As some of you have gratefully noted, I’ve temporarily given social security blogging a rest. However, my colleague Tim Lee is on the ball. Tim points out that Yglesias is either being shady or doesn’t know what he talking about in his article on transition costs to personal accounts. And, looking at the debate between Kevin Drum and Will Saletan over the retirement age, Tim wisely wonders why we got ourselves into the sort of system where extremely personal issues, like the age at which people choose to retire, becomes a matter government policy.

Here’s another little point I want to make about the idea of empiricism in politics and social science. The “empirical” results in the social sciences are often not gained through direct observation, but through often quite loose measurement techniques involving all sorts of proxies and approximations. So, when I hear somebody say “Real wages have declined since 1970″ or something like that, and I snort with absolute incredulity, and they point me to some BLS chart, and I demand to know how we calculate real wages, and then I’m told about the CPI, and I assert that the methodology of the CPI must be flawed because it is obvious by casual observation that real wages have increased a great deal, who’s the empiricist? Were economic liberals being good empiricists when they bitched about the Boskin report?

Alex Tabarrok (like his co-blogger, also at least as good an economist as Michael Kinsley) makes this sort of measurement method contesting move this morning on the WSJ Econoblog:

Is America on a consumption binge? In 2003 the savings rate was a paltry 1.2% — the lowest rate since the Great Depression, when savings briefly went negative. But before we tighten our belts we need to know that the standard measure of personal savings (from the National Income and Product Accounts) is highly flawed.[empasis added]

Savings in the NIPA are defined as income minus consumption. But what is consumption? The NIPA defines education expenditures as consumption, but try as I might to keep my students’ attention with the occasional joke, I think few would report that they are paying me for entertainment value alone. Education expenditures ought to be defined as investment financed from savings.

The NIPA also measures savings on an annual basis. But suppose that you are asked what your savings are. You probably don’t add up this year’s income and subtract this year’s consumption, instead you add up your stock of savings; the value of all of your assets including equities, bonds, net housing value, cash and so forth. The latter measure is the right one if we want to measure provision for the future.

The flow and stock measures of savings can easily move in different directions. Indeed, a major reason that the yearly savings rate has declined is precisely because the value of assets has increased.

A declining savings rate, therefore, can easily signal positive things about people’s net asset position. Similarly, we have in recent years experienced a boom in productivity. If individuals expect the boom to continue, it may be quite rational to reduce current savings.

If I insist that the CPI is screwy, or Alex insists that NIPA is screwy, it’s probably because we think it fails to adequately measure observed economic phenomena, or fails to take into account what our best theory says a measurement device ought to be taking into account. Imagine that the motivation for our complaints about measurement comes from our ideological commitments. So be it. Empricism care not about our motivation, as long as we are doing our best to save the phenomena.

My broader point is that the social sciences have a normative upshot. We care about how we measure and reason about the social world because we want to make the social world better. Our normative commitments will inevitably guide the way we generate hypotheses and affect our choice of methodological tools for testing those hypotheses. But this is not counter to empiricism. These are the mechanisms through which empiricism in the social sciences operate. Chait’s hackish claims of virtuous wertfreiheit empiricism betray a kind of self-satisfied naivete that actually threatens the kind of epistemic virtue necessary for empiricsm in social sciencces by encouraging a lack of reflection about the scientific producer’s and consumer’s necessary engagement with and commitment to norms in the social domain.

The empirical, descriptive task in the social sciences is not separable from the normative task. I believe that empirical investigation in the social sciences ought to be as neutral among values as possible. But the question of what constitutes a neutral investigative stance is not itself a question of social science, is essentially contestable, and the argument for wertfreiheit is itself a contestable normative argument. Science in general works because scientific practices and scientific communities embody certain norms and epistemic virtues. Science does not proceed through the application of a Baconian algorithm. Social science studies human action and human coordination, phenomena that cannot even be adequately described without mentioning the normative, goal-seeking nature of practical reasoning or normative features of coordination. (The idea of a market failure, for example, which Chait makes use of, is a normative notion about coordination.) And it seems neither plausible nor desirable for the social scientific community to to pretend indifference to the norm-ladeness of their domain.

Just how and to what extent the social scientist should engage with or be guided by normative conceptions in the conduct of empirical inquiry are very hard questions. Discuss at will.

Jonathan Chait’s article, “Fact Finders,” in the new TNR is one of the most obnoxiously blinkered pieces of self-serving political magazine writing in recent memory. I’m just flabbergasted by the stupidity of this thing. Chait’s claim is that liberals by and large are empiricists, willing to go where the evidence takes them, while conservatives (loosely and irresponsibly identified with free-market types) are dogmatists who will unaccountably but doggedly cling to principle even after being brought low by data. The claim is almost self-refuting. It should be impossible for an intelligent and observant person, such as Chait imagines himself to be, to fail to see the ravages of dogmatic narrowness on all sides. To claim the mantle of empiricism exclusively for liberalism (or any -ism) in the teeth of overwhelming evidence that that empiricism is water in ideology’s oil is a signal failure of empiricism.

