philosophy

Speaking Truth to Power Rarely Works

by Ryan Young on September 6, 2010 · 1 comment

in Economy, Politics as Usual, Stimulus to Nowhere

Telling the truth to one’s superiors is hard. Especially when the stakes are high. Christina Romer comes to mind. Brilliant economist. She’s done excellent work on the role of monetary policy during the Great Depression.

A partisan Democrat, she was summoned to Washington soon after President Obama’s election to advise him. All of a sudden she endorsed the Bush-Obama views on stimulus. This is a 180 degree turn from her previous views. Romer’s own academic research shows that fiscal stimulus’ effects are too small to do measurable good.

Romer the economist believes that most business cycles have monetary causes. Not fiscal. Monetary. Romer the economist had been very consistent in expressing that view. But that view changed as soon as she arrived in Washington and Romer the economist transformed into Romer the political advisor. Suspicious.

This is not a new phenomenon. Politicians from both parties have been using economists for as long as economists have let themselves be so used. Politicians love the air of legitimacy that pointy-headed academics can give to their proposals. And economists love the sudden rush of attention and name recognition — and the professional prestige that will long outlast the current administration. They are happy to sell out. Or is it buying in?

That thought was sparked by reading about F.A. Hayek mourning the death of some of his colleagues’ integrity back during the Reagan years:

“You can either be an economist or a policy advisor.

I have seen in some of my closest friends… how a few years in government corrupted them intellectually and made them unable to think straight.”

-Cato Policy Report, Vol. 5, No. 2, February 1983.

Happy 204th Birthday, John Stuart Mill

by Ryan Young on May 20, 2010

in Culture, Odds & Ends, Personal Liberty, Sanctimony, Zeitgeist

John Stuart Mill was born on this day in 1806. I wrote an appreciation of him last year, and told a bit of his unusual life story. This year, I’ll write a little bit on his philosophy of utilitarianism.

There are two kinds of utilitarianism: act utilitarianism, and rule utilitarianism. Act utilitarianism leads to absurd conclusions; rule utilitarianism, while more lenient, is one of the strongest philosophical underpinnings of liberalism (in the traditional European sense of the word). Many later liberals, including F.A. Hayek, were rule utilitarians.

Act utilitarians think that each individual act should be judged according to how much good it does. This leads to some problems, since most actions involve at least some small harm to others.

If I drive to work, I can save myself a lot of time. But by contributing to traffic congestion, I hurt each of my thousands of fellow drivers just a little bit. Maybe I cost them more total time than I save, so my driving causes a net loss in utility. So that’s not a good option. The subway, then? Same thing. Not only do I lose some time compared to driving, but I make the train more crowded, which causes disutility to every passenger on the train.

Better to just sit at home, then. But then I don’t get anything done. That’s bad for my career, not to mention my bank account. Act utilitarianism is a bit like Pareto optimality in economics: it leads to paralysis. It is an impossible standard.

That’s why I prefer rule utilitarianism. Instead of judging each act by its utility, put rules in place that give people incentives to act well. No law or institution is perfect. Even the best ones hurt somebody; a law against theft is bad for thieves. But good institutions beget good results, especially in the long run.

A property-rights-based system of government is an excellent example of rule utilitarianism. It will not be perfect. Laws against stealing obviously have not put end to stealing. Even within the law, people inevitably have honest disagreements about what belongs to who. Externalities such as pollution will hurt some peoples’ property. But the results are certainly better than a system without property rights. The whole of world history is proof. It’s also better than act utilitarianism, which lacks that overarching institutional-level standard.

Rule utilitarianism is one of the greatest gifts ever given to liberalism’s intellectual toolkit, and we have Mill to thank for it. Happy birthday to you, John Stuart Mill.

Politics 101: Machiavelli and Public Choice

by Ryan Young on February 12, 2010

in Politics as Usual, Zeitgeist

When Niccolo Machiavelli died in 1527, Washington, DC was still more than two and a half centuries away from being founded. But he understood perfectly how that dismal city would work, as Bertrand Russell reminds:

“In the absence of any guiding principle, politics becomes a naked struggle for power; The Prince give shrewd advice as to how to play this game successfully.”

-Bertrand Russell, History of Western Philosophy, xxii-xxiii.

Machiavelli was, in many ways, the first modern public choice theorist. Had he lived in a post-Adam Smith world, he would have made a fine economist. A politician’s guiding principle is usually not ideology. It is to remain in power. So they behave accordingly. The first lesson of economics is that people respond to incentives. If someone’s incentive is to get re-elected, they will behave in a way conducive to achieving that goal. Morality and the greater good compete for a distant second.

Hayek on Freedom

by Ryan Young on January 4, 2010

in Odds & Ends, Personal Liberty, Sanctimony, Zeitgeist

Think for a minute about how progress is made. It doesn’t follow a constant, linear path. It is unpredictable. It comes in violent fits and starts. It happens at the whim and fancy of genius.

Everyday life is much the same. Life is what you make of it. You have to be free to find what’s best for you. That means making wrong choices sometimes. It means not just trial, but error. Or, as Hayek put it:

“If we knew how freedom would be used, the case for it would largely disappear… It is therefore no argument against individual freedom that it is frequently abused.”

-F.A. Hayek, The Constitution of Liberty, p. 31.

Marcus Aurelius: Emperor, Philosopher, Economist

by Ryan Young on December 11, 2009

in Culture, Economy, Odds & Ends

Gibbon’s Decline and Fall begins with the death of Marcus Aurelius in 180 AD. It was all downhill from there.

Besides being a well-regarded emperor who was succeeded by an ill-regarded son, Marcus was a philosopher. Reading the works of Epictetus turned him into a devoted stoic as a young man. Marcus’ book Meditations remains the sterling example of the stoic mindset: civility, moderation in all things, and above all, taking triumph and tragedy with the same quiet dignity.

Marcus also had a bit of the economist in him. Despite predating Adam Smith by sixteen centuries, Meditations contains an excellent example of opportunity costs. Only the law of demand is more important in the economist’s toolkit. As a way of saying “mind your own business,” he writes:

Do not waste what remains of your life in speculating about your neighbours, unless with a view to some mutual benefit. To wonder what so-and-so is doing and why… means a loss of opportunity for some other task.*

*Meditations, III.4; trans. Maxwell Staniforth.