I'm thrilled to have my third cover article for The Freeman. In this piece I discuss the severe problems with economic modeling, which guides more economic policy - fiscal and monetary - than you might imagine. Why can't economists find consensus in their forecasts? My hypothesis is they rely on models that seek to describe complex systems -- systems that cannot be limned with even the most sophisticated maths.
Here's a sliver:
Likewise, we have to explain that a scientist’s model, while useful in limited circumstances, is little better than a crystal ball for predicting big phenomena like markets and climate. It is an offshoot of what F. A. Hayek called the “pretence of knowledge.” In other words, modeling is a form of scientism, which is “decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.” A model is thus a cognitive shortcut for both the wonk and the journalist, the latter of whom wants to peg his story to something authoritative the wonk has to provide. At the receiving end of this wonk-writer alliance are the rest of us—with little besides common sense as a shield. And I don’t mean this as populism. It is rather a defense against scientism launched from the turf of Austrian economics.
I may piss a lot of economists off with this piece. But there are very strong a priori reasons to reject this type of economics. The Austrian insight is potent and powerful. Professional academics in the thrall of the machine metaphor would do well to pay attention to the Mengerian school who grasp bionomics.
I am honored to have this month's column at the Library of Economics and Liberty. In "The Relentless Subjectivity of Value" I go from ultra-statist to subtler "free-market" versions of an error -- that is, the slide between subjective and objective value.
[T]he circumstances of time, context and perspective are like delicate filaments that connect the economic actor to the world. We risk destroying these filaments with too many aggregates, abstractions and models divorced from reality. And when we make concessions to a collective good that doesn't exist, we may win the argument, but lose the individual.
I may be the first non-economist, non-PhD to write this column. I don't know if that represents falling standards of quality over there or a thumbing of noses at the credentialization of everything... But one thing I do know is it's an honor to have even been asked to write the column. I hope you find the piece interesting. I'm certainly in the company of some tremendous thinkers who've written that column. I hope I can do more for them.
The following is a response to the debate proposal at Let a Thousand Nations Bloom.
Politics is like turf war. Tug-o-war. Or a game of king of the mountain. Titanic election cycles mean we’re sinking resources into deadweight activism. More and more resources are going into the promises of politicians who consistently let us down. The system is rigged: left, right and center. Corporations are spending more time, energy and money protecting their asses, colluding with politicians, or chasing the spoils of legislation—instead of innovating. Entrepreneurship, social or otherwise, is starting to languish. The resources we use to play king of the mountain don’t get used on positive social change. As a result, we’re increasingly disillusioned, polarized and angry. I say enough already. And there is a way to end it.
Paul-Emile de Puydt didn’t have Facebook when he wrote the following in 1860:
It is simply a matter of declaration before one's local political commission, for one to move from republic to monarchy, from representative government to autocracy, from oligarchy to democracy, or even to Mr. Proudhon's anarchy - without even the necessity of removing one's dressing gown or slippers.
Let that sink in for a minute. De Puydt is suggesting something simple and profound. If each one of us – progressive, libertarian, conservative or liberal – were willing to give up what I’ll call territorial monopoly, we could each have almost any system we wanted. Any system—within reason. Think about it: you certainly don’t get the system you want now. You might get the temporary high of your chosen candidate winning. But that high is contingent on factors completely beyond your control. Your ideals, whatever they are, will always be muddied by compromise, corruption and horse-trading. That is the nature of a representative democracy with territorial monopolies. Your party affiliations may satisfy something tribal in you, but implementation never satisfies your deeper ideals – the beauty, elegance and pragmatism of your chosen system.
So how can you have your system?
Enter panarchy. It’s a clumsy name. But think of it as sort of like Facebook government, which boils down to a simple change in the rules: You have a right of exit. Beyond that, you can join any community or system you like, as long as that system accepts you as a member. Community is crafted in the image of its members. As with Facebook and the Web in general, we become a nation of joiners again. Like Tocqueville’s America, we would get even more pluralism, more experimentation. Paradoxically, I think we would get more peace and prosperity, too. Why? Because with a right of exit, politics of the sort we’re used to utterly disintegrates. When systems compete, you win. You must only be willing forfeit any "legal" right to impose your system on others and, to a considerable degree, say goodbye to large territorial monopolies. That's panarchy in a nutshell.
For a more complete articulation of how it would work, please see my Youtopia posts at Let a Thousand Nations Bloom, or buy the bound version here.