An empiricist about the alignments of empiricists will surely comes to this (my) conclusion:
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Since Matt accused me of committing the pundit’s fallacy(and although I claimed in his comments that I didn’t, I sort of did,) I got to wondering what makes it a fallacy, exactly. The pundit’s fallacy putatively occurs when a pundit sets forth his own preferences as the solution to some kind of strategic political problem. So if Kerry is trying to become president, and I want federal money to save the narwals, I’d argue: “Kerry has thus far failed to recognize the vast but quiet pro-narwal constituency. A firm commitment to use federal resources to save the narwals could be the difference between victory and defeat on election day. Blah. Blah. Narwals.”

Clearly, this is ridiculous. But this kind of thing is a fallacy only if one misconstrues the intended illocutionary force of the pundit’s punditry. If the point of the pundit’s utterances are merely assertive, well, then the conditions of satisfaction are correspondence truth. If there is no vast narwal constituency, and it could not tip the election, then our pundit’s speech act goes unsatisfied. However, the illocutionary point of acts of punditry are very often directive, trying to get somebody to do something, so that the state of the world changes, rather than simply report on the state of the world. The pundit is trying to get enough people to believe that there is a narwal constituency so that (1) the Kerry people feel enough pressure to make promises about doing something about narwals, and/or (2) more people join the constituency, on the belief that many people are already on board, in order to increase the likelihood of (1).

Now, the narwal cause might be dead in the water (not sorry!), but it seems likely to me that this kind of thing often works. You can create a consensus by claiming a consensus, or by claiming the uniquely effective means to a widely shared end. If you can get enough people to share your preferences, then your preferences come to have actual political heft, and one way to get people to share your preferences is by persuading them that satisfying your preference would satisfy some other preference that they already have.

I have no doubt that acts of punditry with this kind of illocutionary point can and do meet their conditions of satisfaction. We are not surprised to learn that “It’s a little drafty in here,” can be intended to communicate a request to close the window rather than comment on the draft conditions in the room. We should not be surprised to learn that a claim of strategic necessity for one’s own preferences can be used to alter other people’s commitment to one’s preferences rather than make a comment on what’s really stategically necessary for what. So there is no good reason to think of this as a generally fallacious form of utterance. If a pundit out of myopic enthusiam asserts that their pet idea REALLY WILL make all the difference, that’s one thing. But if the pundit is trying to recruit allegiance to their pet idea by, in effect, asking people to imagine how their pet idea COULD make a difference, to try it on, to consider it, then it’s all good.

Michael Tomasky worries out loud that contemporary liberals don’t make any sense. Liberals strategize and strategize, but means require ends, and those are . . . what? Conservatives do better:

I’ve long had the sense, and it’s only grown since I’ve moved to Washington, that conservatives talk more about philosophy, while liberals talk more about strategy; also, that liberals generally, and young liberals in particular, are somewhat less conversant in their creed’s history and urtexts than their conservative counterparts are . . .

This is interesting largely because conservatives of late have been manifestly superior at strategy, too. Tomasky’s rumination raises the obvious question: to what extent is a coherent governing philosophy a strategic necessity? Answer: To a very large extent.

My diagnosis of the malaise of American statist liberalism is that it has failed to accept that many of the ideals of FDR and LBJ are best realized by decentralized means. Clinton represented the best in the possibilities of liberalism in welfare reform and his advocacy of free trade.

Tomasky implores liberals to revisit the Dewey/Lippmann debate. History and thought has moved on so much from the time of Dewey
and Lippmann that although their debate about democracy versus expertise still has some limited relevance, their politics simply do not. But I do encourage a review of the debate. If you can understand why Lippman was right about public ignorance & democracy, and wrong about bureaucratic expertise, then you’re on the road to a sensible liberalism.

However, American liberalism has a phobia of what’s down the road to a sensible liberalism and so remain The American Society for the Preservation of Historic Welfare Programs. This is both comical and dangerous. Comical because it’s hilarious to witness sophisticated adults confuse contortionist apologetics for ill-functioning, haphazardly structured, historically accidental government programs as an intellectually serious enterprise. Dangerous because the intellectual vacuity of the left allows the conservative juggernaut to pick up speed unimpeded.

I find the Tomasky article through Matt, who I would love to hear attempt to articulate a philosophy. I know what Matt is for, but I can never really make out why. I know Matt is some kind of utilitarian. That’s silly, but, well, utilitarians will always be among us, so what can you do? What I clamor for is the story of how Yglesian liberalism maximizes net utility? Come on Matt! Your people need you!

Arnold Kling also discusses the Daley/Hooks microfinance piece. But the valedictory Kling question poses a false alternative:

For Discussion. Which is an easier problem to solve–a shortage of capital, or institutional deficiencies?

