As Easy As A.B.C.

Monday, March 24th, 2008

A couple months ago, when I watched H.G. Wells’ Things to Come, it led me to pick up a used copy of The Science Fiction Stories of Rudyard Kipling, which includes two stories about a future world “ruled” by the Aerial Board of Control: With the night mail and As Easy As A.B.C.

Kipling’s A.B.C. doesn’t really rule the planet the way Wells’ league of super-scientists, Wings Over the World, does though. The A.B.C. is more like the laissez-faire British Empire, keeping its hands off of things until someone threatens the free flow of (aerial) trade.

The story involves civil unrest in the Chicago of the future, and our heroes come to the rescue — that is, they rescue Chicago from democracy:

Suddenly a man among them began to talk. The Mayor had not in the least exaggerated. It appeared that our Planet lay sunk in slavery beneath the heel of the Aerial Board of Control. The orator urged us to arise in our might, burst our prison doors and break our fetters (all his metaphors, by the way, were of the most medieval). Next he demanded that every matter of daily life, including most of the physical functions, should be submitted for decision at any time of the week, month, or year to, I gathered, anybody who happened to be passing by or residing within a certain radius, and that everybody should forthwith abandon his concerns to settle the matter, first by crowd-making, next by talking to the crowds made, and lastly by describing crosses on pieces of paper, which rubbish should later be counted with certain mystic ceremonies and oaths. Out of this amazing play, he assured us, would automatically arise a higher, nobler, and kinder world, based — he demonstrated this with the awful lucidity of the insane — based on the sanctity of the Crowd and the villainy of the single person. In conclusion, he called loudly upon God to testify to his personal merits and integrity. When the flow ceased, I turned bewildered to Takahira, who was nodding solemnly.

This is a future that has lived through populist democracy and mob rule. Kipling appends something called MacDonough’s Song, apparently from the not-so-distant past of this lawful, non-democratic future:

Whether the State can loose and bind
  In Heaven as well as on Earth:
If it be wiser to kill mankind
  Before or after the birth —
These are matters of high concern
  Where State-kept school men are;
But Holy State (we have lived to learn)
  Endeth in Holy War.

Whether The People be led by the Lord,
  Or lured by the loudest throat:
If it be quicker to die by the sword
  Or cheaper to die by vote —
These are the things we have dealt with once,
  (And they will not rise from their grave)
For Holy People, however it runs,
  Endeth in wholly Slave.

Whatsoever, for any cause,
  Seeketh to take or give,
Power above or beyond the Laws,
  Suffer it not to live!
Holy State or Holy King —
  Or Holy People’s Will —
Have no truck with the senseless thing.
  Order the guns and kill!

  Saying — after — me: —

Once there was The People — Terror gave it birth;
Once there was The People and it made a Hell of Earth.
Earth arose and crushed it. Listen, O ye slain!
Once There was The People — it shall never be again!

“We own ourselves,” the non-democrats say.

Anyway, I was shocked to come across such a clearly non-Progressive story. It reminded me of Mencius Moldbug and of Bryan’s Caplan’s Myth of the Rational Voter.

Democracy is a commons, not a market

Tuesday, February 26th, 2008

Before Mencius hijacked my brain, I read another, softer anti-democratic piece, Bryan Caplan’s The Myth of the Rational Voter: Why Democracies Choose Bad Policies. I’ve discussed it before, but in an election year, it all bears repeating.

And there’s the fact that I finally got around to reading the book, not just a good summary or two.

Caplan’s ideas are fairly straightforward, if controversial. The key is that he has gone to the data — the Survey of Americans and Economists on the Economy. He isn’t just rhapsodizing about political philosophy from his lofty perch.

Despite all the jokes about economists, they really do agree on a number of issues — and ordinary folks do not “get” this economic point of view. An important, but subtle, point is that ordinary folks don’t simply make random “mistakes” from an economic perspective. Those would cancel each other out in the aggregate. They make systematic mistakes with systematic biases — against markets, against foreigners, toward making work rather than improving efficiency, and toward pessimism rather than optimism.

