Max Borders

Max Borders - Up to No Good in November, December

Tons and tons at Ideas Matter.

In the Washington Examiner:

• One on longevity and the coming fountain of youth.
• One on anemic concepts of human nature.
• One on the implications for a partial Obamacare strikedown.

In the Daily Caller:

• One on Government as God.
• One on The Liberal Gene.
• One on locking arms with athiests.

 

Ariely and Norton: Never Mind the Gap

Everyone knows the social sciences are fuzzy. Economists, political scientists and anthropologists bring their moralistic baggage into the ivory tower as soon as they decide what to study and what not to. There’s no avoiding social science’s value-ladenness.

But on the value-ladenness continuum, there’s a point at which you undermine your credibility as a scholar. That is, if you use your status as a scholarly “expert” to launch a political crusade, you are engaging in a form of academic malpractice. Michael I. Norton of Harvard and Dan Ariely of Duke are guilty of such malpractice. Let me explain.

In a recent “study,” Norton and Ariely seem to be engaging in a kind of democracy-by-proxy. They claim Americans really want more “wealth redistribution” and they have the evidence to prove it. Here’s their own description of the findings from the Los Angeles Times.

We recently asked a representative sample of more than 5,000 Americans (young and old, men and women, rich and poor, liberal and conservative) to answer two questions. They first were asked to estimate the current level of wealth inequality in the United States, and then they were asked about what they saw as an ideal level of wealth inequality.

In our survey, Americans drastically underestimated the current gap between the very rich and the poor. The typical respondent believed that the top 20% of Americans owned 60% of the wealth, and the bottom 40% owned 10%. They knew, in other words, that wealth in the United States was not distributed equally, but were unaware of just how unequal that distribution was.

When we asked respondents to tell us what their ideal distribution of wealth was, things got even more interesting: Americans wanted the top 20% to own just over 30% of the wealth, and the bottom 40% to own about 25%. They still wanted the rich to be richer than the poor, but they wanted the disparity to be much less extreme.

Okay. So Norton and Ariely succeeded in proving that Americans don’t know who has how much money. We the People are not only largely ignorant of quintiles, but how many assets are controlled by each quintile.

LInks, Traces, Bits and Bytes

Daily Caller ran my personal story of wrestling with stereotypes.

Still plugging away at building up Ideas Matter. I hope you'll sign up for the newsletter, Dear Reader.

Had a piece over at the Examiner on my HSA experience and fallout from Obamacare. For the record, I didn't put the apostrophe in the title.

Max Borders: The Hobbit v. Big Labor, Importing Ideas and the Rich-Poor Gap

Imported ideas for Republicans? Find them here.

The rent-seekers have come to infest Peter Jackson's The Hobbit. 

There's a gap between rich and poor. And it's growing. So what?

Plus, this week at Ideas Matter: 

Me and the Regulatory State

Douglass North on complementary institutions.

Bruce Yandle on Bootleggers, Baptists and Bureaucrats.

Ideas Matter and The Long Tail.

Max Borders: "Radicals for Rules" Talk - Clip and Full Length

The folks at the John Locke Foundation were kind enough to let me talk about one of my pet ideas: panarchy. Find a clip and full talk here.

Borders on the beauty of the Swiss System

Happy Fourth, Switzerland!

Max Borders: The Myth of the Model (The Freeman)

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.

Subjectivity: Library of Economics & Liberty

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. 

I conclude:

[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.

Community or Coercion?

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.

 

James Buchanan: The Economist Has No Clothes

Nobel Laureate, James Buchanan, ain't dead. In fact, the man refuses to go out with a whimper, much less go out. He gives the whole economics discipline what for, right here:

How do markets work? Standing alone, this is an inappropriate and unanswerable question. It must be replaced by the question: How do markets work under this or that set of constitutional and institutional constraints? Economists’ scientific expertise can be brought to bear on the predicted effects of alternative sets of constraints. The relevant question is not that of asking how this or that end-state or outcome may be put in place through possible collective or political action. The question becomes, instead, how can this or that set of constraints be predicted to operate so as to allow the generation of an order that meets certain criteria of desirability? The difference between the two methodological stances may appear minor, but much ill-advised effort might be avoided if economists would recognize the limits of their own discipline.

Repeat after me: institutions matter.

Incidentally, I've been writing a considerably dumbed-down version of his line of thinking, which is currently sitting in an editor's queue. Here's an excerpt:

We have to explain that a scientist's models, while useful in limited circumstances, are little better than crystal balls for predicting big phenomena like markets and climate. They are offshoots of what F.A. Hayek called the "pretense of knowledge". In other words, a model is a cognitive shortcut for both the wonk as well as the journalist who wants to peg his story to something authoritative the wonk provides. At the receiving end of this unholy wonk/writer alliance are the rest of us -- with little besides common sense as our shields. This is not meant as a populist diatribe, but an a prioristic attack against scientism, an attack launched from good ol' fashioned Austrian economics.

Interestingly, Buchanan's piece is bolder. He questions not only the models (especially the failed forecasting), but the entire economics status quo as it tries to dissect the financial crisis of 2008 ex post facto. I'm only worried about economists trying to predict the future. But if hindsight ain't even 20/20 for economists, they need completely to refashion their enterprise. The economist has no clothes.