I think it’s increasingly apparent that institutions are a form of capital. Money and machines are more or less useless, aren’t really capital at all, in the absence of a system of formal and informal rules that enables extended, stable mutually beneficial coordination. That was my largely point in this TCS article on the prospects of success in Iraq, and I’m sticking to it.

Steve Daley and Brian Hooks, my former colleagues at the Mercatus Global Prosperity Initiative, have put out a nice op-ed explaining why microfinance doesn’t get you far in the absence of a well-integrated set of political, legal, and economic institutions.

Personal bias aside, I don’t think anyone is making the case for the importance of institutions for development and growth with more force and clarity than GPI. Blather about institutions is ubiquituous in development circles, but the Mercatus guys actually know what they’re talking about. Speaking of which, check out Frederic Sautet’s new policy primer on “The Role of Institutions in Entrepreneurship“(pdf) for a good overview of the Mercatus position. And take a look at Steve Daley’s new policy comment on “Microfinance in Action: The Philippine Experience” for further detail on the problem of getting microfinance over the hump into the extended order.

The new Cato Policy Report is out, and the lead article is something I’ve written on what evolutionary psychology can tell us about capitalism. Check it out.

[If you're a print & read sort of person, here's the .pdf of the official printed version.]

In my notebook I see my notes for the question that I asked Layard at the Brookings talk last week, and which I meant to blog. Here’s more or less what I said/asked.

Well, context first. . . Layard had promoted abandoning the theory of revealed preference as the basis of economic inquiry and policy analysis and recommended substituting his brand of normative hedonism/eudaimonism.

I said:

You said we should give up on the idea of theory of revealed preferences. I want to defend it, and hear your response.

Perhaps the fact that people behave in ways that don’t maximize their happiness is evidence that people don’t always demand happiness. This raises two points, one scientific and one political.

The scientific point: Social science based on taking a side in hotly contested arguments about the metaphysics of value doesn’t count as science.

The political point: In a pluralistic society where people have fundamental disagreements about the nature of value, taking a side and basing policy on one philsophical conception of value is inappropriate.

Layard’s answer? He seemed to me to avoid the question. He reiterated a point he had made earlier to the effect that we can’t tell what makes people happy by observing their revealed preferences, or that individual behavior when scaled up to the macro-level can have results that fail to maximize happiness, or some such thing. (If someone who was there can remember just what he said, please do correct me, or elaborate.) Whatever it was, he didn’t even approach the scientific and political points, which I think deserve to be taken seriously.

How would you respond?

I am not now, nor have I ever been, an acrobat.

[Update: The mysterious Fey Accompli vouches for my authenticity. Now, regarding the Libertarian Girl debacle, it may be that I know all of the extremely attractive libertarian women in existence, although I am very glad to doubt it, but there are a passel of ladies of my acquaintance who put the mail-order bride to shame. (Fey, by the way, is loveliest of them all.) Why all the fuss for a 7.5?]

DC Ward One Councliman Jim Graham has a little poll on his website asking “Should the DC Council act to eliminate smoking in indoor workplaces?” (On the left column, a ways down.) Apparently the anti-freedom forces at Smoke-Free DC already got the word out and they’re way ahead in the poll. Will you help? Tell my councilman that DC should not violate the rights of business owners to run their establishments as they choose.

Elizabeth Anderson, of the University of Michigan and left2right, has heroically taken up the thankless task of very clearly illustrating the fact that mainstream contemporary academic American liberalism is, at its core, an essentially reactionary creed built around the conservation of the institutions of the “New Deal” and the “Great Society,” and the protection of the interests of the affiliated political rentier class. One would thus imagine that Anderson would at least understand the institutions she is trying to conserve against the forces of reform. But, no, not so much with the understanding.

Anderson argues that whatever the other faults of Social Security benefit calculators like Heritage’s, “It forgets that Social Security is a form of social insurance, not a simple retirement plan. So it’s comparing apples with oranges.”

Of course, readers of the Annals of Improbable Research understand that apples and oranges are eminently comparable. But more importantly, Social Security is emphatically not a form of social insurance — unless we arbitrarily stipulate that any redistributive transfer is ipso facto a form of insurance by providing people with resources that they could use to protect themselves from risk. Social Security is: a tax and a transfer. That’s it. It’s not insurance, not legally, not in structure, and not in fact.

The Roosevelt administration defended the constitutionality of the Social Security Act in part by arguing before the Supreme Court in Helvering v. Davis that it did not establish a social insurance program. The Court agreed, and reaffirmed this point 23 years late in Fleming v. Nestor where it determined that Social Security taxes are just taxes, and that individuals have no right to any benefit on the basis of having paid these taxes.

It is true that successive governments have maintained a deceptive program structure and system of admininstration intended to trick citizens into believing that there is a connection between their so-called “contributions” and their benefits, and that Social Security is a kind of insurance. Roosevelt fully intended for citizens to mistakenly believe that their payroll tax constituted a kind of insutance premium. He vehemently opposed paying benefits out of the general fund because that would impede the goal of deluding taxpayers. No one thinks they are entitled to some kind of cash transfer from the government simply because they have paid their taxes. And the SSA to this day continues to encourage the systematic deception of the citizens of the US.

