfortunately, because these truths don't fit the planning models [...] they are generally ignored. -- The Hacker's dictionary

Links first

1. I hereby nominate Megan McArdle as the most reasonable person writing on the web.  She is intelligent, but not 4-sigma wrapped up in her own head.  She is libertarian-leaning, well-educated (Chicago MBA), and grew up in/lives in NYC, with all the prejudices that come with.  She was clearly upper-middle class growing up, and just as clearly lower-middle income now.  She acknowledges the strengths of almost every non-insane position, and yet hews to her own path.  Almost all commenters on Megan's site yell at her, but oddly she is yelled at from all 3 sides of the political spectrum.  Being called a liberal hack, a libertarian hack, and a conservative hack, all for the same article tends to make one believe that you're presenting things fairly.  To do that regularly, like she does with abortion, health care, welfare, and almost every other topic she writes about is sheer genius.  Here is Megan on Pedophilia, in one of her best discussions ever.
2. Arnold Kling, as regulars know, is also among my favorite writers on the web; often, for many of the same reasons as Megan.  Today, he presents how Keynes was right to the skeptical micro-only audience.  Remember, that Kling is among main proponents of macro-modeling as voodoo -- he's worth reading on the topic. 
3. Isegoria is, as usual finding incredible quotes, and angling for QoTD.  Today, it's about black and white and shades of gray.  Unsurprisingly, his tie-together of disparate quotes is magnificent.  His post links through to Less Wrong, where Eliezer in a much more in-depth, and much more judgemental fashion, discusses the error.  Regardless, Isegoria's collation is magnificent.  If you read only one of my links from this post, read this one.
4. Falkenstein and ESR each have posts discussing in detail what bad regulation does to people that they know and care about.  Falkenstein's wife, child care, and OSHA.  Raymond's friend and the EEOC.  Regulations have BIG costs, especially over time, which are almost never intended by their creators.  If I were to make one suggestion to libertarians, it would be to bring out as many stories like this that one can, and store them in an Encyclopedia of Regulatory Failure.  Personal anecdotes only.  Bring in the real effects.
5. Patri (with whom I spontaneously agree on way the heck too many items), confirms the heretical position on exercise. It's a well-known fact that after ~45 minutes of brisk walking 3-4 times a week, there is ZERO cardio benefit to Cardio-exercise.  However, it's not well known that marathoning CAUSES heart disease, according to recent research.  There are two easy explanations for the results, and I have to acknowledge both.  A: Aristotle was right.  Golden mean, etc.  A.  The Ken Hutchins / Arthur DeVany ( Mike Mentzer / Crossfit )axis is right, and aerobic exercise, while improving mood, decreases health.  High Intensity training is the only healthy game in town.  
6. Ron Bailey, fair-minded investigator extra-ordinaire, is best known for being the serious libertarian who investigated Climate Change, and changed his mind.  ClimateGate has pushed him back towards skepticism, but regardless...he looked at the evidence and switched...twice now, as the evidence shifted.  Huzzah for actual updating.  While Robin Hanson is both the patron saint of explaining everything via status explanations, and among the most original thinkers anywhere, ever...Ron Bailey went out and found the research to support him.  Roughly...people work very hard to support their prejudices, and actively ignore evidence that doesn't come from the right social group. 

Like Twins

Aretae:

[...]some groups (David Duke Racists, Mike Huckabee Compassionate Social Conservatives, Karl Rove neo-cons, and Ron Paul libertarians, to pick 4) would all of them prefer to have nothing to do with the other groups.

Glenn Greenwald:

Neocons (who still overwhelmingly dominate the GOP) and Paul-led libertarians are arch enemies, and the social conservatives on whom the GOP depends are barely viewed with greater affection.

Separated at birth?

Crazy ideas

To show y'all that I'm not just a crazy pie-in-the-sky philosopher, I'll now propose 2 ideas for product.

1.  Authorized Credit/Debit Card -- cannot be used while stolen.  Why?  Because it is authenticated by phone every time it is used.  2 options.  a) allow a pre-emptive text message from a defined number to specify the $ value of the next purchase.  b) send text messages to given # upon purchase, require confirmation.

2.  Replace many/all welfare programs with said authorized credit card, or thumbprint-card.   $1k/month.  If there's money in the card at the end of the month, pay full month.  If none, pay 1 week at a time.   Virtues: makes marginally more difficult off-the-books (drug) transactions.  Allows analysis of spending patterns for real, so as to improve the program.  Could permit targetted prohibition (can't use in liquor stores).  With above, avoids (most) theft problems. 

