Gold Pins

In "Notes from Underground," Fyodor Dostoevsky writes:

They say that Cleopatra (excuse an instance from Roman history) was fond of sticking gold pins into her slave-girls' breasts and derived gratification from their screams and writhings. You will say that that was in the comparatively barbarous times; that these are barbarous times too, because also, comparatively speaking, pins are stuck in even now; that though man has now learned to see more clearly than in barbarous ages, he is still far from having learnt to act as reason and science would dictate. But yet you are fully convinced that he will be sure to learn when he gets rid of certain old bad habits, and when common sense and science have completely re-educated human nature and turned it in a normal direction. You are confident that then man will cease from INTENTIONAL error and will, so to say, be compelled not to want to set his will against his normal interests.

David Brooks could well be the "you" to whom Dostoevsky's apocraphyl speaker addresses this segment of his diary. In "The Sandra Bullock Trade," Brooks argues that "most of us pay attention to the wrong things," such as making money, even though tending to our social and spiritual careers is a far more efficient way to achieve happiness than focusing on our economic careers. Like Dostoevsky's narrator's audience, Brooks is confident in science's ability to turn human nature in a rational, "normal direction," namely, toward the productive pursuit of happiness. He calls those who would consider trading social welfare for economic welfare for "more than three seconds" "absolutely crazy."

As Dostoevsky points out, however, the columnist's rational, science-backed vision of how to produce prosperity makes some questionable assumptions, such as:

1. Happiness = prosperity.


2. People want to be happy.


3. People want to prosper.


4. People will rationally pursue what they want.

Cleopatra did some irrationally cruel things to make herself happy. I'm guessing that Brooks would label her as "absolutely crazy." If he could go back in time, he might even offer her some advice, like telling her that "being married produces a psychic gain equivalent to more than $100,000 a year." Or maybe he at least would have advised her not to marry her brother(s).

It is not that any of the advice Brooks gives is wrong, and I don't doubt the "impressive rigor" of the research on which it is based. But if Cleopatra were so crazy, why would she heed it? By the same token, why would people who are looney enough to choose an Oscar over a healthy marriage -- or commit themselves to a comparably irrational course of action -- take Brooks's recommendations to heart? As Dostoevsky suggests, creatures who err intentionally in the present have no reason to do otherwise in the future. If Brooks already thinks that we pay attention to the wrong things, could we "be compelled" by logical argument "not to want to set [our] will against [our] normal interests"?

This is not to stay that humans cannot put their gold pins in a drawer for a while and behave more in their self-interests and in the interests of others. Reforms like the Civil Rights Act can produce just this effect. In the end, though, any meaningful road to prosperous, rational human society must be paved by science that seeks to understand the proximate and ultimate foundations on which human behavior and psychology are built and by which they are constrained. The goal should not be Brooks's analysis, which tries to uproot "absolutely crazy" psychology; instead, we should endeavor to understand the biology from which constraints to rationality originate and work with the constraints toward psychological freedom, not against them or indifferently to them.

(Paradoxically, assuming irrationality, there's no good reason to expect anyone to take up this noble task, or that it is noble to begin with... though some already have.)

We'll always have gold pins. Let's learn how to use them right.

Merrill Lynch, the Marxists?

I missed the 10:25 pm train, so I was stranded in South Station until the midnight train to Providence. Bummer. Good thing I had my work with me. I sat down at one of the many small tables facing the giant train schedule that hung from the high ceiling.

Every few weeks, South Station -- the whole thing -- adopts a new advertising campaign. A couple months ago, ads for Windows 7 overwhelmed the station. In the past few weeks, Merrill Lynch, the financial consulting firm has taken over. (And by Merrill Lynch, I mean Bank of America, which has recently absorbed the company.)

The ads are really peculiar. They feature men and women (with their heads cut out of the picture) in an office space holding signs that read: "Help 2 retire _________." In the blank space are a word or two -- maybe written by the worker holding the signs -- like "hesitation," "guesswork," "indecision," "distraction," "the rat race," and "the 6 am train."