You would imagine that a liberal would deplore a system of paternalistically motivated noble lies and would forcefully argue against this kind of deception as a transgression against democracy, which is what it is. We are angry when the government uses lies in order to circumvent the democratic process by causing citizens to misrepresent their options. Think of Bush and the WMD. We ought to be incensed when the government entrenches lies into the very structure of the welfare system.

Anderson has either been taken in by the lie, is trying to perpetuate it, or has a notion of insurance so broad that anything that cushions people against risk, such as exercising regularly, wearing a bicycle helmet, or cultivating a network of altruistic friends and family, counts as “insurance.” In any case, she ought to admit that Social Security is not an insurance program according to the law or according to ordinary usage, and she should stand up for transparency and democracy by condemning the purposefully deceptive structure and rhetoric of the American Social Security system.

I strolled up Mass Ave to Brookings this afternoon to hear Richard Layard speak on his new book Happiness. Layard, an unreconstructed Benthamite, is worried by the fact that, once a certain threshold in absolute wealth had been crossed, people’s self-reported happiness is correlated with their perception of their place in the distribution of income, i.e., by their relative wealth. Layard’s worry is that there is an arms race. Each of us tries to improve our relative position. But since everyone else is trying simultaneously to improve their relative position, very few end up succeeding in moving up relative to the others.

We’ve all perhaps moved up in absolute wealth, but that doesn’t matter so much for our happiness once we’ve crossed the critical threshold. All we’ve done is made a futile rush for a higher relative position, and ended up no happier. But we could have been spending our time doing better things.

Layard suggested that higher taxes might be worth having because it would create a disincentive to work, and this might help create a truce in the relative position arms race, freeing everyone to pursue activities that would positively promote their happiness.

Blah. Blah.

First of all, maybe the lesson we should take from this is that people just value status, period, independent of its hedonic effects. That is, perhaps the value of status cannot be reduced to the value of happiness. Casual empiricism would seem to confirm that people behave in predictably hedonically non-maximizing ways in order to maximize status. And it seem to me that many people find it very difficult to release a privileged relative position, even if they recognize that maintaining the position is making them unhappy. (Source: VH1: Behind the Music).

Some people — pehaps many people — would, other things equal, prefer an additional unit of status over several additional units of happiness. And in arms races over relative position, some people do move up. As long as the arms race does not make you significantly less happy, then it can be worth the gamble to jump in and try to be one of the few folks who succeeds in pulling ahead.

(Suppose that you’re very likely to stay in the same spot if you get in the race. And that when people pull ahead, they pull way ahead, but when people fall behind, they fall only a little bit. So even if you’re more likely to fall behind than jump ahead, the upside can still look big.)

Additionally, it can very well be the case that people are generally less happy when they have a lower relative position, more happy when they have a higher position, but don’t value higher position because it will make them happier. They value higher position because it is higher position, and getting higher position tends to make us happy because we value it, and we are generally made happy by getting what we value.

OK, let’s shift gears. Suppose I have written a transcendently great poem. Yet it very complex, and not very accessible. That said, a fair number people take great pleasure in it. However, this pleasure is swamped by the disutility caused to people who, before reading my poem, had thought that they were potentially great poets, but now are made to despair by the realization that they will never attain the heights of my poetic accomplishment.

Have I done a good or bad thing by writing my poem? Obviously: a good thing. The poem is transcendently great! It’s aesthetic value has next to nothing to do with its effect on net utility. Why care if it makes some people feel bad in comparison? Well, there is no reason to care.

To change the example slightly, suppose my poem raises the bar on poem-quality, and all my competitors rush out to write poems that will be even better than transcendently great. However, the effect of this is sheer frustration. They can never do it; I’m just that good! And here they went and wasted all that time failing to write transcendently great poems when they could have been lying in the sunshine, getting massages, or freebasing Prozac. IS THIS A PROBLEM WE NEED TO BE WORRIED ABOUT?

If the greatness of my poem creates negative externalities, they need to be negative externalities we have reason to care about if we’re going to take them into account in policy making. Parfit or Scanlon, in an argument against the pure preference satisfaction theory, give the example of a person who prefers that Uranus has six moons over any other number of moons (or something like that). If it turns out that Uranus does have six moons, is that guy any better off in any sense that we have a reason to care about? Well Parfit/Scanlon don’t think so, and neither do I.

Similarly, if you are a small person, and my success makes you burn with pained resentment, do we have any reason to take your pained resentment into account when evaluating the value of my success. I think not. The problem here is your unreasonable reaction, not my success.