Moldbug, Rand, Jacobs and me

Devin and Andrew have been explaining to me (in the comments) a Moldbugian view of the world: 

If I understand properly, Leftism is mostly a coherent single entity, pursuing relentlessly the distribution of power.  Rightism, on the other hand, is a haphazard collection of folks, all of whom are opposed to leftism, and so have to unite against it, even though some groups (David Duke Racists, Mike Huckabee Compassionate Social Conservatives, Karl Rove neo-cons, and Ron Paul libertarians, to pick 4) would all of them prefer to have nothing to do with the other groups.  Problem is that the progressive machine is so big and so horrible that you take the allies you can get.

I hear it.  I don't like it much.  Ct seems to describe an awful lot of Western history post-1791.  It doesn't seem to describe much of anything before 1648. My two big problems: 

1.  I don't understand why we're accepting (apparently arbitrary, and tailored to fit his hypotheses) Moldbugian lines that start with the age of absolutism.   There is a good explanation for why one would: This is the dawn of the age of literacy, and someone historically minded like Moldbug will have a heckuva time finding reasonable quantities of work from before then.  Gutenburg wasn't adopted immediately...and took a while to spread...and so really the 1600s were the dawn (early morning anyhow) of literacy.  That this coincided with the age of absolutism is very likely coincidence.

2. This doesn't seem to be taking BBdM's serious study of politics into account.  Politics -- the distribution of the goodies available in society -- goes on in absolutist societies as much as non-absolutist ones, and the best growth rates/standards of living thus far are the constrained democracies (Early US, Singapore now, etc.)


I like better the combination of Moldbug, Rand and Jacobs:

Mencius Moldbug is right: Harvard is, and has always been a seminary.  The religion has dropped God, but continues uninterrupted.

Jane Jacobs is right: There are fundamentally 2 standard ethical systems -- the trader and the protector.

Ayn Rand is right: There is a universal conflict between Atilla and the Witch Doctor, where both of them want you to subordinate yourself to their cause.

As of right now, the Witch Doctor, in the guise of the Academy, is ascendant in the conflict of who gets to make you serve.  In the middle ages, the relative strengths were reversed.  In neither case is life good for the individual. 

The only thing that makes life better for individual people is the continuing creation of wealth/value through trade.  And Rand spoke truth to power by exalting the Jacobsian trader, and disparaging both varieties of slave-holder who would restrain the trader. 

If I remember correctly, though, Marx has a better handle on the problem:
Throughout history, you have the upper classes, the middle classes and the lower classes.  Revolutions consist of parts of the middle classes trading places with upper classes.

Neither the Church of Harvard nor the Military-Industrial-Complex (as per Chomsky) are separate, much like the Church and State in Midieval Europe.  They intermarry, interbreed, and together become a single mass of entrenched privilege with no need for revolution.  Now, the bourgeoisie controls not only the means of production, but the means of education as well. 

The only path out is to invent economic structure, and undermine the state church faster than it can keep up.  This is happening.  The progressive edifice is massively cracked, and no one is paying attention.  Economic forces are stronger even than that Cthuloid beast...and where newspapers go now, so too goes Collegiate education within 15 years...and much of K-12 as well.  Since the center of the Progressive edifice has been the ownership of the Means of Education, those of us in our 20s or 30s will live to see the day when again the Atillas are a bigger worry than the Witch Doctors.


Back...suddenly to the original point:  there really are 3 positions.  Pro-church (of Harvard), Pro-MIC, and anti-both.  I'll grant that right now the Church of Harvard seems so large a threat that it's difficult to see it as transient.  But the economic chickens are flying home, and it's not going to be pretty, especially with no one paying attention well.

Links

Tyler Cowen links to a whole bunch of good stuff.  Robin Hanson, Paul Krugman on Republicans, and writing tips are all quite nice.

Philosphy on one foot

Rand (after Hillel) made me do it.

Epistemology -- Measure predictiveness, apply Bayes.
Metaphysics -- "Reality is" predicts superbly.
Ethics, real -- Internalized fear of social disapproval.
Ethics, ideal -- Eudaimonistic prudence + Golden Rule variant.
Politics, real -- BBdM / Public Choice
Politics, ideal -- distributed responsibility
Aesthetics --  aretae + Evolutionary builtins

Talky weekend links

1. Private email from a friend points to a story documenting step 2 in my predicted fall of the ivory tower.  Summary:  not only was I right, but it's happening sooner.  The wager is now 50% of all college-level education done online by 2025 (Not sure to measure by student or credit hour).  
2. Robin Hanson castigates folks for racism in dating, a charge from which I'm happily immune.  However, I was trying to come up with a measurement for a person's racism-quotient yesterday morning.  Economists revealed preference-like.  On my list were categories for
   