It would not have been out of place had Merrill Lynch thrown up some signs that said, "Help 2 retire 'alienation,'" or, "Help 2 retire 'the bourgeoisie.'" The company is portraying indecision, distraction, and hesitation as predicaments exclusive to the capitalist worker. The campaign taps into an ubiquitous sentiment that work -- and capitalism in general -- is a necessary evil, but an evil nonetheless. This is ironic coming from Merrill Lynch, the brokerage firm whose name has come to be synonymous with corporate greed.

There is an ambiguity here, though. Some of the signs could be referring to retiring from hesitation and indecision in the process of thinking about retirement, whereas others are referring to retirement from the commute to work every morning. Even if the messages were intended by Merrill Lynch to be distinct, the juxtaposition of images makes it so that the ads appeal to the idea that work is the root of most people's problems.

What does Merrill Lynch's campaign imply for democratic capitalism as a set of institutions meant to bring about general prosperity? If work within these institutions breeds psychological and physical discord, what is the point?

But this is probably looking at the issue the wrong way. Maybe we should assume that people under any set of institutions generally dislike working and would rather not be working. Marx was right: people typically don't like laboring for money. Marx idealized the act of working at one's "life-activity," though. Work "can be pretty stressful," even for those who take (disturbing) delight in their vocation, like the cheerful communist farmers.

It is most likely that, by incentivizing work, institutions of capitalism make being productive as attractive and fun as possible. For many people, work still isn't much fun, even with capitalistic institutions firmly in place. We can only imagine what it's like to work in the absence of institutions like private property. Probably doubleplusungood.

Megan McArdle is smart

From http://www.washingtonpost.com/wp-dyn/content/discussion/2010/03/19/DI2010031903563.html

Appleton, WI: Megan, since you support some form of income redistribution, and seem to support some form of health income supplementation, what is it that this bill gets the most wrong? Or is it simply its irresponsible long-term budget? This seems like an entitlement you support, if there were more first-dollar consumer discretion and funding. Do you really feel in all honesty that this bill will do more long-term harm to medicine than it will do short-term good, with the rate at which technology advances? I just don't see how the poor currently overeconomizing on health care is a positive curb on the system. Please help me agree with you that the bill isn't worth it over any time span.

Megan McArdle: One of the hardest problems that economists deal with is how to weight the interests of future people. The problem is, there are so damn many of them (we hope!). Because the number of people who will be alive in the future is so much larger than the number who are alive now, straight utilitarian calculus can easily lead you to say that people alive now should give up 90% of their income to do anything that increases the income of future people by a penny a year.

The natural answer is to discount the utility of people in the future--in much the way that you discount your own future utility, so that someone has to pay you (interest) in order to get you to defer consumption.

Unfortunately, because the future is very long, even a low discount rate ultimately means that you put basically no weight on people who are alive beyond about 50-100 years from now.

This is a big dilemma for environmental economics, and I think it is also a dilemma here. I am fairly skeptical of the claims that this bill will save thousands, or tens of thousands, of lives a year. (see here: http://www.theatlantic.com/magazine/archive/2010/03/myth-diagnosis/7905/) But even if you think this is true, placing any value at all on the lives of people in the future means that if you save those lives by causing even a small reduction in the rate of innovation (through price controls or regulation), you will end up killing far, far more people than you save. Compound interest is a killer.

I hope that's not too abstract and boring. It's a really tough, really interesting problem, and at some level, it's simply a value judgement about how to weigh the lives of current and future people.

But I'll note that both sides do this very inconsistently: the left wants a high weight on current lives and a low weight for future lives in analyzing health care, but wants to reverse this for the environment; the right takes the opposite stance. Or, in many cases, they simply deny that there is any possible tradeoff between current and future welfare. I find those denials pretty unconvincing--which is one of the reasons I'm for a carbon tax, and against this legislation. There's also the fiscal problem, which I've addressed in other questions.

Milgram Redux

How do we free our psyches from auto-coercion? How do we avoid becoming Nazis?

