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16 March 04. How to argue with a conservative, pt I

[I've aggregated this series into a single essay, so you may want to pass on reading this and go straight to this paper.]

Cost minimization Let me start off with an interesting fallacy often assumed by many conservatives: that if an organization has no profit motive, then it will be inefficient. A business has a simple directive---maximize sales minus costs---and a business which fails in that directive will lose out to other businesses which do a better job of it.

The first part of the argument, that an organization which isn't maximizing profits has no motivation to be efficient, is simply false. The reason is that profit maximization is equivalent to cost minimization. We could cast the problem of the business as finding the cheapest way of producing its product; similarly, we could characterize the goal of the bureaucracy's manager as finding the cheapest way to achieve whatever its goals may be. If the manager isn't minimizing costs, then there's something s/he could do to save a few bucks and then apply that toward achieving the bureau's goals. Why would the manager of a government department eschew such a savings, while a business manager wouldn't?

Of course, there's still the problem of defining the goals of the organization, and here government excels in the provision of things where the goal is ambiguous. The goal of a public energy utility is to provide citizens with reliable and cheap power, while the goal of a private company is to maximize profit for the owners of the company by providing citizens with power. It'd be nice if these incentives aligned perfectly, but they clearly don't, which means that privatization often leads to disasters in the provision of public goods (e.g., everything associated with Enron).

Bear this point in mind when the privatization harpies come after you: profit maximization and cost minimization both encourage efficiency, and neither magically produces efficiency.

zero profits The second part of the fallacy, the Darwinian part, assumes that if you're not perfectly optimal, you'll lose money and will go out of business. But anyone who has ever worked in a company's office will attest that abject, persistent inifficiencies happen every day througout the business world, and yet these companies continue to keep their heads above water. Liberals and conservatives alike agree that `big government' in the sense of `over-bureaucratic' government is a bad thing, and if there's a more efficient way to achieve existing goals, then that's a good thing. But the same could be said of IBM.

Some folks used to tell me that zero-profits-plus-efficient-market means that racist hiring would eventually disappear, since a racist manager is imposing a restriction on his choices, which will therefore lead to suboptimal hiring on a regular basis, which will lead the company to go out of business. Maybe racist businesses go under more frequently than non-racist businesses, but a few centuries have shown us that no, having racist policies does not immediately condemn a company to bankruptcy. Similarly with any of a number of other mean, irrational, and destructive policies that the businesses of today engage in all the time. Also, we've seen that laws that force people to not be racist also don't lead to businesses closing down all over.

Theoretical economists assume that all businesses are on the verge of bankruptcy at all times because they always assume that firms are all competing to produce widgets that are exactly alike in every way---and there are often an infinite number of firms. But the assumption of zero profits really doesn't work in real life, as you can see by the fact that businesses exist, and this means that any healthy businesses can afford to operate in a manner that society deems acceptable without going bankrupt, meaning that they can conform with laws about accounting, treatment of workers, or environmental care.

Yet when a new regulation is put in place, the chorus of capitalists all shout out in unison, `I'm barely making ends meet and will go out of business.' Sometimes the response is a bit more moderate: `I'll have to lay a few people off and reduce production,' or `If you pass regulations that I don't like, I'll just take my ball home and pout.' After all, they're right on the verge of bankruptcy, so any new costs will put them under.

The reality of the situation is much more complicated. For example, New Jersey raised its minimum wage one year, while Pennsylvania didn't. Card, Katz, and Krueger took this to be as good a natural experiment as you'll ever get: the economies are closely linked, the passage of the new law was quick and sort of a surprise, and C, K & K managed to get a good before and after picture of fast food joints on both sides before and after the law took effect. The end result: there were more jobs created in New Jersey after the law was passed than in Pennsylvania. It wasn't much (and I don't recall if it was statistically significant), but it was definitely not a loss of jobs. Why were there more jobs in NJ? Maybe people spent all their new minimum wage earnings on fast food, or maybe more people entered the labor market, or maybe all those truckers carting in goods which used to be produced in NJ factories needed a place to eat. Regardless, the moral is that a new rule can often change all sorts of things in the economy, some good some bad, so reducing it to a simplistic one-liner like `higher wages means less jobs' is stating a falsehood. [For the theorists, here's the moral: never trust a partial equilibrium model.]