The other key point is that citizens have very little incentive to educate themselves on the issues and to improve their understanding of the implications of the economic policies they’re voting for or against, because “Democracy is a commons, not a market.”

Your individual vote has a negligible effect on an election. Consider it zero. But your vote does not have a negligible effect on how you feel about yourself. So we all have an incentive to vote for things that feel good, even if they won’t work. We can be rationally irrational.

If a policy is bad for the economy, it’s bad for the economy, and if it’s good for the economy, it’s good for the economy, but your one vote, one way or the other, doesn’t change whether that policy get implemented or not. You don’t individually have the power to choose policy for the nation. But you do have the power to vote your heart.

Is that so bad? Think of it this way: since you don’t actually choose policy, you don’t have to put your money where your mouth is. And people have all kinds of strong opinions that disappear as soon as you ask, “Wanna bet?”

Six Months of Intellectual Anthropology

Friday, November 30th, 2007

Bryan Caplan thinks Tyler Cowen makes a spot-on plea when he asks for six months of intellectual anthropology:

I’d like to propose a new research convention. Anytime a writer or blogger talks about what The Right or The Left (or some subset thereof) really wants or means, I’d like them to list their personal anthropological experience with the subjects under consideration.

Caplan, who wrote The Myth of the Rational Voter, has some recent experience with this notion:

Since the publication of my book, I’ve been meeting a much wider range of people. I’ve talked to an elite Republican book club, a room full of vaguely Marxist academics at the New School, retirees, Cato, Heritage, a conference of largely leftist philosophers, the State Department (!), the Yale law school, DC economists, and UVA social scientists. I’ve also spoken on a wide range of radio shows and podcasts, left and right.

What have I learned? Primarily, I’m more convinced than ever that virtually everyone is sincere. The legions of people who imagine that their opponents secretly agree with them are utterly deluded. Even when you’ve got undeniable facts on your side, your opponents probably think that those facts don’t matter; you’re missing the deeper picture.

The lesson I draw: Sincerity is greatly overrated. It’s an easy and widely distributed virtue. So what is in short supply? Common-sense. Literalism. Staying calm. Listening. Sticking to the point. Accepting and working through hypotheticals.

If you’ve got these, I’d like to meet your tribe.

Watch the Platforms, Not the Winner

Sunday, June 24th, 2007

Bryan Caplan (The Myth of the Rational Voter) says, Watch the Platforms, Not the Winner:

Puzzle: If you look at voting behavior, education does little to make people more Democratic or more Republican. So what difference does it make if people acquire more sensible views about policy, if it doesn’t change their vote?
What I question is that we should be very interested in the differences between presidential candidates in the first place. In our competitive democracy, the candidates wind up being pretty similar in any case. The real problem of democracy is bipartisan agreement on foolish policies.

So how can more reasonable beliefs about policy sway political outcomes? The answer is surprisingly simple. When public opinion gets more reasonable, both parties adjust their positions to avoid giving the competition an edge. For example, the U.S. public is markedly less protectionist than it was in the ’70′s, leading both parties to become markedly less protectionist than they used to be. The identity of the winning party might make a marginal difference; but this difference is muted by the fact that politicians want to get behind whatever happens to be popular.

Vote for me, dimwit

Thursday, June 21st, 2007

In Vote for me, dimwit, the Economist reviews Bryan Caplan’s The Myth of the Rational Voter:

The world is a complex place. Most people are inevitably ignorant about most things, which is why shows like “Are You Smarter than a 5th Grader?” are funny. Politics is no exception. Only 15% of Americans know who Harry Reid (the Senate majority leader) is, for example. [...] Many political scientists think this does not matter because of a phenomenon called the “miracle of aggregation” or, more poetically, the “wisdom of crowds”. If ignorant voters vote randomly, the candidate who wins a majority of well-informed voters will win. The principle yields good results in other fields. On “Who Wants to Be a Millionaire?”, another quiz show, the answer most popular with the studio audience is correct 91% of the time. Financial markets, too, show how a huge number of guesses, aggregated, can value a stock or bond more accurately than any individual expert could. But Mr Caplan says that politics is different because ignorant voters do not vote randomly.