   
   • %age of people dated of other races
   • %age of non-related non-work dinner companions of other races
   • %age of kids play-date companions of other races.
   Separate category for NAMs.  I'll grant that this measure massively disadvantages people who live in all-white, rich communities (like the one I grew up in, the one I live in now, or ).  However, intentionally so.   The original question I had was how to call out the fact that Portland's policies are tailor-made to make sure that poor people (like most NAMs) can't afford to live in town, and that this at least as racist as most other claims of racism.  I still think that biggest racism occurs primarily in places where
   
   • there's massive social-class differences -- west suburbs of chicago have rich white people, south suburbs have poor black people.  BIG problem.  
   • there's a scarcity of jobs that multiple racial groups want, and which may be subject to some sort of hiring bias -- chicago firefighters, michigan autoworkers. 
   Also, Robin closes with a question of why it's ok to discriminate in dating as per John Mayer, but not in hiring.
3. Robin again on night-owls vs. early birds.  10 years ago a friend brought to my attention some work on melatonin (??cant' remember which blood element) that can be measured to determine whether you're a morning or night person.  Just the measure-the-blood to determine was impressive.  Also, I've been a night owl for my entire adult life.  My preferred schedule is wake at noon, bed at dawn.   Oddly, no one else I know wants me to live on those hours.  Part of this, I'm sure, is my vampire nature, where I aggressively dislike bright light and warmth.  Our line back then was "damn farmers, repressing the rest of us".  Robin reaches similar conclusions, but the evidence is much more expansive and stronger.  Morning people are more conscientious, and follow rules a lot better.  
4. Seth Roberts throws a(n) hypothesis at why ~50% of all medical spending occurs in last 6 months of life.  Roughly, many old people are lonely (spouse dead?  No job), and when medical care is cheap or free, using doctors to alleviate loneliness is a good move.  Can we save massively on medical care by EITHER having more subsidized senior-hostel type activity, or moving back towards the extended family model?

History, Ancient, and not

Four posts on history:

Will Wilkinson on Citizen's United and the progressive vision.
Eric Raymond on the importance of  careful definitions (example on torture)
Alex Tabarrok on Julian Simon vs. Paul Ehrlich.
Megan McArdle on the US Government "accidentally" killing thousands of its own citizens.

Epistemology and libertarianism

Suppose we have the question:
Who can make a correct decision.  There are several possible answers to the question, and it's interesting, in my mind, to list them, because they have consequences:

1. Anyone/almost anyone -- 2+2, Volcano: fight or flight
2. Some easily identifiable experts -- What is the spin of a top-quark? What are the most effective advertising campaigns in world history?
3. Some hard to identify experts -- Bob in Houston and Sanjay in Hyderabad are the two people most able to answer questions about the relative decay rates of various cloth coverings in conditions of high humidity, because each of them undertook to do some experiments for their respective trucking companies.  However, nobody else knows they did the experiments.
4. Some group of people -- See Surowiecki. 
5. Nobody at all -- What sector will contribute the most to GDP growth in the 2030s?  There is a correct answer, but (probably) no one knows it right now.
6. Varies by preference -- Is chocolate better than vanilla?
7. The question does not have correct answers -- How many angels can dance on the head of a pin.

Ok...so why does Aretae think this is interesting?  Well...what are the consequences of various types of decisions on who should make them?

Only in the case of #2 or some varieties of #4 does it make sense to have experts make decisions.  The rest of the time, distributed decisioning either with statistical aggregation or markets beats experts...or else letting each person make their own decision. 

If that is the case, then for any given decision, we need to make the case that this is a situation where #2 is true.  And in general...my experience says that this tends strongly to be unlikely.  If #2 is rare, then we have no case for individual expert solutions to problems...and no case for progressive government intervention. 

Conservativism as unitary

There is some discussion in the comments of Conservativism as a set of movements, all of which are in opposition to progressivism, rather than a core position.  Furthermore, it is argued that the groups only barely tolerate one another, and wouldn't except for the progressive threat.

FWIW, I think Moldbug may agree with the above: There are 2 positions: pro-progressive, and anti-.
  Two arguments against the commentariat. 

1. Congress is well-modeled as a 1-dimensional system.  If you assume that there are only 2 dimensions, left and right, and you place each senator along the left-right axis, and then, at random, you tell me about a vote ONLY what the split was, and whether it was left-leaning or right leaning, then it is very likely that I can list every single person who voted for and against it.  To the extent that this is true, then at least the senate does not have fiscal, religious, and neo-conservatives.  It has Republicans.
2. Your mama was right.  Who you hang with matters.  People are social animals, not rational animals.  If you spend your time with cannibals, your attitude towards cannibalism will become less anti-.  If you spend time in California, you become more liberal, and not just due to brain damage from the smog.  Ditto any other position.  Since fiscal, social, and neo-conservatives all sit in the same big tent, their attitudes come to resemble those of one another.  Hence, one should expect that to the extent that conservatives unite under the Republican banner, they should come to resemble one another.  The fiscal conservatives should grow more socially conservative, the social conservatives should grow more fiscally conservative, and both groups should become more fond of American power projection due to the neocon influence.  . 