This tele-xperiment paints a bleak picture. Still, I want to know about the 16 out of 80 who refused to shock the contestant. What are they like? What education have they had? How were they able to free themselves from the authoritative glare of the camera? Knowing these things might enable us to lead better, more moral lives.

Evolutionary psychology could potentially provide an explanation for why we obey, even when the orders are immoral, and why we sometimes don't obey. It's probable that, in the environment of human societies, (hypothetical) genes that give an individual the propensity to obey were favored by natural selection.

I make this guess based on analogy with other social species, including those in which beta males submit to the alpha male's authority, even to the point of eschewing reproduction. For these males, the net cost of being a member of a society in which they cannot reproduce outweighs the net cost of being cast out to defend against threats all alone. Not to mention, a beta male could one day become the alpha male and find huge reproductive success.

It is likely that our ancestors faced a similar situation. They were probably better off gleaning benefits from authoritative individuals by obeying them than they were by dissenting and facing punishments like execution or exile. I doubt that these speculations are too off the mark.

But what about disobedience? That may have also been positively selected for, but probably on fewer occasions than obedience. Ancient Galileos may have gained reproductive success by throwing off the chains of the powers that be and pioneering more productive, truer ways of doing things. Or they may simply have subverted the ruler's rule and taken over for themselves. This, of course, could also help dissidents maximize their reproductive fitness.

Even if obedience isn't encoded in our genomes, it may be differentially favored within and across cultures. Cultural notions of when it is right or wrong to obey may have evolved by similar mechanisms as in the biological evolution scenarios above. The difference is that cultural concepts of obedience would be transmitted by word of mouth both horizontally (between strangers) and vertically (between parent and offspring) whereas vertical inheritance would be the primary means of biological transmission of a gene that codes for a propensity toward obedience.

By understanding both our cultural and biological histories of obedience and disobedience, we may be able to lower the proportion of individuals who kill others under orders from authority figures and avoid future genocide.

Social Science Gone Wrong- what not to do

In Monday's NY Times, op-ed columnist David Brooks talks about change in the Senate which will make it more like the House. He says the Senate is home to "person-to-person thinking" and that "because one senator had the ability to bring the whole body to a halt, senators had an incentive, every day, to develop alliances and relationships with people in the other party". He contrasts this with the House, which he refers to as embodying a "clan psychology", where individuals have little power and decisions are made on the group level.

He notes that the Senate is becoming increasingly like the house in this respect, despite attempts by prominent democrats, including our very own president, to curtail this change. The problem is that the crux of Brooks's argument hinges on what he calls humans' innate sense of sympathy. It is true that humans, along with many other species, have an internal sense of sympathy or empathy, causing us in many cases to have an internal sense of fairness and to avoid violating the social code. Brooks notes that with the shift from person-person interactions to group-group interactions there comes to a degree a loss of this empathy and natural mimicry.

Brooks uses this to shape his argument, saying that humans are naturally inclined to be sympathetic, and that forming in-groups and out-groups as he notes would happen with the impending shift in the senate would "bleach out normal behavior and the normal instincts of human sympathy". To make this argument is to deny that the formation of such groups was a crucial factor in human evolution.

Brooks's argument is riddled with poor science, to a degree that undermines the efforts of many to seek consilience between the sciences and the humanities. It may be true that we should work to stop these changes in the Senate and that to change the current system would be a step in the wrong direction. But what Brooks has done is grab a snippet of science, ignore all context, and mold it to fit his argument. This is what led to the idea of social darwinism. It is also what led to the eugenics movement which, unbeknownst to many, played a prominent role in early 20th century American domestic policy (I would highly recommend this paper).

What Brooks is doing isn't as dangerous as social darwinism or eugenics, but it's a chip off the same block. Poor use of scientific evidence to support policy arguments in appallingly superficial ways has been a giant setback to both the sciences and the understanding between disciplines. Humans evolved, this is clear. As such, it is productive to consider evolution and the forces which shaped animal behavior before the phenomenon of culture got underway. To do this correctly will prove invaluable; to do it sloppily and superficially is an obvious burden to consilience and understanding.