Instead, he identifies four biases that prompt voters systematically to demand policies that make them worse off. First, people do not understand how the pursuit of private profits often yields public benefits: they have an anti-market bias. Second, they underestimate the benefits of interactions with foreigners: they have an anti-foreign bias. Third, they equate prosperity with employment rather than production: Mr Caplan calls this the “make-work bias”. Finally, they tend to think economic conditions are worse than they are, a bias towards pessimism.

An amusing illustration:

The make-work bias is best illustrated by a story, perhaps apocryphal, of an economist who visits China under Mao Zedong. He sees hundreds of workers building a dam with shovels. He asks: “Why don’t they use a mechanical digger?” “That would put people out of work,” replies the foreman. “Oh,” says the economist, “I thought you were making a dam. If it’s jobs you want, take away their shovels and give them spoons.”

Dumbocracy in America

Wednesday, June 20th, 2007

In Dumbocracy in America, Nick Schulz interviews Bryan Caplan on his recent book, The Myth of the Rational Voter:

If people were merely ignorant about economics, I wouldn’t be worried. After all, if you never studied a subject, we’d expect you just to be agnostic about it. The real problem is that people have strong opinions about economics even though they’ve never studied it — and their strong opinions tend to be the opposite of what you’d learn in an economics class.

As you indicate, I identify four main ways that people’s beliefs about economics tend to go wrong. I call them anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias. But you want “striking concrete examples,” not exposition, so here goes:

Example of anti-market bias: The way people react to higher gas prices in the face of natural disasters. When supply goes down in a competitive market, you should expect the price to go up. It’s hardly a sign of “conspiracy” or “gouging,” contrary to much of the public. More importantly, this price rise has large socially beneficial effects: In the short run, it encourages people to cut back on low-value uses of fuel; in the slightly longer-run, it encourages sellers to direct their inventories to the hardest-hit areas; and given a little more time, the price rise encourages additional production until the crisis abates.

Example of anti-foreign bias: These days, the best example has to be hysteria about immigration. In essence, trading labor is like trading anything — it’s mutually beneficial for buyer and seller. But public opinion has made immigrants a scapegoat for a long — and often contradictory — list of social ills. We hear simultaneous complaints that immigrants are “taking all our jobs” and “all going on welfare” — well, which is it? Their underlying theory is that economic interaction with foreigners has to have bad consequences, so people eagerly blame foreigners for anything that comes to mind.

Furthermore, even if you take some of the complaints about immigration seriously, the subjective reaction is out of proportion to the objective magnitude. George Borjas, an economist famous for emphasizing the costs of immigration, estimates that immigrants have reduced low-skilled Americans’ wages by only 8%. And if that were one’s real complaint, why would you want to deport millions of immigrants, instead of e.g. proposing extra taxes on immigrants to compensate low-skilled Americans?

Example of make-work bias: Make-work bias is probably one of the main rationales behind European labor market regulation. Among other things, you have a lot of laws that make it difficult to fire workers, seemingly forgetting that the key to social prosperity is not employment, but production. These laws backfire in other ways – making it hard for employers to fire workers also makes employers reluctant to hire in the first place. But the key point is that labor is a valuable resource — and passing laws that require employers to waste valuable resources makes little sense.

Example of pessimistic bias: The example that strikes me more and more as I grow older is the refusal to recognize how much life has improved over the past twenty years. I remember life in the ’80′s — the Internet alone has raised my standard of living in ways I could barely have imagined. But many remain convinced that life is getting worse — and want to “do something” about it.

Schulz asks Caplan about economists underestimating the value of markets:

Actually, I say that economists underestimate the virtues of markets relative to the democratic alternative. Rational voter models have made economists too optimistic about democracy. If you think that democracy works well, then every market failure you find makes you say “Let’s turn to the democratic process to fix it.” If and when economists give up on rational voter models, they will be a lot more likely to say “The market’s not perfect, but I’m worried that the democratic process will just make the problem worse.”