Regulations can be burdensome and annoying, just like not being able to pee in the street is often burdensome and annoying, but somehow, we all manage it. However, not all burdensome regulations are destructive regulations, and if a conservative forgets that there's a distinction, be sure to remind him/her/it.


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Footnote: CK & K's arch-nemeses, Neumark & Wascher, wrote a reply in which they got another data set for the NJ/Pennsylvania experiment, from the NRA---the National Restaurant Association. Their data set conclusively found that the passage of the minimum wage law caused New Jersey to fall into the ocean. C K & K asked to see the data so they could verify the results, and N & W refused, citing a non-disclosure agreement with the NRA.


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22 March 04. Debating with Uncle Milt, Part II

It all began in the fifties or so, with a Mr. Milton Friedman, herein `Uncle Milt', which is what U of Chicago professors really called him when I was a student there. Uncle Milt wrote this little book called `Free to Choose', and the name basically describes everything there is to know about the theory. If you have to choose among a few options, an unconstrained choice is always better than a constrained choice. It's almost a tautology. Therefore, government restrictions on the choices available to people, be they consumers or managers of business, are bad.

[This is often called the Neoclassical school, since it's a reinvention of Adam Smith's work. You know Adam Smith: he wrote A theory of moral sentiment, which explained how a market requires good will among its members in order to properly function. He also wrote something about an invisible hand moving the market to an optimal state.]

`Free to Choose' is basically the Republican position on all economic issues. It's appealing because it's so simple: restrictions bad. But economics since the dominance of Uncle Milt and the Chicago School has been all about the exceptional situations where the simple logic of constrained vs unconstrained choice is too oversimplified to do reality justice. Generally, regarding any issue where we in the modern day consider government to be potentially relevant, one of these exceptional cases will come up. Pointing out the appropriate exception is often enough to get a free marketeer to stop smirking.

Monopoly One of the main money-makers for the working economist are anti-trust proceedings, in which one set of well-paid economists proves that a merger allow a company to `unfairly' use its expanded market share, while another set of well-paid economist proves that this won't happen. Many a conservative I have met believes that this is all silly, and that if a monopolist can find a price at which people will buy their goods, then the monopolist is clearly still providing something valuable, so why is the government being all pissy about it? Leave the companies to merge to their hearts' content.

The first is that there aren't any theorems about the optimality and welfare-maximizing properties of monopolists (that I know of). So, Mr. Conservative, you can have a government that doesn't try to prevent monopolies, but then all of your other arguments about the virtues and automatic optimality of the market are thrown out of the debate.

Second, monopolies are often in things that we'd like people to have easy access to, like bread or information. [E.g., a professor of mine did an extensive investigation of a merger between two bakeries in Boston.] If the market is providing these things well, and suddenly one day it doesn't, then this creates problems. Media monopolies, by the way, are not directly a problem for consumer choice---it works indirectly through the providers of content: they have fewer and fewer companies to negotiate with about disseminating their works, which will make it difficult for independent content producers to survive (see price-taking, below). And thus, consumers will have fewer choices.

To digress briefly, the way that we figure out who has undue market power is to look for massive price changes. For example, when a large music distributor cuts its prices 30% and still expects to make a profit, this is a gigantic red flag that there was some sort of collusion in price-setting before the fact. We don't need to know anything about the cost of recording or promoting a CD, just that prices were out of equilibrium.

Lock-in Third, products often interoperate with other products, meaning that a company which is doing wonderful market-pleasing things in one field can exert its power to sell crappy goods in another market where it's not necessarily the best. I am thinking, of course, of Microsoft. The company, at this point, is built entirely on the concept of lock-in, and spends most of its marketing budget trying to convince consumers of two things: you should upgrade your existing MSFT product, and you shouldn't switch to something else. Not much in the way of innovation going on here.