Self-experimentation

Two articles.  Both interesting.

Active patients (HT: Patri).
Self-modding (HT: Tyler Cowen)

Libertarians and tea parties

Rod Long points back at an older article of his on the topic.  Summary:

Whichever party is out of power always begins to emphasise its libertarian-sounding side in order to divert anti-government sentiment toward support of that party rather than toward genuine radical opposition to the entire establishment.

[...]I saw this game under Clinton, I saw (almost) everyone switch teams under Bush, and now they’re all switching back again.

 Excellent but depressing.

QoTD

I'm torn between Kling, opining on Health Care:

By and large, Americans reject today's health insurance when they have to pay for it themselves. Of the people who are not on government or employer-provided health plans, the majority choose to be uninsured.

and Cowen, defending his VAT position against innumerable antis:

In economics, be suspicious when you read discussions of "whether" rather than "how much" or "with what probability." 

or Hanson, on Mysticism:

We similarly self-deceive today to give ourselves higher and stronger excuses to do what baser motives require.  Beware: if you won’t accept and act on your baser motives, your subconscious may well get you to achieve similar ends via self-deceptive delusions.  For a better chance at believing the truth, accept your ignoble desires.

Libertarians are NOT conservatives

Glenn Beck getting nutty. (HT: Rod Long)

Reason blaming Bush (correctly) for government growth and rights violations in the W era.

Conservatives are for stability
Progressives are for equality
Libertarians are for freedom

3 different axes.  And very importantly, everyone (everyone not suffering from a cranio-rectal difficulty, anyhow), finds all 3 of these values important. 

In ex-communist countries, the conservatives and the progressives are the same people.When Barack Obama is president, the Conservatives and Libertarians are (largely) the party of NO.
When Bush was president, the Libertarians allied with progressives in building the anti-war movement.

Multiplier

Can someone explain to me how the concept of a multiplier (>1) makes any sense at all?  Not whether there is one...I'm not that interested in that right now...but whether the concept makes sense under basic econ theory?

My understanding:
If the government taxes, then money that a private individual had is now had by the government. 

The private individual would have given X% to someone else (spent it), who would in turn have spent Y% of it, and so on. The rest would be saved, and thus invested by the saving institution (assume a lending bank). 

Instead, the government gives it to someone else, who still spends Y%.  Are we suggesting that the value (1-X%) towards spending instead of saving (for loans) results in a massive difference?  Are we suggesting that the government with it's Fatal Conceit knows where to spend (and even less likely, will follow the knowledge, rather than lobbying) that money better than the private individual? 

My understanding was that in general, we have nearly 100% empirical evidence that for almost all problems, centralized governments do not know where to put $ as well as individuals.  It seems insane that someone could claim a 3x multiplier by doing anything other than ignoring Bastiat.

So...if taxing doesn't work...then let's borrow.

Now that we have a robust futures market...and good future-looking predictions...doesn't borrowing money now, to spend later have the same result?  It simply creates a future obligation...which results in a net future prediction of having to save more to pay taxes...which is taking money out of the private economy?

Someone educate me.  I'm not real clear here.

Quote-source of the Day

Eric Falkenstein.

In the last couple weeks:
On health care:

The real magic of the invisible hand is based on two pillars: self interested action to motivate people, and competition. Without competition, self interest leads to monopolies and sloth, but workers compete with other workers, and companies compete with other companies, we get better workers and widgets.

So one would think that opening up states for real competition would be an obviously good idea. Yet it is highly instructive what progressives think about competition and markets, that they approve of only highly constrained competition that basically neuters it.

On learning economics via sex:

Obviously, one could come up with enough examples and applications to replace Mankiw with something much more salacious and of interest to the mass of 18-21 year olds learning economics. It's not as if the application of economics to the study of GDP and employment has elevated the nature of political debates over the past 100 years.

 On Elizabeth Warren and corporate greed:

That someone with such a understanding of complex financial institutions highlights her naiveté, as if things are what they are, not because they are an equilibrium of borrower and saver preferences, but rather, the whims of The Captains of Industry in their top hats.

 In passing, otherwise on emotions:

[Eliezer Yudkowsky and Razib Kahn] ponder whether people are more problematically stupid or crazy. I'd go with crazy. Stupidity is a problem, but the really harmful ideas come from the smart people who believe in bad ideas, and the most imaginative people are the most credulous, because for them everything is possible if we just implement their master plan.

