Posted by on February 4, 2017

Careful readers will note that the book named in the title of this post, written by the libertarian economist from George Mason University, has already been mentioned twice in this blog.  With good reason.  It is a very worthy addition to the libertarian canon.

Until The Myth, a widely accepted theory in economics and political science was that voters were rationally ignorant.  The argument is that the chance of an individual voter determining the result of an election is so vanishingly small that it does not make sense to spend the time and effort to cast an informed vote.  Except for wonkish anomalies like yours truly and my good readers, it is obviously true that the great mass of voters acts on this basis.

Since the doctrine was propagated, economists and political scientists have tried to come up with theories for why, despite rational ignorance, democratic decision making might still function well.  One argument is that, although voters may be ignorant, they are unbiased in their ignorance.  Which means that under the laws of statistics, their ignorant votes cancel out and democratic choices are ultimately made by the cognoscenti.   You can imagine the enthusiastic reception this argument received in Washington, D.C., Cambridge, Massachusetts, and the editorial offices of The New York Times.

Caplan is having none of this.  He accepts the argument that voters are rationally ignorant, but then demonstrates, using survey results and some reasonably fancy statistics, that they are far from unbiased.  In particular, Caplan shows that uninformed voters suffer from four biases which have very important implications for economic policy.  These are antiforeign bias, make-work bias, antimarket bias and pessimistic bias, the titles of which are self-explanatory.  If you doubt their existence, then tune into almost anything said by our new Commander-in-Chief.

Caplan then makes one further observation, which is that people derive utility from acting in accordance with their worldview.  In other words, indulging biases is inherently pleasurable.  Although no user of Twitter could question this, Caplan goes to the trouble of citing multiple thinkers and writers, from René Descartes to Lewis Carroll, passing extensively by Joseph Schumpeter, in support.   He then goes back to the statistical improbability of a decisive vote and argues that voters have no incentive to overcome their ignorant biases and no disincentive to acting on them.  It is true that enacting bad economic policies will hurt each voter, perhaps even in a material way.  But since each voter is extremely unlikely to be decisive, the expected value[1] of this hurt approaches zero.  Voters can “consume” the pleasure of their biases at a tiny expected cost.

He calls this theory rational irrationality.

Caplan then goes on to show how the existence of voter bias flips a lot of conventional thinking on its head.  Many of the arguments advanced in defence of democracy in the face of rational ignorance lead to even greater perversions in the face of rational irrationality.  Likewise, many of the things conventionally bemoaned about politics, such as the failure of politicians to adhere to voter preferences, actually become virtues in a world of rational irrationality.

Caplan then draws conclusions which will be very familiar to readers of this blog.  He devotes a chapter to “’Market Fundamentalism’ Versus the Religion of Democracy,” which argues that the debate-ending dogmatism of “all the ills of democracy can be cured by more democracy”[2] is moronic.  From this, along with the wealth of argumentation of the “public choice” school of economic thought, Caplan argues that we should have a very healthy skepticism about the ability of a demonstrably flawed government to cure an allegedly flawed market.  The argument also points out why it is not inconsistent to believe that people are rational in the economic choices they make about their own lives but persistently irrational in their political decision making – it’s all a question of incentives.

The book includes a quote from Steven Pinker, the renowned cognitive scientist and avid bicyclist[3], who believes that schools should try to “provide students with the cognitive skills that are most important for grasping the modern world and that are most unlike the cognitive tools they are born with,” by emphasizing “economics, evolutionary biology, and probability and statistics.”  Caplan also argues that the economically literate should evangelize, preferably in a witty and slightly simplified manner that emphasizes the broad areas of agreement in economics and downplays the minor qualifications.  Caplan makes a plea for more “one-handed economists.”[4]

All of this is music to the anthropomorphic ears of a blog that contains the following words on its “Welcome” page:

The main purpose of this blog will be to look at current events from an explicitly economic perspective … and to have some irreverent fun doing it.  The emphasis is on the word irreverant, with a healthy dose of sarcasm.  The general method will be to use a current event to illustrate a broader theme or topic.  The approach will be semi-academic, but no attempt at factual rigor will be made.  The main goal is to have fun, particularly for me, and finding and verifying details is the opposite of fun.  Statements will be correct in the broad strokes and nothing will make me angrier than someone pointing out detailed mistakes.  I have no intention of being confused by the facts.