MSFT's argument to the Justice department was that anti-monopoly laws hinder their ability to innovate, by dictating that certain things can not be integrated into MSFT Windows. The other side countered that MSFT uses its monopoly to prevent innovation---most notably, they killed Java. Java is a set-up designed to allow you to run applications from your web browser. You'd go to a web page, and instead of getting an article or pictures of naked people, you'd get a word processor. When you leave the office, you'd be able to go to the same web page and work at home using exactly the same software. When the word processor needs an update or a security fix, the guys who run the web page would take care of it.

A few years ago, many people were very optimistic about this paradigm, and MSFT was very threatened by it, since every computer would work the same, whether it was running Windows, MacOS, or even no operating system at all. I will spare you the technical details, but their solution to the threat was to include a web browser with every version of Windows that had a broken version of Java. People tried the new paradigm, it didn't work, and innovation was soundly prevented. Here in 2004, we use the same computing paradigm that we used in 1998 (windowing operating system running OS-specific applications we bought at the store); who knows what our machines would be like if MSFT hadn't taken explicit steps to kill Java.

So what can you tell your conservative pals? That incremental innovation isn't necessarily a problem when there are monopolists involved, but innovation on a larger scale---paradigm shifts---are blocked when there are monopolists who can use their influence to prevent that innovation. [More technically, monopoly rents are a strong incentive to keep the market underlying the monopoly as large as possible.]

Price-taking More generally, the idea of a monopoly gets to the concept of market power: the ability of a single player in the market to influence the market itself. Most of neoclassical economics assumes that every agent has zero market power, and is thus a price taker---they can't influence prices at all, just take them from the market.

Large companies are clearly not such price takers, and conservatives frequently need to be reminded of this. For example, Wal Mart negotiates the price it pays on most (maybe all) of the items it sells. There is one Wal Mart, and dozens of pretzel vendors, so Wal Mart can use this asymmetry to negotiate down the price it pays for pretzels. The most important price for Wal Mart it the price of labor, and the market is again clearly asymmetric: one Wal Mart, and millions of potential employees.

Setting a price is a negotiation over how surplus should be divided. If an hour of work is worth $6 to Wal-Mart, and a person is willing to work for $4, then any wage between the two would work, in the sense that the person would work the hour and Wal Mart would pay the person and both would walk away better off. Uncle Milt stops here, content in the belief that even if Wal Mart stands firm at $4.01, the employee is still better off.

The main problem with this is that the lowest wage a person will accept depends on the conditions. Notably, because of what I will call the `food constraint', any job is better than no job at all. Our conservative pals forget the food constraint all the time, since it's hard to work in to a simple model of agents [nondifferentiable kink and/or discontinuity in the utility function at zero], and it's easy to forget that `agents' means `people'.

Also, the wage Wal Mart sets is interdependent with any of a number of other things, such as the wage the company next door sets. In the theory, there's a menu of wages available, so if you don't like Wal Mart's wage, you go next door to Sam's Club and take the wage they offer. But if Wal Mart and Sam's Club set their wages in concert, and Sears and K-Mart follow Wal Mart's lead in price-setting, then the model falls apart again, because it is impossible for people to negotiate the price of their labor by threatening to go next door.

The solution to the asymmetry of the market is unionization. One Wal Mart and one worker's union is a symmetric market, which has some hope of working as it should. Conservatives often miss this, and only see that the union is a restriction on the behavior of its workers and the employer. That it is, but it is a restriction that allows negotiation of prices to work.


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10 April 04. Externalities

So the biggest problem with the neoclassical view espoused by so many conservatives is that it forgets about externalities. This is huge.

An externality is the effect you have on others that doesn't directly affect you. When you drive, every pedestrian has a little more trouble breathing. When you eat a hamburger, a cow had to be killed. When you wear a low-cut dress, the boys who pass you on the street feel a little bit better. [I swear, every econ class I've ever had used an example about cute girls.] That sort of thing.

