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 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” 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, 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.”
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.
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)
 “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.
 A quote usually attributed to the failed 1928 Democratic Party presidential candidate Al Smith.
 This is a reference to the famous quote from President Truman who tired of hearing “but on the other hand” from his economic advisors.