Back to the poetry arms race. Suppose all those lesser poets are made unhappy by their persistent failure to achieve at a trancendent level despite their years of mindbending labor. Should we conclude that the arms race was a bad thing? Obviously not if it led to the creation of a lot of poety which, if not transcendently great, is still great. Maybe the lesser poets can learn to take satisfaction in the value they’ve created, despite their subordinate position in the pantheon of poets. But if they can’t that’s their problem, not a social problem. Similarly, if folks fail to make any progress in the race for relative economic position, they will have still improved everyone’s absolute economic position, which is just good. They will also have produced many wonderful conveniences, objects of beauty, wonder, delight, and technical merit. They will have increased the sum of human knowledge. They will have opened up new avenues of possibility for human life.

Gentlemen, on your marks!

What’s wrong with people owning things? Well, if people own things, then the government doesn’t really control it. Apparently it is worrying if the benevolent members of the political class don’t have the discretion to spend your money. I think it is impossible to defend on moral grounds that other things being equal, if the choice is between individual ownership and state control, we should choose state control.

One of the arguments in favor of individual ownership is that property rights create a shield against political predation. Yglesias, who seems to think that other things equal it’s better for the political class to control resources, blithely says, “Why worry!?“:

One [remark on the issue of the relative security provided by legally binding property rights versus the discretion of the politicians] is that while I’ve heard much touching concern from certain privatizers about this “Grace of Congress” issue, the more typical conservatarian complaint about Social Security is that due to the ever-growing voting power of senior citizens it is, in practice, nearly impossible to cut Social Security benefits. So the whole issue strikes me as being of academic concern only.

Matt is pulling a kind of probably unconscious bait and switch here. This is all too common among conservative opponents of progress on social security. Unless there is structural reform of the social security system, such as the implementation of personal retirement accounts, either there will be VERY LARGE future tax increases or VERY LARGE future benefit cuts. The problem with Big Senior’s hegemony and reactionary impulse is not that it makes benefits cuts permanently impossible by constituting an indefeasible coalition, it just pushes the decision into the future while the problem continues to mount. The further into the future we push the problem, the bigger the benefit cuts or tax increases will need to be.

Now, politicians are indeed averse to cutting benefits, due in part to the electoral muscle of Big Senior. Yet they are also averse to raising taxes, due to the electoral muscle of taxpayers. Unless we do something quite soon, the tax increases will need to be quite large. This may not be politically easy, and it is quite realistic to imagine that voters may prefer to cut benefits rather severely in order to avoid giant tax increases, at which point, politicians will cut benefits. Matt’s bait and switch consists in having us imagine that voter demand over policy-bundles remains constant despite the fact that the demographic unsustainability of the system will force tough trade-offs that will alter voter demand.

Matt’s argument is that senior citizens will never allow benefit cuts and so the “Grace of Congress” point is simply academic. Congress will always grace us, so why worry? Well, if Matt is right about the intrasigence of Big Senior, we’re going to need a giant payroll tax increase. Indeed, those who wish to stall serious structural reform are arguing for huge tax increases by default. But the real prospect of a huge tax increase is precisely the sort of thing that will shift voter demand so as to make benefits cuts politically feasible. And so by stalling, Matt is helping to bring into being the conditions under which the Grace of Congress argument gets real teeth.

Unless there is serious structural reform, reduced benefits become increasingly likely. That’s why it’s simply dishonest and incoherent to confuse a politician’s promise with a credible guarantee. There is no guarantee. There are no guaranteed benefits. There are promised benefits — promised by people who honor their promises when it benefits them. And, credibility of politicians aside, given the structure of the system, the promise cannot be kept.

The “conservatarian” argument is clearly not that Big Senior obstructionism regarding reform locks in a sure benefit level, but that it threatens benefits by making the problem ever more acute. At some point, the problem is so acute that the Big Senior coalition will not be political decisve regarding the issue of benefit levels. One main point of reform is to avoid the need to choose between tax increases and benefit cuts, and the political uncertainty the necessity of such choices would create.

I don’t understand the principal of just savings.

Rawls says that parties to the OP will pick a principle of savings that satisfies maximin, that maximizes the welfare of the least-well off group. But I cannot make intelligible to myself just who the least well-off group is here in the inter-generational context. It may turn out the best off person in generation 1 is much less well off than the least well off in generation 7.

So, OK, suppose I’m a party to the OP. I don’t know which generation I’m in. So, I’ve got to assume I’m in generation 1, on the assumption that later generations are better off because of the accumulation of capital. And I am suppose to ask how much I am willing to save, on the assumption that generation 0 has saved at the same rate, and that future generations will follow the same principle. I am assumed to have my children and grandchildren in my (primary goods maximizing) welfare function in order to ensure I don’t choose to save nothing. But it seems that there’s no firm place to stand.
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I wish everyone would read Paul Romer’s “Preferences, Promise, and the Politics of Entitlement,” in Individual and Social Responsibility, edited by Victor Fuchs.