A second theme will be evolutionary psychology.  I firmly believe that, to the extent that people are rational, then economics is the best way of explaining their behavior.  To the extent that people are irrational, then evolutionary psychology provides the best explanation.  These two fields of study are largely consistent — evolutionary theory and genetics use much of the same “optimizing” technology as economics — and there is a lot of overlap.

Teaching Math and Science

I have made my feelings about STEM teaching (thumbs very up) and teachers unions (thumbs very down) abundantly clear.  But I didn’t realize that there is a hidden linkage between the two until I read a recent article in The Economist.

One of the reasons why STEM instruction in America’s public schools is so abysmal is the shortage of math and science teachers.  There is a well-established solution for a problem like this: pay more.  But teachers’ unions often forbid salary differentials based on the area of teaching notwithstanding that math and science experts are scarce as hen’s teeth and have plenty of alternative employment prospects, whereas you can’t swing a dead cat without hitting an art history or sociology major who isn’t unemployed or serving cappuccinos.

This is another way in which the boundless economic illiteracy and venality of the teachers unions are crushing the chances of the next generation.

Meanwhile, in England, the government is experimenting with specialized mathematics and physics schools for the smartest students.  These are modelled on similar schools in Soviet Russia, where the comrades were never burdened with the liberal aversion to investing in the most fruitful human capital.  Of course, these schools have had to overcome the dreaded charge of “elitism,” but the results are simply too good to ignore: the schools are in the top 0.5% of the country.

Someday I may understand why “fairness” demands massive efforts to help slower students, but it is somehow reprehensible to spare the brighter students the tedium of dumbed-down lessons.  But I hope that day doesn’t come soon.

Meanwhile, in the area of financing education, the private sector is once again schooling the government.  Climb Credit, a financial technology startup, grants loans to students pursuing courses that do not qualify for federal college funding.  These are frequently short, vocational programs covering subjects like web design or coding.  Climb’s focus is on classes with a demonstrated ability to lift earnings and generate a strong positive return (measured properly as the earnings uplift, minus the cost of the training and the opportunity cost of foregone earnings).

Climb uses statistical deep dives to calculate the returns on different programs from different schools, all the way down to the teacher level.  Climb then uses these results to fund only profitable training.  Climb also makes sure that the schools have skin in the game: a school is responsible for at least 20% of the loss if one of its students fails to repay a loan.  (Any relationship between these sensible provisions and the terms of the loans granted by the government are, of course, completely coincidental.)

Climb has granted 10,000 loans so far and it is capturing data with each one.  Once it builds enough statistics, Climb intends release the results, thereby providing extremely useful information for students.  Please note that the US government, which has been in the business of providing student loans since the 1950s, could have started doing this a long time ago.  Either the idea never occurred to the bureaucrats or, more likely, the information would have unmasked the folly of much of their activity and undermined many of their co-conspirators in the teaching profession.  And this must be avoided above all.

Finally, The Economist has recently run a special report on “Learning and Earning.”  The general thrust of the report is the rise of alternatives to conventional two- and four-year college programs, which actually do a pretty crappy job of preparing students for productive and rapidly changeable employment.  It is impossible not to juxtapose this with the recent efforts of Bernie Sanders and Hillary Clinton to subsidize further the conventional system.  One of the tenets of “public choice” economics is that whatever is always dominates that which is becoming.  Big government fans like Clinton and Sanders always drive the car while staring in the rear-view mirror.

Betsy DeVos and Sally Yates

Senators Susan Collins (Maine) and Lisa Murkowski (Alaska) have recently announced that they will vote against Betsy DeVos for the position of Secretary of Education.  Their objections to DeVos are so flimsy that this can only be a case of successful thuggery by the teachers unions.

I still need to write about the remainder of Trump’s nominations, including DeVos, but the short summary is that her strong support for charter schools and vouchers make her one of the good parts of the curate’s egg.  These things also put her firmly in the crosshairs of the left.  I am more and more convinced that distancing the government from education is one of the imperatives of our era.  The public schools are doing a lousy job of teaching the “three R’s” but an outstanding job of force feeding progressive propaganda.

Finally, a word for Sally Yates, the acting Attorney General whom Trump recently fired for instructing her underlings not to defend Trump’s Executive Order on immigrants and refugees because she did not find it “wise or just.”  Sally, that word is “resign.”  I share your views on the EO but so long as you are cashing your salary checks, it is not for you to make policy decisions.  So you should have either done your job or left it.  This is not rocket science.