Explainin economics much more eloquently than I can.  Fabulous post:

A lot of people seem to find Goldman's profits rather disturbing--these guys are in it for themselves! That can't be good! Ah, but Economics was created as a separate discipline based on the insight that the unintended consequences of self interest are, often, quite good. As even today most people find this incredibly difficult to believe, I figure I would point to some seminal references on this. After all, profits are not bad, losses are, and it's good to remember that.

The magic of the free market is based fundamentally on the assumption that people are self interested, and so profits are sought after, and losses shunned. Given sufficient freedom of entry and property rights, firms will compete for those profits and in the process generate greater consumer surplus for your average schlub. Today's doofus lives a pretty good life relative to his counterpart in the middle ages, through neither his doofus antecedents or the conscious intentions of his actual benefactors

This is the invisible hand that magically transforms the greed of individuals into a social good totally orthogonal to their explicit intention. That it is a truly remarkable insight is reflected by how counterintuitive it is to this day. I think the underlying reason most intellectuals do not trust the free market is because they feel that left to itself, the market tends to monopoly, inefficient outcomes as highlighted in RollerBall, or It's a Wonderful Life. Global Warming and health care policy concerns are both, in a sense, driven by the intuition that without top-down guidance, we are like airplane passengers without a pilot, doomed to catastrophe.

But, markets do force profits to zero, as anyone in business can attest. Not immediately, but over only a few years. The best descriptions of the competitive process and how it is consistent with efficiency, for me starts with Risk, Uncertainty, and Profit, in which Frank Knight describes how people respond to profit opportunities, and how this both lowers profits and provides lower costs to consumers. Friederich Hayek's most important essay, The Use of Knowledge in Society, noted the way the price system aggregates information in a way a Politburo could not[...]

Read that whole thing.  Fabulous on the basics of economics.  If you haven't studied the topic at a graduate level, Falkenstein is laying out economics in 1 not-long post.  He closes with rudimentary public choice insights.

Brilliant snark about top-down planning:

At the end of his review on this week's latest book on the recent economic crisis, liberal economist Bob Solow brings in this observation:

I have read that a firm such as Goldman Sachs has made very large profits from having devised ways to spot and carry out favorable transactions minutes or even seconds before the next most clever competitor can make a move...

Now ask yourself: can it make any serious difference to the real economy whether one of those profitable anomalies is discovered now or a half-minute from now? It can be enormously profitable to the financial services industry, but that may represent just a transfer of wealth from one person or group to another. It remains hard to believe that it all adds anything much to the efficiency with which the real economy generates and improves our standard of living.

This kind of reasoning has been going on for a long time, and while introspection is useful, it's really not good for figuring out what other people should do. Some guy thinks to himself, 'what's the use of that?', and decides the world would be a better place not only without that activity, but the people who actually got rewarded encouraging such frivolous activities. Tthe fact that one guy in Boston can't fathom how something helps the world seems rather unsurprising.

I'll say for the record that I think Puff Daddy is a waste of resources--I have no need for him, and can't understand his celebrity. There are many activities I not only don't do, I judgmentally think people waste time when they do them, but I'm not so arrogant to think that really means they must do something else. It took us decades to figure out that altruism could be based on enlightened self-interest (iterated prisoner's dilemma, reciprocal altruism), so it's a good idea not to throw something out merely because we haven't figured out its benefit in 'the big picture'.

 And let's close with offensiveness, masking an (or maybe even THE) important question:

Republican Lt. Gov. Andre Bauer of South Carolina on charity:

My grandmother was not a highly educated woman, but she told me as a small child to quit feeding stray animals. You know why? Because they breed. You’re facilitating the problem if you give an animal or a person ample food supply. They will reproduce, especially ones that don’t think too much further than that. And so what you’ve got to do is you’ve got to curtail that type of behavior. They don’t know any better,

Of course, the press responded by noting how ridiculously stupid and offensive that remark is. I'm not running for office, so I'll say I think that's about right. One could nuance that, by saying 'The most melancholy of human reflections, perhaps, is that on the whole, it is a question whether the benevolence of mankind does more good or harm (Walter Bagehot). Or that 'The poor don't need money or pity, they need temperance, diligence, thrift and other bourgeois virtues'. Or that 'The ultimate result of shielding men from the effects of folly is to fill the world with fools' (Herbert Spenser). Same idea.

I think what's considered so offensive about the remarks is it implies these people are poor, in large part, because they aren't very bright. That means it's not someone else's fault, and thus responsibility, and thus the rich might just eat them like Soylent green! For a post-Christian society, we sure hate to judge, just like our bible-thumping predecessors. Better to point out the exceptions to 'disprove' the generalization, and say 'there but for the grace of God go I'.