From the economist side of things, there is no real solution to the externality problem, in the sense that it's supremely difficult to work out what the optimal behavior is, and how you should go about getting people to engage in that behavior. Basically, if an agent can do something that benefits it but causes a negative externality on others, then you're guaranteed that the agent will do too much (a suboptimal amount) of that activity.

Which is where government comes in. A good law curtails those activities which have negative externalities and thus makes the world a better place. Y'know: don't litter because it's easy for you but makes other people's lives worse; don't drive drunk because it's easy for you but makes other people's lives worse; don't infect Windows PCs with viruses because....

The problem comes in when working out how much curtailing to do. When people say that their lives are worse off because of somebody's actions, they have absolutely no incentive to tone down the whining. I think you've all been there---especially if you've ever had a roommate. Back when I was a bike messenger, my roommate borrowed my bike for a stroll along the lakeshore, and got a flat tire. He didn't quite patch it right, and it went flat a few more times over the course of the day. I lost work as a result, and by the time I got home, I had prepared an extensive bitchy commentary for him about how his actions had caused me such problems. Yet he started yelling first, about how I'd left a nubbin of pasta at the bottom of a pot, and now it was really stuck, and how I had thus totally ruined his life. He made it very clear that losing buisness, patching an expanding hole, and walking part of the way home was nothing compared to what he'd sufferred at the hands of that blob of pasta. It wasn't the best roommate situation.

But imagine the whining when the problem is bigger than pasta stuck to the pot, like an issue of education and property taxes, or pollution. It basically becomes guesswork as to what damage one person suffers from somebody else's actions. The conservatives of the world often latch on to this, and conclude that everybody is just lying all the time, and there really are no externalities, or if there are, they aren't nearly as bad as everybody makes them out to be, so we should ignore them. `Buck up and stop whining,' the conservative would politely explain.

Anyway, behind a huge number of government activity and restrictions upon behavior, there is an externality involved. It's a fun exercise to ask yourself, for any law that comes to mind, what harmful externalities that law is preventing; you'll find something for almost all of `em. For example, laws curtailing pollution exist because pollution damages property which is either in the public trust or is intimately the property of a non-polluter (like the air in my lungs). When people don't get an education, studies show, they're more likely to wind up poor, annoying, and a criminal, which are all things that affect the other people that interact with the uneducated. On a vaguely positive side: when you take public transportation instead of driving, other people have clearer roads and lungs. When people tell you that government should get out of these fields and the market will provide the optimal levels of pollution, education, and public transport, tell them that they're entirely wrong, because the market can not accommodate the effects of the externalities.

[Also, when the privatization people tell you that the bus system is losing money, and therefore needs to be severely cut and/or privatized, you should tell that that because of the externalities, the system isn't behaving optimally unless it is losing money.]

The choice of externalities Both sides of the political fence complain about externalities, but different ones. For example, social conservatives have lately taken to griping about how their marriages will be less sanctimonious or something if gay marriages are allowed.

Externality arguments are usually made by social conservatives and economic liberals. Conversely, social liberals and economic conservatives tend to ignore or belittle externalities. The asymmetry here is that economic externalities, which the liberals gripe about and the conservatives ignore, are about the things that actually affect people's lives; the social externalities, which the conservatives are up in arms about, are typically aesthetic. In an ideal world, you could call a conservative on the relative triviality of the externalities s/he chooses to care about. E.g., why are you bothered about how your kids are harmed by gays, but aren't bothered by how many kids are killed by guns every year? Why do you think the market should be free to decide on whether to drill for oil in Alaska, but don't think the market can work out the optimal exposure of boobies on TV without government oversight?

Another asymmetry to this is the exaggeration issue: when people suffer externalities such as job loss, crime, disease or death (or even environmental damage), there's something physical that can be measured and compared to any hypothetical benefits, albeit imperfectly. But when somebody says that they suffer because gays are getting married or because they were subjected to the sight of female nipples, there is simply no way to measure the aesthetic damage that the person is internally sufferring. I'm not exactly sure how you can use this for rebutting a fanatic conservative, but it gives some idea of how fanaticism can come about: there's nothing keeping anyone from the extreme position, because there are never facts that get in the way of the claims of endless damage.