I have another guest post over at Let a Thousand Nations Bloom. In this one, I make a tenuous association between economics and cosmology -- but hopefully one that will set folks to thinking. A sliver:
Let’s just put it out there: There is an optimum range for economic dynamism, diversity and complexity determined by rules. If our economic rule-sets are too complicated and cumbersome, we won’t get flourishing. There will be distortions and perversions at best. If our economic rulesets are underdeveloped or ambiguous, economic actors will not be able to regularize their behavior so as to lower transaction costs and focus on innovation. As with the laws of nature, there is a sweet spot in the set of all possible rulesets, which gives rise to maximum complexity and diversity. If we can agree that a complex, diverse economy is likely to result in concomitant opportunity and prosperity, then maybe we should turn our attention to those rules in the sweet spot that yield complexity and diversity.
Been writing on other sites, so allow me to share:
A couple of Examiner Posts here (Obamacare Epicycles) and here (Google and China).
An oped in the Raleigh News and Observer that's not making me any friends in Winston Salem.
Plus, a very good thinker out West has decided to re-publish my piece on Panarchy himself in pamphlet form. Pretty cool. $5.00 ain't bad to spread peace and prosperity around the world while getting rid of tug-o-war politics.
I just came across an ongoing debate between Bryan Caplan and Robin Hanson. The usually razor-sharp Caplan may be out of his element on this one, as he responds again to Hanson's response here. It will be fun to share some thoughts on this. First, here's a sliver of Caplan's position:
In any case, suppose we took neurology as seriously as Robin claims to. The right lesson to draw would be that thoughts and feelings require a biological brain. There's no way you can dissect a brain, then infer that a computer program that simulated that brain would really be conscious. That makes about as much sense as dissecting a human brain, then inferring that a computer program that simulated a brain could, like a real brain, be poured over a fire to extinguish it.
Philosophy is not for everyone. Nor is it, generally, for economists. But let me see if I can offer a few pointers to those, like Caplan, who would wade into these debates:
First, if you believe in disembodied souls, this is not the debate for you. Why? Because a commitment to the existence to non-physical substances is not something we can argue about unless we can agree on the meaning of terms like 'physical' and 'substance'--i.e. a basic agreement on what it means to be physical. A substance is a) something that exists, and b) something that is causally efficacious. Turns out both of these are necessary properties of physical things. The Cartesian would disagree with such tautologies for reasons of faith in souls. And faith is usually a philosophical conversation killer.
Now, let's see if I can dredge up basic criteria for physicalism (that way we don't have to trifle with lingering Cartesianism) and let the debate be about the relationship between mental and physical properties. I seem to remember some criteria, though admittedly it has been over a decade since I did any work on this: I) That which exists, is physical, which is also to be causal. For something to be physical is to exert itself causally in the universe -- some how, some way. Descartes spoke of "substances" that were non-physical, causally interacting with the world through the "penial gland". But as we said above, this is absurd. That which exists is physical. Similarly, the universe is causally closed--that is, no physical event has a cause outside of the physical domain (e.g. what's wrong with Cartesianism). Ps can cause Ps and Ps can cause Ms. But no Ms can cause anything. II) Supervenience.The mental supervenes on the physical. The relationship of supervenience is critical because it unpacks the tight ontological connection between some mental state M and the underlying physical state P (for, say, experience z). Any change in M will necessitate a change in underlying P, but not the reverse. The supervenience relationship is asymmetrical for the reasons Hanson suggests. (For example: silicon or other substances could instantiate certain causal-physical properties normally instantiated by biological gray matter. Bryan's software example is unideal because it intuitively distracts us from how M would be instantiated in the new P stuff (call it P'.) After all, lines of code are not instantiators, but information about what is to be instantiated in some physical stuff--like an android.
III) Dependency. The mental is dependent on the physical in the sense that no mental event can arise independently of some causal-physical substrate.
It may seem as if I'm being unfair with these criteria. But these seem to me to be basics of any respectable mind-body physicalism. So, Hanson may be correct that life extension is possible through replicating causal-physical processes a la functionalism. In fact, the real arguments lie in questions of whether mental properties are identical with causal-physical properties of the brain (rather than m/p identity of early physicalism). Hanson's life extension is basically a functionalist view, where the causal-physical properties of, say, "Bryan Caplan" are preserved (where "Bryan Caplan" is the sum of all the M(s)).
Now, there are associated problems of identity -- such as the persistence problem Hanson highlights in this video. But these are mostly separate problems. We may have to live with the fact that the referent "Bryan Caplan" is a collection of mental properties that are identical with certain causal-physical processes--all of which can be duplicated (even replicated time and again) in other forms of matter. (Imagine a bifurcating tree of Bryan Caplans, each of which will have their own superscripts (prime, double-prime, etc.) after replication.) In any case, I think all this boils down to the fact that Robin Hanson is a functionalist and Bryan Caplan is a dualist, who, unless he espouses some slippery (and obscure) form of dualism (like Chalmers's) believes in, well, spirits in the material world.