Envy, rather than greed, explains LUE, and progressivism:

I argue that people are primarily driven by envy as opposed to greed (see here), so they are mindful of their relative, as opposed to absolute, position, [...]

[...]Given the conspicuous failure of socialism in 1989, wealth maximization is intellectually defensible on moral, societal, and libertarian grounds. There is no such bright side to envy, which does not generate any salubrious unintended consequences.

In sum, envy is a better description of what motivates people in general, and underlies currently popular politics and progressive intellectuals. We can rationalize the desire to take from those with more under various pretexts--reducing health care costs, rectifying racism, improving the financial system--but only because the mind is very good at confabulating (eg, taking money from the top 5% is often presented as an altruistic disposition). People aren't utilitarians, and academics are usually only utilitarian when they presume it is consistent with egalitarianism (eg, Peter Singer arguing that giving everyone positive rights is utilitarian). I don't believe 'ought implies is' anymore than 'is implies ought', so I'm comfortable knowing my pragmatic utilitarianism that emphasizes the the virtue of liberty is not what most other people think is good policy. My only comfort is that I believe most educated egalitarians would admit their beliefs are untenable if they weren't also consistent with utilitarianism, that there is a trade-off between equality and efficiency, and that their instincts are more base than the dismal scientists every imagined.

Falkenstein rocks.

Book Report: van Creveld

As per an assignment from Isegoria, I read van Creveld's book, The Transformation of War.  The book is fabulous.  Worth reading for darn near everyone.  However, as a very odd happenstance, I don't think I would have understood the book had I not read War and Peace.  Let me explain:

When I was a young whippersnapper, I read a lot of mythology (Greek, Arthurian, Norse, whatever).  One of the things that perpetually confused me was this whole "divine right of kings" "love the monarch" bit.  It was so foreign to what I knew and understood that I couldn't even figure out if folks were being serious when they wrote about it, or whether they were just confused.  Then I read War and Peace.  Tolstoy painted a book that still strikes me as impossibly clear in showing a frame of mind that I do not now have, nor am I capable of having.  But nonetheless he showed it to me.  How did an aristocrat in the age of absolutism view his monarch, and his duty to the country.  Wow. 

So...back to van Creveld.  Roughly, the book is simple.  His claim: von Clausewitz was brilliant, and did a good job of defining War, as war was understood from Westphalia through the second 30-years war (1914-1945).  Outside that narrow window, von Clausewitz's theory of war is not wrong so much as irrelevant.  To really understand this, you have to get outside your narrow prejudices as someone who has grown up in the peaceful age of the state.

Clausewitz says war is near-unlimited application of force between two states in order to achieve objectives. 

1. War is not (in most of history) a perogative of states...that was usurped in 1648, and began to fall apart seriously by WWII.  No war since WWII has been even primarily a conflict between 2 states.  Rather it has been state against amorphous in-population tribe or tribe against tribe.  Not only that, but the distinction of state/military/population is not only historically recent, but rapidly dying.  Africa is only the start.  Expect it everywhere in 50 years. This followed-through says that US vs. Iraq (II -the invasion, not III the occupation) may well have been the last state-vs.-state war.  Nukes have changed everything.  Normal military hardware is IRRELEVANT.  Counter-insurgency (COIN)-war is all there is left. 
2. War is not unlimited application of force historically.  It is normally a deadly status game between high-status men of different tribes.  Low status men and women have mostly been strictly prohibited.  He never uses the words, but let's call it a mating ritual of the human species. And the unlimitedness is tremendously modern in application.  Really, it's a WWI, WWII invention...where normally unlimitedness is highly frowned upon.  Rather, various (strongly, but imperfectly observed) rules of war have always applied in greater geographical areas (europe, china, etc.).
3. War is NOT about objectives primarily.  War is about war.  To fight for objectives (as all post WWII fights have been) is to lose.  Fighting must be done for a nearly sacred purpose (God, Tribe, Country, Apple Pie), or the fighters lose will-to-fight and thus the fight.  Sure, there were some eras (1648 to 1945) that were kinda like that (purposeful), but not really. 

Expect future war to be non-state driven, not strictly limited to combatants, not strictly for "worldly" objectives, and not limited in its "kind" treatments of noncombatants.   War is the ultimate in "flow" experiences, where one must put all of one's being into the experience...or else you are liable to die.  It is at the same time immensely focused, high status, good male-bonding and good at making offspring for the victors.

The line from van Creveld is that the only way to stop the kind of low-grade war that now owns much of Africa is to use mind-altering drugs, orwellian surveillance, or to remove the status-dimension of war. This status-dimension removal is historically best done by fully integrating women into combat units (fascinating history in Israelli Defense Forces here).  At that point, it's no longer a man's game, with all its benefits, and organized war withers.  