Definitely read the whole thing.


Monday, May 28th, 2007

In Clueless, in the New York Times, Gary J. Bass, associate professor of politics and international affairs at Princeton, reviews Bryan Caplan’s new book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies:

Now Bryan Caplan, an economist at George Mason University, has attracted notice for raising a pointed question: Do voters have any idea what they are doing? In his provocative new book, “The Myth of the Rational Voter: Why Democracies Choose Bad Policies,” Caplan argues that “voters are worse than ignorant; they are, in a word, irrational — and vote accordingly.” Caplan’s complaint is not that special-interest groups might subvert the will of the people, or that government might ignore the will of the people. He objects to the will of the people itself.

In defending democracy, theorists of public choice sometimes invoke what they call “the miracle of aggregation.” It might seem obvious that few voters fully understand the intricacies of, say, single-payer universal health care. (I certainly don’t.) But imagine, Caplan writes, that just 1 percent of voters are fully informed and the other 99 percent are so ignorant that they vote at random. In a campaign between two candidates, one of whom has an excellent health care plan and the other a horrible plan, the candidates evenly split the ignorant voters’ ballots. Since all the well-informed voters opt for the candidate with the good health care plan, she wins. Thus, even in a democracy composed almost exclusively of the ignorant, we achieve first-rate health care.

The hitch, as Caplan points out, is that this miracle of aggregation works only if the errors are random. When that’s the case, the thousands of ill-informed votes in favor of the bad health plan are canceled out by thousands of equally ignorant votes in favor of the good plan. But Caplan argues that in the real world, voters make systematic mistakes about economic policy — and probably other policy issues too.

Caplan’s own evidence for the systematic folly of voters comes from a 1996 survey comparing the views of Ph.D. economists and the general public. To the exasperation of the libertarian-minded Caplan, most Americans do not think like economists. They are biased against free markets and against trade with foreigners. Absurdly, they think that the American economy is being hurt by too much spending on foreign aid; they also exaggerate the potential economic harms of immigration. In a similar vein, Scott L. Althaus, a University of Illinois political scientist, finds that if the public were better informed, it would overcome its ingrained biases and make different political decisions. According to his studies, such a public would be more progressive on social issues like abortion and gay rights, more ideologically conservative in preferring markets to government intervention and less isolationist but more dovish in foreign policy.

Books for Brooks

Tuesday, November 21st, 2006

Nick Schulz suggests some Books for Brooks — books for New York Times writer David Brooks, who complained that “big books” of “politically useful” thought have been replaced with blogs:

Brink Lindsey, Against the Dead Hand
Robert Shiller, The New Financial Order
Robert Fogel, The Escape From Hunger and Premature Death
William Lewis, The Power of Productivity
Joel Mokyr, The Gifts of Athena
Joel Mokyr, The Lever of Riches
Virginia Postrel, The Future and Its Enemies
William Easterly, The Elusive Quest for Growth
Richard Herrnstein, Charles Murray, The Bell Curve
Charles Murray, What It Means to Be a Libertarian
Charles Murray, In Our Hands
Arnold Kling, Learning Economics
Hernando de Soto, The Mystery of Capital
CK Prahalad, The Fortune at the Bottom of the Pyramid
Deirdre McCloskey, The Bourgeois Virtues: Ethics For an Age of Commerce
Bjorn Lomborg, The Skeptical Environmentalist
Jerry Muller, The Mind and the Market
Richard Thaler, The Winner’s Curse
David Warsh, Knowledge and the Wealth of Nations
Jared Diamond, Guns, Germs, and Steel
Michael Cox, Richard Alm, Myths of Rich and Poor
Jonathan Rauch, Demosclerosis
Bryan Caplan, The Myth of the Rational Voter (forthcoming)
Steven Pinker, The Blank Slate
Ray Kurzweil, The Singularity Is Near
Andy Kessler, How We Got Here
Carl Schramm, The Entrepreneurial Imperative
Michael Hardt, Antonio Negri, Empire