Daydreaming Prompt

A giant asteroid is set for a collision course with the Earth. Humankind has 5 days to get its act together. Fortunately, you have constructed a space vessel just in case this sort of thing were ever to occur. (Needless to say, you are very meticulous and paranoid.) Your fully stocked spaceship is gassed up and ready to set sail for Mars.

The vessel seats 10, meaning one seat for you (I would assume) and 9 seats for whoever you want to bring with you.

1. Who will you invite aboard your space ship? In other words, who will you choose to repopulate and reconstruct humanity on Mars once Earth has been demolished?

In addition to room for foodstuffs, you can bring 1000 lbs. of other stuff on the ship.

2. What will you bring with you to your space colony?

Let's assume that, being the genius captain and engineer that you are, you safely land your ship on the red planet.

3. What institutions will you instate to govern the colony? Will you try to create a lasting constitution for what you hope will be the burgeoning population of [enter sweet colony name here]? Or will you be more flexible? How will you go about sowing the seeds of a prosperous settlement, both in the short run and the long run?

(My thoughts on the issue are forthcoming...)

Relative vs. Absolute

In a free market economy, businesses that do not succeed go bankrupt. The relative success of businesses is a situation much more reminiscent of a zero-sum game than that of countries competing on a global scale. Or so says Krugman.

If relative success at the nation-level isn't really that important and what really matters is your absolute success, then it is possible for each involved party to improve, even though some will grow faster than others. So what would happen if everyone woke up tomorrow and every country in the world were 30x richer than the US? To follow Krugman's logic, this would ostensibly be good for the US; trade and cooperation with other countries would raise the US's level of prosperity, causing the US to be better off than it is today, even if it is the poorest country in the world.

This is tradeoff between relative and absolute success is also prevalent in animal behavior. Dominance hierarchies are perfect examples of relative success being chosen over absolute success. A hiena in a pack which can kill large prey is able to aquire food for itself, and is consequently better off than it would have been by itself. But at the same time, that one hiena might be the lowest notch on the hiena social totem pole.

If the argument for absolute over relative success holds for nations, does it hold for individuals? Would you really rather make $10,000 and be the poorest person in your country than make $5,000 and be one of the richest? If we were measuring in terms of 'happiness' then you might say yes, but if we measure in dollars it's not so clear. Does this mentality hold true across levels of hierarchy? And if so, what units are best to clarify the relationship?

In which I proudly demonstrate a remedial understanding of supply, demand, and economic growth

An asteroid may have spelled doom for dinosaurs. But what do asteroids spell for humans?

In "Space: The Final Frontier of Profit," Peter Diamandis of the X Prize Foundation writes that the cosmos provide endless lucrative opportunities of enterprising individuals. In particular, he appraised "an average half-kilometer S-type asteroid" at $20 trillion. But that's not all. He writes:

...companies and investors are realizing that everything we hold of value—metals, minerals, energy and real estate—are in near-infinite quantities in space. As space transportation and operations become more affordable, what was once seen as a wasteland will become the next gold rush.

I find Diamandis's assertion that "everything we hold of value" can be found in the heavens to be overly cavalier -- as a case in point, (almost) none of us are up there right now -- but certainly "metals, minerals, energy and real estate" are abundant in space.

So what does this mean for us? Is space a money tree? If space becomes our industrial playground, how will this effect our perception of the world? Consumer goods? Productive goods? How will it alter our views of what's important?

Without a doubt, the practical opening of the space market would flood the supply of goods such as platinum and iron. Unlike Spain in the New World, countries that laid claim to a medium-sized asteroid would not suffer from atrophy in other growing industries (like how Spain failed to grow its manufacturing capabilities in the colonial era); rather, space explorers would be advancing the new and profitable technologies of the future. Dutch disease would not be a concern.