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20 April 04. How not to argue with conservatives

The reader should note the arguments that I haven't suggested. These are things which are generally true and often important, but which are simply non-starters in debate with conservatives. They'll never get it, so don't waste your time trying.

In some ways, this is the most important section, albeit the most haphazard. A bad argument is worse than no argument at all, and I've often been vicariously embarrassed by fellow liberals (Ralph Nader) who argue the points below as if they're persuasive.

Equality and fairness arguments Equality is, to many conservatives, just not important. There's nothing much in the Bible about it, and humankind got along just fine without it for centuries and centuries. Similarly, many conservatives define fairness endogenously, so any outcome is always tautologically fair: if you can grab more for yourself, then you deserve more and that's fair.

I don't think there's any way to convince somebody that equality in treatment or outcomes is a good thing. So don't argue that a certain rule or structure is fair; instead, consider the ways that it appeals to the principles that our conservative pals find appealing, like efficiency (everybody likes efficiency) or pro-U.S. nationalism.

For example, redistributive taxation. By keeping the poorer folks fed, the likelihood of crime is lower, and kids are better fed and are more likely to be healthy and smarter and more productive in the future. You could provide certain goods/services via inefficient social services, or via the market by undertaxing the poor who are most likely to use those social services. You can get pretty far without ever using the word `fairness'.

To give another example, the Unified School Districts of various areas insist that all schools in a wide area (like LA) must get the same level of funding. Again, this improves efficiency: another dollar to a school which needs to buy textbooks will go a lot further than a dollar to a school which wants to fund one more field trip. [So why do LA's schools suck so badly? Because property taxes in California are so low that they're effectively nil, so every school in LA is equally underfunded. It's a paragon of where the conservative drive for lower taxes will get you: the fastest drop in school quality you've ever seen.] And why is it so easy to talk about optimality when we want to talk about fairness? Because fairness is optimal. Another dollar given to a wealthier person just isn't as useful as another dollar given to a starving person, so all else equal, the best allocation of a given dollar is to the starving guy. [Technical version: Although not universally true, people are generally risk averse, meaning that we can describe their preferences using a concave utility function. If everybody has equal weight and has the same utility function, then the optimal allocation is the perfectly equitable one.]

Even these arguments require some comprehension of efficiency on a societal level instead of on a personal level. Some folks just don't get this; they're convinced that they're an island and that they need nothing of the people they interact with (directly and indirectly) every day. You can try to get them to see that they do indeed function in the context of a larger society, or you can throw your hands up and leave; at this point, I often go with the latter option.

Limited rationality and informational asymmetry Trademark laws are all about minimizing confusion in the marketplace: if your logo looks too much like the other guy's logo, then dumb people will get confused and buy the wrong thing. There are loads of other truth-in-advertising laws, such as how stock brokers can not guarantee that a plan will make money. And indeed, there are enough dumb people and enough slimy stock brokers that laws like this have to exist.

In LA county (among others), all restaurants are inspected and must post signs giving their inspection grade. Similarly, food manufacturers have to tell you basic nutritional info and what's in their food. Publicly traded companies have immense reporting requirements, which keep many a lawyer and accountant employed full time. If you sell a house, you need to give full disclosure about potential problems with the house, basically testifying against yourself to the buyer.

All this seems fair enough to me: trade on equal grounds requires equal information. And yet, there are loads of conservatives (not all, but a few) who think these are invasive laws that condescend to the buyer. The emptor should caveat for his or her own darn self. Again, all of these rules are based on hope for a `fair market', which differs from the concept of a `free market'. As above, you can't argue fairness to a conservative who doesn't already believe it's worth striving for.

Part of this is the Lake Woebegone effect, that everybody thinks `I'm smarter than average, so this law isn't protecting me; it's protecting the dumb people whom I don't know.' From my own experience, conservatives are especially prone to this, which makes any argument about how information is not perfectly disseminated at all times supremely frustrating. I think your best bet is to either argue the extreme cases [should out-and-out scams be legal? When does hiding information become substantively different from lying?] or use the grandmother argument [Would you want your grandma to have to sift through this?] I don't know why grandparents are always considered to be so dumb, but debating with a conservative is not the time to work on dispelling stereotypes.