Romer tells the story of exactly how concerted and intentional is the deceptive rhetoric of Social Security. The ideas of SS as “insurance,” the payroll tax as “contributions,” and the “trust fund” were purposeful rhetorical ruses deployed to lock in political support for the program. The point was to create the illusion that a tax plus a regressive transfer from the young to the old (which could not have maintained political support) is instead a form of social insurance, which it manifestly is not. The illusion — the lie — has succeeded brilliant. Indeed, Romer’s paper suggests that Social Security may be the best example of purposefully deceptive framing for political gain in the history of the United States. (That’s the lesson I take from it, in any case.)

Unfortunately the paper is not exactly online, but you can probably make your way through it using the Amazon “Search Inside” function (link above).

For various reasons I have gotten pretty involved in the literature on endogenous preference change. My first push came from reading Rawls. As I see it, the key difference between Rawlsian contractarianism and Buchanan/Gauthier rational choice contractarianism is not just that Rawls posits a sense of justice, a capacity enabling agents to be motivated by considerations that nicely allow for the choice of non-Nash, Pareto-improving strategies (Gauthier’s “constrained maximization” gets you this, as does McClennan’s closely related “resolute choice”) but that Rawls has something of an account of endogenous preference change that accounts for the convergence of the right and the good and thus the stability of social ordered according to the principles of “justice as fairness.”

The trouble with theories of endogenous preference change is that they seem the ruination of neo-classical theories of efficiency. The usual Pareto or Kaldor-Hicks (or Marshallian, if you like),criteria for efficiency work only by holding preferences fixed or exogenous. We evaluate the desirability in changes by tracking their relation to people’s preferences. If a change makes someone better off and no one worse off, in terms of preference satisfaction, then it is worth doing. But if a change can modify individuals’ preference-profiles themselves, then our efficiency criterion becomes a moving target, and one becomes quickly mired in paradox.
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Tim’s link to Andrej Bauer’s primer on Objectivism reminded me that the cartoon Rand of our zeitgest dreams was never put to better use than by the astounding artificially intelligent replicated personas of Forum 2000. Here AI Andrej discusses the axiom of identity with AI Ayn. Also try here, and here.

That Reason’s so-called Rand-O-Rama failed to acknowledge Forum 2000 shows the editorial staff to be so overoccupied with working obscure song lyrics into the titles of blog posts, outsider art, waxing lyrical about New Jersey, and generally kpeping nihilism fresh, that they neglected to touch on the ubiquity of Rand’s spirit in the bygone heyday of the information superhighway.

This absolutely arbitrary and wonderful Observer article about indie guys who also happen to like football contains some gems. My favorite:

And what about the girls? Indie-rock girlfriends, who thought that when they started dating music boys they were leaving football Sunday behind forever, are pissed off to discover that they thought they were getting Joe Strummer but actually got Joe Buck. In fact, at the league-championship party in Bushwick, the host’s girlfriend took off during the game to do the most opposite thing ever—make a mix tape on the occasion of her friend’s little sister’s first period.

The most opposite thing ever!

I would enthusiastically endorse the Larry White plan if it was possible for the state to credibly commit to refusing benefits to people who fail to invest.

Here’s Larry’s idea:

Here’s how it works: we give Ms. Smith, a worker, the right to opt out of paying $100 in social security payroll taxes provided she also opts out of (say) $103 in future Social Security benefits. She can now save her $100 privately. She will consider herself better off opting out if she thinks she can earn a return of better than $103 for each $100 saved. Voila, who could object?

Maybe we can throw in a little benign paternalism, and have the payroll taxes automatically roll into some kind of investment account by default.

Anyway, nice idea.

For some time I have been persuaded by Georges Rey’s account of meta-atheism. (Georges was one of my teachers at Maryland.) His claim is that many people who say they believe in God don’t really. It’s not that people are lying about what they really believe. It’s just that we’re often wrong about our own beliefs. (Our own beliefs are just another thing to have beliefs about, and we can get it wrong about our own beliefs just like we can get it wrong about anything else.)

This weekend, I had a thought which is a version of Georges’s point (6) in favor of meta-atheism. Here’s point (6):

(6) Betrayal by Reactions and Behavior People’s reactions and behavior (e.g. grief, mourning) do not seem seriously affected by their supposed “belief” in a Hereafter. Imagine a young “believing” couple. He is dying from a painful disease. Would she really rejoice at the prospect of his going to heaven, and of joining him herself when she dies, as though he’d just gone off for a great –eternal!- cure in a luxurious resort in Miami? I betcha she’d grieve and mourn “the loss” like anyone else. (Note that most all religious music and rituals surrounding death are deeply sad -seldom, if ever, joyous).

In a related vein, if people really believe in the efficacy of prayer, they should be willing to have the National Institute of Health do a controlled study of the effects of prayer, just as they would if they believed that soy beans cured cancer. (And why does no one expect prayer to cure wooden legs?)

Let it not be said that Georges is an ideal diplomat to the theistic community. Nevertheless, I believe his observations are sound.

In a fit of Beckerite rational choice reasoning, I decided that theists ought to have higher rates of death by accident. If I believe that heaven is infinite bliss, then I should be quite eager to join my maker. Suicide is a disqualification for paradise, but dying in a car accident isn’t. So, one should expect that theists who believe in perpetual Miami would take more risks than those who do not so believe, and that thus, death-by-accident ought to be higher among believer than non-believers.