I walk away from the book boggled by a few items.

1. Violence/War is ubiquitous.  Almost no generation in human history EVER has avoided wars which impacted every town everywhere.  War between states is an anomaly, and should be thought to be done.  Now it's war between smaller units.
2. So much of most people's theory of the world rests on a very historically transient idea of the state.  Strongmen ruled the globe from the dawn of agriculture to 1648 (in Europe), with occasional virulent outbreaks of the state (Rome, China), which universally descended back to strongman rule, and occasional bouts of anarchy, both peaceful (Iceland, Ireland) and not (Somalia, Bosnia).  Any real approach to politics has to take "the state" as a temporary (semi-fictional) constraint.

Finally, a thought.  Given where the author sits, the society that hopes to survive for a while must pursue two items.  First, they must have a means by which they can defend against the violent.  This is most likely best done by means of defensive arms training ... we call it militias.  Second, they must suborn most of their young men's violent energies into other paths.  Violent, competitive games (football, hockey, boxing, MMA) should be exalted and encouraged in all young men.  After writing this down, it seems that redneck culture is in an awfully good place at this point, for future survivability. 

Easily the best book I've read so far this year.  If you even take it seriously enough to try to refute it, it will mess with your head, and ask you to think differently about an awful lot of stuff. 

Kling on Climate Science Voodoo

Actually, he's talking about Macro, but the point remains.  Very important thing to note. Arnold did this for a living at one point, and he's FAR more qualified than you or I to talk about what really happens.  Money quote:

In nontechnical terms, this issue can be stated as follows. Consider two ways of getting a computer to print out that the stimulus created 1.6 million jobs. Method one is to set up an elaborate computer simluation that produces such a result. Method two is to type "the stimulus created 1.6 million jobs" into a word processer and hit the print key. The only difference between those two ways is the amount of computer processing time involved.

On the real test of the science:

What if the models performed well in out-of-sample forecasts? If that were the case, then I would have to concede that there might be some scientific validity to the models. However, that has never been the case.

There are more details, which are worth reading.  Unfortunately, as a criticism, it attacks an entire field or 6, with lots and lots and lots and lots of people employed, and so will necessarily be ignored, regardless the merit of the argument.  Arnold closes with roughly the same argument:

Macroeconometric models satisfy a deep need to create the illusion that government can exercise precise control over output and employment. As long as people are determined to believe that such control is possible, the models will have a constituency. For better or worse.

Evolution Applied

One of my 7 foundational E's is evolution.  There are two aspects to evolution that I particularly care about.  First is the mechanism of natural selection.  The things that reproduce better take over the world.  I'm not interested in that at the moment. 

The second is that accepting evolution also requires that you accept that we are effectively the kinds of creatures that the Bible talks about...saddled with the "original sin" of having monkey-brains, monkey-glands, and hairless (well, unless you're descended from the native american ... buffalo like my mom claims we are) monkey-bodies.  Note, that this is not the same as naive hobbsian all against all-ism, but game-theory informed in-group cooperation. 

I read 3 things this morning that expand on that idea.

1. Robin Hanson and Seth Roberts are arguing against Andrew Gelman on the topic of academic status.  Robin & Seth argue that it's all status all the time, and usefulness is not just irrelevant, but actively low status in academia.  Andrew Disagrees.  The linked argument by Robin seems to me devastatingly powerful.  Of course, anyone who takes evolution seriously would find ludicrous the idea that status isn't the primary driver of academic activity.  We're monkeys with chimp/wolf instincts
2. Seth Roberts discusses the strong positives of North Korean life in parallel with Penn State.  Essentially, North Korea does good group-bonding.  Penn State has good group-bonding.  Everyone else's group-bonding sucks.  And group bonding is a deeper need for human beings than material well-being, as would be expected from the "individuals die if they're alone." ESS.    FWIW, this means that libertarianism is well and truly f'd.  Libertarianism is essentially an individualist movement, which violates a deep core of the human groupist instinct.  The only shot in hell that Libertarianism has is to infiltrate some other movement (Tea Party, anyone?) that is highly groupist, and attempt to create an identity that includes leave-US-alone-ism.
3. van Creveld's book discusses war.  War isn't going away anytime soon.  Basically, war occurs for evolutionary reasons.  Men like to fight, and women like men who fight successfully (for them).  Expected from evolution.  Does not make for a good prognosis for the future. 

VAT

Tyler Cowen posts on the VAT.  Greg Mankiw posts on the VAT.  Arnold Kling disagrees.

Kling is basically right, Cowen and Mankiw are wrong.

There are several issues in play. 