 

Roger Barris

Weybridge, United Kingdom

 

I Wish That I Had Said That…

“As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron” by H.L. Mencken, in a quote that will become a regular feature of this blog until further notice (but without prejudice to those who were in the #NeverHillary camp)

 

[1] “Expected value” is a term from statistics that means the numerical value of something multiplied by the probability of its happening.  In this case, the probability is close to zero and almost anything multiplied by “close to zero” is a very small number.

[2] A quote usually attributed to the failed 1928 Democratic Party presidential candidate Al Smith.

[3] A strong recommendation is the Conversation with Tyler podcast featuring Pinker, which can be found here.

[4] This is a reference to the famous quote from President Truman who tired of hearing “but on the other hand” from his economic advisors.

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Posted in: Economics, Policy, Politics

Comments

  1. Anonymous
    February 5, 2017

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    How long before all of the former anglo-saxon colonies understand what the continental european countries who brought them about really mean when they speak about “education”? This ingratitude is not something continental Europe will continue to encourage.

  2. Anonymous
    March 28, 2017

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    Allow me to clarify my previous comment so that readers can build up the courage to respond to it and avoid this promising blog from becoming a tepid receptacle for the opinions of a small segment of the like-minded. In other words: let me have a go at trying to make this blog aspire to french, german, dutch standards of debate, i.e. of serious debate.

    Richard Hofstadter was not kidding when he wrote “Anti-intellectualism in american life”, nor was Allan Bloom when he wrote “The closing of the american mind” (there are no similar books in British literature – we can only surmise there was nothing intellectual, nothing to be closed on the island in the first place).

    The reason why the US and the UK are beginning to look like prominent candidates for failing populist states is because they never developed a talent for philosophy, never recognised their obligations to the greeks. They seem happy to be a ‘practical’ people, to play the eternal roman 2nd fiddle to the genius of that greek first violin, to be uninhibited by a talent for nuance, for the sacred practice of semantics: the age-old anglo-saxon crime of intellectual shallowness to frame the world in populist terms as a community of ‘economic men’ and be surprised to see this myopia back-fires when decades of multi-cultural endorsement posing as cheap open-mindedness, as people-as-economic-resources, contradicts everything Thatcher and Reagan ever had to say about culture, because they had no education, let alone any genius. E-ducation = philosophy. Why will people who speak the world’s most popular language, “bad english” (Prince Charles) never recognise this? Do we really need to divide for all the wrong reasons and see lesser cultures like Asia and the Middle East benefit from this?

    • Roger
      March 29, 2017

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      One obvious counterpoint: The most philosophical country in Europe, in the 18th, 19th and early 20th centuries, was Germany. Hands down. How did that work out? The Germany philosophic tradition gave rise to the two most horrific forms of government the world has ever seen: fascism and communism. Not an obvious endorsement of the wonders of philosophy, especially as it was practiced in Germany.

      And France? France? After Voltaire and some of the other Enlightenment figures, the rest is 99% bullshit.

  3. Anonymous
    March 29, 2017

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    It’s too obvious, too cheap, for that to be an ‘obvious counterpoint’. It is, in itself, a mark of lack of philosophical education. It would lead to far too elaborate comments for this blog to explain this properly here, but suffice it say that Germany (as you agreed in a former post) is by far the most exemplary democracy in the world. And that is because they absorb their admittedly tragic episodes like only countries with a proper intellectual tradition ever do. Similar but less so in France, for all their mistakes, the only other country where there is something that can be truly called informed political debate. It’s just unfortunate that most english-speakers never managed to learn enough french, enough german, etc to understand this point by engaging with that debate on its own terms. “Bullshit” is not the most eloquent way of putting an argument. And let me put it another way: I will be curious to see any continental european country elect a guy as president who has no education and tweets at 5am something like “Obama tapped my phone. VERY BAD”. This is in-sane. Literally. And I will be curious to see any continental european country appoint a guy to lead the most complex negotiations in recent times, who did not have good enough grades to get into university, and unsurprisingly, did not do his numbers on what various scenarios might look like. And thinks that does not matter. Because in addition to being illiterate he is also innumerate (only in anglo-saxon countries do people think that is OK, where ex-education ministers (Gove) can get away with saying “the people have had enough of experts”). The Brexit-negotiating step-son of a polish immigrant… reporting to a prime minister who voted ‘remain’. “Subjects” of Her Majesty, the biggest recipient of EU farm subsidies by far. In-sane. Read Hofstadter on Anti-intellectualism in the US, and similar writers in the UK.