My guess is that there is no difference in rates of death-by-accident among believers and non-believers. If my guess is correct, then there’s another reason to believe that many people don’t really believe in God, even though they think they do. Or, at least, there’s a reason for rational choice economists to believe meta-atheism.

All this was stimulated by a Ross Douthat post that touches on Orwell’s attitude toward a character in a Graham Greene novel. Orwell:

Scobie is incredible because the two halves of him do not fit together. If he were capable of getting into the kind of mess that is described, he would have got into it years earlier. If he really felt that adultery is mortal sin, he would stop committing it; if he persisted in it, his sense of sin would weaken. If he believed in hell, he would not risk going there merely to spare the feelings of a couple of neurotic women . . .

Douthat:

If he really felt that adultery is a mortal sin, he would stop committing it. This is astonishingly obtuse, and something that could only be written by the most bloodless and Puritanical of Christians — or by a devout atheist like Orwell. For him, I suspect (and perhaps for Hitchens?), the always-upright Christian is fairly comprehensible: he has his dogmas and he lives by them, with the same lack of nuance, backsliding, and self-doubt that Orwell brought to his staunch unbelief. Whereas understanding the tormented Christian, the questing agnostic, the atheist who takes a gamble on God and the Catholic who commits suicide — the stock-in-trade of Greene’s great novels, in other words — requires an imaginative leap into religious experience that an atheistic critic is often ill-equipped to make.

The Orwell’s astonishing bit of obtuseness (”obtusity”?) is the core of Georges’ point (6) and my little Beckerite addendum. Is Georges obtuse on this point? Am I? Well, let’s concede the possibility of weakness of will. Discount rates won’t help here because no matter how sharply you discount infinite bliss, it’s still infinite. But if I truly believe the hype about my celestial reward, or my infernal punishment, how can I fail so utterly to align my actions with my incentives. Ross’s point makes it sound like it is obtuse to question the coherence of a character who truly and hosetly loves life, but flings himself from a rooftop anyway.

I submit that meta-atheism is the key to understanding the “nuance, backsliding, and self-doubt” that Ross sets out as central to the religious experience. Many of us believe that we believe because the social and psychological benefits of appearing to be a believer seem to us greater than the costs, and the most compelling way to appear a believer, but to avoid the behavioral costs of actual belief, is to earnestly but falsely believe that one believes.

Our “faith” is shaken when we find we cannot stop cheating on our wife, or whatever our transgression may be, because, on some level, we know that if we really believed what we believe we believed, cheating on our wife would be psychologically impossible — like peeling the skin off your screaming baby out of sheer boredom. Yet the general value of our self-deception is so high that we cast about looking to preserve it. If our religion is a good one, well-adapted to survive in the forbidding habitat of a human psyche, it will tell us that we are fundamentally and irremediably broken, flawed, and unsuited to virtue. And THAT explains why we can be so abjectly and arbitrarily irrational. So grateful are we for the explanation of the possibility of our misbehavior, and thus the possibility of retaining the deep benefits of religious conviction and a religious form of life, we redouble our faith in our faith, and our religion tightens it’s embrace on us we tighten our embrace on it.

Today is Ayn Rand’s 100th birthday. Bryan Caplan, who is smarter than you are, defends Rand’s legacy at the EconLog. I especially like this bit:

Yes, many of her philosophical arguments are question-begging. Shocking… unless you’ve read the work of Descartes, Locke, Kant, or Mill. They all make plenty of embarrassingly bad arguments. If you don’t want to dismiss their whole subject matter, you’ve got to judge philosophers based on their best work and/or the novel questions they raise. And by that standard, Rand more than holds her own.

Right on. Bryan mentions that he wouldn’t be a professor if it wasn’t for Rand. I certainly wouldn’t have studied philosophy (and wouldn’t be working at Cato) if Rand hadn’t convinced me that philosophy really matters. But more than that, Rand more than anyone I can think of, makes philosophy seem downright romantic. John Galt’s the bomb not just because he solves the problem of energy scarcity, or engineers the collapse of a parasitic corporate welfare state, but because he’s a philosopher!

I think Tyler’s right about what you really learn from Rand, even if you’ve given up on most of her particular arguments:

The true take-away message is a reaffirmation of how the enormous productive powers of capitalism — the greatest force for human good ever achieved — rely on the driving human desire to be excellent. I don’t know of any better celebration of that combination of forces.

Rand teaches a deep-seated reverence for innovation and discovery, and a heightened sensitivity to the dark motives that often underlie appeals to the commonweal. After reading Rand, you cannot live in a capitalist order and fail to appreciate the great glorious gift of innovation driven by the self-interested pursuit of excellence and wealth. And you cannot live in DC, the town of ten thousand Mouches, and fail to see daily how the fuel of resentment, parasitic avarice, and powerlust blazes in the rhetoric of shared sacrifice and fires the black engines of the state.