1.  Expansion of government powers is BAD.  To create a VAT adds an entirely new level of marginal increases that the government can use to take money.  This increases their power.  Furthermore, the collection of the VAT requires a whole new layer of bureaucracy.  From this standpoint, the only trade for the VAT is the income tax.  Trade one for the other...not both.

2.  The VAT increases centralization, and preferences subsidiaries over independent entrepreneurs.  The primary game at play for libertarian-leaners and pro-growth-ers is how to incent non-governmental organizations and especially entrepreneurs.  VAT is horrible for that, as it increases transaction costs outside organizations but not within organizations.  Also, as per previous work, I think entrepreneurialism is good for the soul, and that corporate work is ethically corrupting.  From this standpoint, it could only apply to consumer-direct transactions. 

3.  The VAT massively increases dissatisfaction with government.  When it's a sales tax, you can tell if the government is stealing your $.  When it's an income tax, it only comes up when you get a new job, and send your IRS forms.  Also, VAT taxes in Europe are avoided on a massive scale.  Increases civil disobedience substantially, and trust / value in government.  This is a good thing. 

Audacious prediction the 47th

The modern left as a political force in America dies inside 30 years.  Something else will have to grow.

Why?  Because in 20 years, the Academy falls as the arbiter of truth.  The internet disintermediates.  The academy is the church, which restrains the worst corporate excesses of the corporate Baronlets, but a person living in the real world cannot afford it's unrealistic prejudices. 

3 part politics part 550

Among the unusual themes of this blog is that ALL of the major points of view about most topics (and politics particularly) have important, useful, true things to say. 

I am recently quoted as pushing the 3-part politics meme (that I read from Kling before I read it in Friedman the eldest or Hayek), where Conservatives, Libertarians, and Progressives may be aligned with the three values, Tradition, Freedom, and Equality.

I've been listening recently to the Moldbugian view of the world, wherein the Left and Right are defined significantly in terms of centralization vs. distribution of authority, and into which libertarians don't fit well at all.

I started this blog back when I was reading Sowell, and his apparently standard riff on left vs. right is that the left holds a largely unconstrained vision of the world (we can make it better) while the right holds a largely constrained vision (there's only tradeoffs).  For what it's worth, he wants to group libertarians with the right, as he is personally half-conservative, half-libertarian...and certainly the Hayek/Friedman/Chicago tradition from which he hails breeds that kind of conservative constrained-view libertarian.  But neither Rand nor Rothbard fall into that tradition. 

Also, darn near every libertarian/conservative I run into counts the progressive view as necessarily including the idea that problems can be solved by centralized intelligence and design (technocracy).  I have yet to be convinced of that, but the anti-progressive forces all seem to think that is an axiom of the political left.  I think it's an accident of political choice, and part of the violence inherent in the system.  If a system is to have power to solve problems, it must chase power, which promotes the technocratic elite. 

My current 3-part has shifted mildly, and now sits as such:

As I have said before, people are primarily social creatures, NOT intellectual creatures.  Hence the decisions made by people will be primarily about who they think should have higher and lower status.

As per Moldbug, the progressives/Democrats/left are the party of the church of Harvard, which disseminates the truth.  It was then, is now, and always shall be.  It promotes God's truth, attempts to care for the poor and weak, and damns unbelievers to hell.  Alliances with the guilds are unsurprising here.  Women, as always, are more religious than men.  Their status preferences are to leave their intellectual status in place (it's god-given), but strip the economic status of the businessmen and military. 

The Conservatives, similarly, are the party of the protectors.  Tradition, contra my original thinking, is not the right word: Stability instead.  The primary commandment is to protect what exists from despoilment.  They promote family, orderliness, country and God, in roughly that order.  Anything, be it beggars, gays, or immugrunts, that threatens family or orderliness is to be attacked.  Men, and particularly male heads-of-household with wife and kids that they are responsible to protect and feed, are the primary group here.  They live in the military and the world of business, and prefer to leave their economic status unchanged (it's hard work), but to diminish the status of the Academy. 

The libertarians dislike both groups.  We are status-free as a group, and object strongly to both camps.  Both holy writ from the Academy, and the formal order of the Conservatives are stifling to the individual, and thus hateful.  We think that all status heirarchies should be A LOT flatter.  Neither the Church's intellectual hierarchy, the Military's rank-structure, the government's layers, nor the corporate tree are very appropriate to human beings.  Various libertarians land more or less in opposition to the left or right at various times, but almost universally, all libertarians are opposed to massive swaths of both the left and the right.  Freedom, individuals, and economic growth.  We love innovation (Apple and Google) and think they should keep 100% of his wealth, for creating massive multipliers of that amount of value to society.  We hate much corporate rent-seeking in Washington (Health Insurance companies, RIAA), and think they should be dismantled.