To summarize the section, fairness is an idea you learn as a kid, and if somebody doesn't get it by now, they never will. But you can argue for efficiency almost anywhere you'd prefer to discuss fairness.

The more hard-core libertarians take it all a step further, though, and believe that not only is the empathetic desire for fairness a weakness (as Ayn Rand teaches), but the world would be better off if we all went out of our way to eliminate empathy (i.e., the internalization of externalities, which are assumed away in the free market model). By this point, it becomes a religious issue (sometimes literally), so debating is useless; cut your losses and just don't bother associating with the person.

Corporate conspiracies Many liberals argue from the basic premise that small businesses are better than large corporations, and that companies which are big enough to be international are especially bad. The issue needs to be disaggregated into parts which can and can't be argued with a conservative:

Personalization and diversity: Just as conservatives like smaller government which is more representative of the people, we want smaller businesses which don't force corporate HQ's worldview on its patrons. But conservatives will dismiss this by saying `if they don't like the bigger store, they'll shop at the smaller, spunkier store next door' and will dismiss any further debate on this point. In other words, the cultural issue is a total non-starter.

Market imperfections: As noted before, there is a natural asymmetry between labor and capital (many workers, few employers), and this distorts the market in favor of the few, the monopsonists. As corporations grow and consolidate, the problem only gets worse. Some conservatives get this, and will acknowledge that reduced competition is bad. The more libertarian conservatives will abjectly refuse to accept this, and will cling to the idea that a firm that abuses its monopoly power will be deposed by a spunky startup.

The Spunky startup argument is impossible to argue with, kind of like the `tomorrow will be sunnier' argument: there are enough examples where it's been true that people can say it with a straight face and be happy ignoring the fact that there are so many cases where it was entirely not true. On the perfectly level imaginary playing field, the spunky startup can definitely win---but in the real world, the profit-per-unit only goes up as a company gets larger, network effects and lock-in make people more likely to buy the old thing instead of the new, and if all else fails, the big and lumbering corporation can keep serving Spunky the Startup with lawsuits for trespassing on Lumbering Corporation's trademarks and intellectual property until Spunky's supply of optimism is entirely depleted.

To summarize, your best replies to arguments about Spunky the Startup are about the market imperfections discussed in the last sections, most of which help companies which survived at the start keep new competition out of play. But my personal experience is that it's an uphill battle, and an irrational faith in Spunky the Startup's abilities is hard to dispel.

Competition with sovereigns: A company which exists in multiple states will be able to find the state with the least restrictive laws and register there. When `state' means portion of the U.S.A., this is Delaware; when `state' means sovereign nation, this is any of a number of islands in the Caribbean. Whether this is a problem to the conservative you have before you depends on how much contempt the conservative has for the concept of a government. Some enthuse at the idea of a lawless world; others are a bit concerned by the prospect. As with any issue involving sovereigns, there are enough thorny philosophical issues that you have no chance of selling somebody if they disagree with you. But if you find that they do believe some laws are worth having, then take advantage of that and ask how that law is going to be maintained in a world where corporations get to pick the set of laws they are beholden to.


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08 July 04. Debate suggestions

As my contribution to The Cause during these contentious political times, I've aggregated the `How to argue with a conservative' series into one convenient essay. For your linking pleasure, it's here. Please, disseminate it to all your friends, and try its methods on all your enemies (or, if you're a conservative, on yourself).

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20 February 08. Hyperrational is boring

[PDF version]

I don't think there are all that many actual economists out there who really think that people are interested only in maximizing their profits. Academically, it's something of a straw-man that some sociologists like to attack. But it remains a favorite among people who have only read a bit of economics.