The Myth of the Rational Voter

Monday, November 6th, 2006

Bryan Caplan debunks The Myth of the Rational Voter, starting with misconceptions about the economy:

Economists and the public hold radically different beliefs about the economy.[4] Compared to the experts, laymen are much more skeptical of markets, especially international and labor markets, and much more pessimistic about the past, present, and future of the economy. When laymen see business conspiracies, economists see supply-and-demand. When laymen see ruinous competition from foreigners, economists see the wonder of comparative advantage. When laymen see dangerous downsizing, economists see wealth-enhancing reallocation of labor. When laymen see decline, economists see progress.[5]

While critics of the economics profession like to attribute these patterns to economists’ affluence, job security, and/or right-wing ideology, the facts are not with them. Controlling for income, income growth, job security, gender, and race only mildly reduces the size of the lay-expert belief gap. And, since the typical economist is actually a moderate Democrat, controlling for party identification and ideology makes the lay-expert belief gap get a little bigger. Economists think that markets work well not because of their extreme right-wing ideology, but despite their mild left-wing ideology.
Consider the case of immigration policy. Economists are vastly more optimistic about its economic effects than the general public. The Survey of Americans and Economists on the Economy asks respondents to say whether “too many immigrants” is a major, minor, or non-reason why the economy is not doing better than it is. 47% of non-economists think it is a major reason; 80% of economists think it is not a reason at all. Economists have many reasons for their contrarian position: they know that specialization and trade enrich Americans and immigrants alike; there is little evidence that immigration noticeably reduces even the wages of low-skilled Americans; and, since immigrants are largely young males, and most government programs support the old, women, and children, immigrants wind up paying more in taxes than they take in benefits.[9]
Democracy is a popularity contest. If the average voter believes that less immigration is best for society, democracy rewards politicians who oppose immigration. This does not necessarily mean that elected officials cynically pander to the prejudices of the public. Our leaders might have gotten to the top of the political game because they sincerely share popular prejudices. Regardless of what is going on in politicians’ hearts and minds, though, we can expect democracy to listen to the average voter, even when he is wrong. The empirical evidence indicates that he often is.

How are such misconceptions possible, and how can the public keep making the same mistakes, year after year, from the time of Adam Smith to today?

Public choice economists are used to blaming what they call “rational ignorance.” In elections with millions of voters, the personal benefits of learning more about policy are negligible, because one vote is so unlikely to change the outcome. So why bother learning?

In my book, however, I argue that rational ignorance has been oversold. Rational ignorance cannot explain why people gravitate toward false beliefs, rather than simply being agnostic. Neither can it explain why people who have barely scratched the surface of a subject are so confident in their judgments — and even get angry when you contradict them. Why, to return to the case of immigration, do people leap to the conclusion that immigration is disastrous, and have trouble holding a civil conversation with someone who disagrees?

My view is that these are symptoms not of ignorance, but of irrationality. In politics as in religion, some beliefs are more emotionally appealing than others. For example, it feels a lot better to blame sneaky foreigners for our economic problems than it does to blame ourselves. This creates a temptation to relax normal intellectual standards and insulate cherished beliefs from criticism — in short, to be irrational.

But why are there some areas — like politics and religion — where irrationality seems especially pronounced? My answer is that irrationality, like ignorance, is sensitive to price, and false beliefs about politics and religion are cheap.[10] If you underestimate the costs of excessive drinking, you can ruin your life. In contrast, if you underestimate the benefits of immigration, or the evidence in favor of the theory of evolution, what happens to you? In all probability, the same thing that would have happened to you if you knew the whole truth.

In a sense, then, there is a method to the average voter’s madness. Even when his views are completely wrong, he gets the psychological benefit of emotionally appealing political beliefs at a bargain price. No wonder he buys in bulk.

Unfortunately, the social cost of irrationality can be high even though it is individually beneficial. If one person pollutes the air, we barely notice; but if millions of people pollute the air, life can be very unpleasant indeed. Similarly, if one person holds irrational views about immigration, we barely notice; but if millions of people share these irrational views, socially harmful policies prevail by popular demand.

You should probably read the whole article.