Overall, the effect of harvesting space would be to lower the prices of most goods. At first, the depression of prices would seem infinite, corresponding with buyers' expectations of infinite growth and resources. Space's bounty would shine down on humans with the gratuitous generosity of Bastiat's sun in "The Candlemaker's Petition." It is likely that humankind would bask in its light and prosper. By this, I mean that we'd reap the benefits of a higher standard of living and, in general, more time to play guitar.

So maybe space does "hold everything we value."

Some other cool questions to ponder: If we began to colonize other worlds, or even just asteroids, how would we go about exporting our lives and our ecosystems? What role would Earth's biosphere play in the transformation of the solar system? How does global warming's threat to the biosphere affect our future in space? And is space -- an almost infinite resource -- the unique, inevitable path to prosperity? Would it "solve the economic problem"?

Pessimistic Bias, 1995 edition

It's very easy to call this guy stupid. Very easy. But it is just as easy to mock those who are overly optimistic about innovative ideas, like flying cars. So what is the difference? It's probably just hindsight 20/20.

A few of Stoll's predictions have some validity. Consider the final paragraph:

What's missing from this electronic wonderland? Human contact. Discount the fawning techno-burble about virtual communities. Computers and networks isolate us from one another. A network chat line is a limp substitute for meeting friends over coffee. No interactive multimedia display comes close to the excitement of a live concert. And who'd prefer cybersex to the real thing? While the Internet beckons brightly, seductively flashing an icon of knowledge-as-power, this nonplace lures us to surrender our time on earth. A poor substitute it is, this virtual reality where frustration is legion and where—in the holy names of Education and Progress—important aspects of human interactions are relentlessly devalued.

Certainly, the internet has made it increasingly possible for people to never leave their homes to shop, work, or even socialize.

At the same time, however, Stoll underrates consumers' sense of their own needs and desires. The internet can and will never devalue human interactions: only people can do that. It is arguably because people value "human interactions" so much that the internet has become such a big deal. Media like Facebook and Twitter have made it easier to arrange meetings and facilitate human contact. They have enabled old friends to keep in touch. One would be hard pressed to find someone who thinks that people were more connected to one another fifteen years ago than they are now. The internet provides an obvious example of the improvements to our standard of living spurred by economic growth and enterprising technological innovation.

Looting, Social Trust, and Social Capital

The generally fantastic Tyler Cowen:

"There is a certain lawlessness in this country that the government enabled," he said in Spanish. "They don't protect people and people don't respect them and criminal elements get out of control. People also have a high sense of entitlement. They expected the government to have water and power and things under control."

There is much more at the link or try this tweet: "The situation in Concepción is deteriorating. Citizens have taken up arms to defend themselves and their stores. 8 PM to 12 PM Army curfew." By no means is it just a bunch of people trying to feed themselves: "...many residents in the most damaged areas have not only taken food from supermarkets, but also robbed banks, set fires and engaged in other forms of lawlessness."

Haiti, on the other hand, remains fairly orderly and there have been reports that police corruption has gone down significantly.

One implication here is that I fundamentally distrust the use of "social trust" or "social capital" indicators in cross-country growth regressions. Repeat three times after me: context-dependence, context-dependence, context-dependence. The lessons for social science run deep.

My deeper worry is that this event will change Chile and set it back more than the damage alone would indicate. It will alter their self-image and national unity could decline. An alternative story is that Chile will become more progressive, as there will be greater common knowledge of income divisions and it will be harder to pretend everything is just fine.

Maybe it is a sign of social health to have some looting after an earthquake. In this part of blogland we do not dismiss the counterintuitive conclusion out of hand. For instance perhaps Haiti is so orderly because a) looters would be killed on the spot, and b) the entire fate of the nation is at stake and thus every small event is taken very seriously. Neither factor is exactly good news.

I'm interested in finding out how the looting that went on in New Orleans in the aftermath of Hurricane Katrina compares to both Chile and Haiti. I imagine that Americans would share the Chileans' "high sense of entitlement" in the aftermath of an equivalent event. Is this due to the rise in high liberalism over the past century? I'm guessing it has something to do with the legacy of New Deal paternalism.