Gosh, I can't find the original reference, but I've read a party or two pointing out that hipster “irony” is just an easy way to sound smart without actually being so. I call it “irony” because, as I'd noted in the context of t-shirts, it's certainly not irony in any O. Henry kind of way--it's just sarcasm. Similarly, it's easy to use cynicism to sound smart. Any time somebody comes up to you and says that Joe is being nice, you point out Joe's self-interested inner motives. Half the time, you're right, and the other half, nobody can prove you're wrong. Cynicism is a win all around: you don't have to think very hard, you sound worldly and possibly insightful, and nobody ever abuses your non-existent trust.

The typical definition of a cynic--somebody who presumes that everybody's motives are always purely self-interested--matches the definition of all of human nature adopted by the typical armchair economist.

From there, you could take it two ways. The narrow path says that it's simply material gain that matters. The humanists characterize this as want of money; those with a biologic bent call it a drive for reproduction. Either way, all the other things people do during the day, like helping others, reading fiction, building ships in a bottle, are all surface activities which the cynic recognizes as mere attempts to get paid or get laid.

Although it is actually true in limited contexts, this approach gets preeminently boring. When I meet somebody who is substituting cynicism for intelligence, I start to wonder why I'm having the conversation. If the machine only has a few moving parts, then I can work out what it will do by myself.

And when the hypothesis is true, that means that the subject is boring too. We can comfortably describe the drive to reproduce and get paid as mechanical. That's why IBM is boring: all they do is maximize revenue. Oh, they've found a new way to sue people for the sake of extracting a cash settlement? How enthralling. Although I never would've thought of it myself, it's still predictable. But when I meet somebody who tells me that they like to build and fly kites, well, that's fun and actually unexpected, and gives me the impression that the person is not a robot.

It is the digression from the cynical baseline that makes people interesting.

Back to economics, the wide path takes humans as much more complex in motivations. People can have all sorts of goals, like bolstering their self-image as good ship-builders, or enjoying various types of play just because they're fun.

I'm comfortable saying that within academia, the wide path is winning out. If you pressed the economists who espoused the narrow path view, many of them would say that they never really believed it anyway, but it is a useful model nonetheless.

After all, if it really is just about cash and getting laid, what are these people doing in academia? Your average University of Chicago economist is very smart, good with numbers, and well-connected with Chicago's large financial community. Why is he wasting his time trying to get papers published in journals nobody reads? He could be on the North side of town snorting coke off the ass of an options trader in the peak of her fertility. Simply by their actions, our neoclassical economists show us that human motives can include far more than just cash income.

And if you bother to read their papers, you'll find more wide-path thinking, which is why so many sociologists and political scientists are annoyed: economists keep writing about things like elections and environmental preferences that they're not supposed to care about.

In other words, economics is interesting again, because economists are increasingly willing to accept that people are interesting.

I like the current crop of pop economists--the ones with book titles in the way of Xtremonomics--for not being about cynical self-interest so much as just applying mathematical reasoning to human affairs. Sure, their statistics are famously sloppy, but at least they're fun, and their focus on quirky facets of humanity acknowledge that people really do things beyond eat, sleep, and reproduce. Now we just need the armchair economists (including every year's incoming class of econ majors) to pick up on the hint and stop equating economic theory with unabashed, mechanical cynicism.

Relevant previous entries:
The first time I used the terms wide path and narrow path

The second time I used the terms wide path and narrow path




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on Thursday, February 21st, Kite Hater said

KITES: WHY THEY SUCK

* kites can get lodged in trees
* kites can be hard to fly
* some kites may have knives attached to them. Knife=bad (in all circumstances)
* kites make little children scream with delight. As a cynical Xer, I don't like children.
* kites have tails. Tails=animals. Animals=bad. I'm a typical vegetarian, cynical Gen-Xer. Therefore I hate all animals. Especially cats and squirrels (because they have long tails too).
* I hate Kites.

on Monday, March 17th, rd said

very well put - but avg U Chicago economist might be doing econ in attempt to get laid - ie might think he'll get laid more by being best in his field than socially awkward wannabe finanace guy

on Monday, March 17th, rd said

also, i equate 'hyper-rationalism' to super optimization / information - not the object of optimization. so you can be hyperrational and still want to fly kites.. and sub-hyper and want to max $. am i wrong ?

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