    • Roger
      March 30, 2017

      Leave a Reply

      Sorry, but that’s not good enough.

      Before we carry on this discussion, you WILL have to explain why Germany, with its supposedly superior philosophical view, did give birth to the two greatest horrors of the 20th century: Nazism and communism. And, while you’re at it, you can also explain why the supposedly anti-intellectual Anglo-Saxons did produce the only political/economic traditions that have allowed humans to escape from utter barbarity: capitalism, the rule of law and representative democracy (as the least bad form of government). Even before Hitler, these were not exactly prominent in German political or philosophical thinking.

      And France. It is amazing that you can endorse France at all, which is probably the most poorly governed major nation in the world. The country that gave us the pompous anachronism that was De Gaulle, whose tradition still continues. The country whose “informed political debate” gave us not only Mitterand — who ruled when France was “much younger than today” (whatever that nonsense is supposed to mean) — but also Nicolas Sarkozy, who fits firmly in the line with Trump and Burlesconi. The country that is ruled by the products of ENA, which produces the type of educated morons that you seem to admire so much.

      In fact, that seems to be your problem. The Anglo-Saxon tradition, which you deride, is that it is the intellectual current least prone to the Fatal Conceit (to use the title of Hayek’s book, who was a Germanic intellectual who fully understood the fallacies of Germanic thinking) that the world is best constructed when it is ruled by an educated elite from the top down. This is the core of the German/French intellectual tradition with which you appear to be so enamored. It has produced only disasters.

  4. Anonymous
    April 2, 2017

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    Germany’s philosophy, as philosophy, i.e. as a body of thought, did not ‘give birth’ to nazism any more than christ’s teachings ‘gave birth’ to centuries of violent christian warfare, any more than the thought of the founding fathers ‘gave birth’ to the humiliation of native indian culture, the rightful heir and shepherds of that piece of geography, to endemic and persistent racist violence, or to repeated large-scale student shoot-outs on US university campuses.

    Nazism is an appalling historical anomaly that emerged from the ill-inspired political and economic humiliation of a country that the germans and we all know to outclass any other country, from an intellectual, commercial and military perspective. Humiliating that kind of country in that way is likely to lead to something that ends up looking like WW2. It would not be any different with any other major country. When the anomalous madness of a leader like Hitler is added to that context, you get the tragedy that was that historical episode. Nowhere can you trace any meaningful influence here of Kant, the Enlightenment’s towering figure, of Hegel, or of any subsequent or previous german thinkers.

    As for communist thought (mainly Marx): this has been the thought that inspired ALL western democracies to implement the urgent, necessary social correctives to the appalling excesses of anglo-saxon capitalism, and led to their improved modern social-democratic versions. There is no such thing as a western capitalist state: all western states, including the UK and the US, are historical balancing acts between the dismal, demeaning political view of capitalist thought, and the equally disastrous utopian view of communist thought (the milder form of which we call socialism; the pathological form of which was implemented in Russia, a country that, again, suffered from a particular cultural dynamic, and extended to the eastern european regimes under its tyrannic rule).

    Note that both capitalism and socialism suffer from the same ill: an overconfidence in the ‘will of the people’, to use a ubiquitous phrase now used by both Labour and the Conservatives (!) in the UK, and with equally populist resonance in the US, on both sides, when you look at Trump and Sanders. They have both, erroneously, been pursuing a view of life that has dropped all aspiration other than the merely appetitive satisfaction of economic man. When the shallow misconceptions, the weak thought, on both sides start to emerge in dramatic fashion, like they do everywhere now, those with some more cash and somewhat better job prospects, i.e. the (economic) right, will call for more capitalism, and those who do not, the left, will ask for more state intervention. Both are misguided by a lack of education, a lack of intelligent refinement.

    As regards France, let me be brief: France, post-WW2, has by and large, been the country where, on the whole, everyone always wanted to live, more than anywhere else, because their way of life, their savoir-vivre, was (seen to be) better. And that is the only test of a culture or a political regime, that is what they are about, what they are for.

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