In the course of a fascinating post in which he discusses Geoff Pullum’s claim that there is a kind of third way between linguistic descriptivism and prescriptivism, Glen Whitman wonders about the relative merits of internal versus external normative critique of systems of social rules. In the process, he quotes the ubiquitous Uncle Fritz (from LLL, vol. II), and then comments:

If we are to make full use of all the experience which has been transmitted only in the form of traditional rules, all criticism and efforts at improvement of particular rules must proceed within a framework of given values which for the purpose in hand must be accepted as not requiring justification. We shall call ‘immanent criticism’ this sort of criticism that moves within a given system of rules and judges particular rules in terms of their consistency or compatibility with all other recognized rules in inducing the formation of a certain kind of order of actions.

Hayek’s argument hinges on two aspects of his thought – first, his severe doubts about the ability of human beings to fully comprehend the functionality of their social norms (an epistemological position); and second, his belief in an imperfect but usually beneficial process of cultural evolution. If one doubts either of these positions, external critique might seem more sensible.

I agree with Glen, but there’s more to the point of internal critique than just this, I think.

Hayekian immanent criticism bears a close resemblance to Rawlsian reflective equilibrium (RE). I believe the most overlooked aspect of Rawls account of RE is that the raw material for reflective moral deliberation flows from from the same capacity that accounts for moral motivation. If we use commitment A to criticize commitment B, and vice versa, and end up with a new commitment C, we can marshall the motivation associated with our initial commitments into the service of C. The problem with external criteria of the right is that they may have no connection to the commitments that govern our moral motivation. The external criterion may tell us that we ought to have commitment D. But there may be no plausible psychological path from here to there. So a system of rules constructed according to an external criterion (the principle of utility is an excellent example) will be regarded by actual people as alien and offensive to their moral sensibility, and will not gain their willing compliance. A system of rules arrived at through a process of reflective equilibrium or immanent criticism will generally have a connection to our prior tendencies of judgment and motivation, and will therefore be more likely to gain willing compliance, and will therefore more likely be stable and viable as a system of rules for real people.

Reliance on immanent criticism is, I believe, a hallmark of a genuinely liberal, non-utopian cast of mind. Because people don’t like to comply with rules generated by external criteria — because we don’t recognize them as binding — those committed to these criteria may get it in their heads that the little people need to be forced to follow the rules, or have their moral sensibility “re-educated.” For their own good, of course. In this respect Rawls and Hayek are very much on the same liberal team against socialists too much in the grip of an external theory about an optimal order.

NB: the line between a highly refined and developed internal critique and an external one is fine indeed.

Jacob Levy has been sighted in Yglesias’s comments making helpful clarificatory points about Rawls and Hayek.

Regarding the Rawls luck argument, of which Matt remains unwisely enamored, may I suggest my August TCS essay, which also gives substance to Jacob’s point that the luck argument proves too much?

Chris Dillow usefully collects a number of pertinent Hayek quotes regarding the debate about income and desert.

I think it’s useful to clearly reiterate what Hayek’s argument about the connection between distibution and overall moral desert really is. I think this is basically the argument:

The setup:

Gather the names of everyone inhabiting a certain social order (pretend that there is some non-arbitrary way to draw the boundaries between orders or societies). On the first list, List A, order the names according to some standard of overall moral virtue or praiseworthiness, from most virtuous to least. On the second list, List B, order the names according to last year’s income, from high to low.

Conclusion:

If you pick a name at random, there will not be an especially tight correlation between its place on List A and List B.

Reasoning:

Income is determined for the most part by the supply and demand for different forms of labor, and the supply and demand for capital (which determines rates of return for those with savings or investments), and an individual’s overall moral merit has almost nothing to do with the overall supply and demand for labor and other forms of capital. If computer programmers are in short supply, for example, they will command high wages, whether or not they are saints or sinners.

That’s the argument.

Now, Hayek’s larger argument about social justice is that it is incoherent to look at List B and criticize it for failing to map onto List A, or to map onto any other list ordered according to whatever normative standard you like as long as the general system of rules (both formal and informal) is desirable.

And we should

“. . . regard as the most desirable order of society one which we would choose if we knew that our initial position in it would be decided purely by chance.”

Or

“The Good Society is one in which the chances of anyone selected at random are likely to be as great as possible.” [LLL, vol. 2, p. 132]

Now, crucially, there is nothing in this argument that says that Gary (picking a name from list B) did not deserve $50,00 in 2004. The argument is that it is incoherent to say that Gary deserves his ranking on List B, which is determined by Gary’s income, which happens to be $50,000, and the number of people who brought in a greater income.

Suppose Gary inhabits a fairly Good Society in Hayek’s terms. Now it turns out that Gary entered into an agreement with the Institute for the Study of Distributive Justice that says that Gary will be paid $50,000 over the course of 2004 if he completes a number of tasks to the satisfaction of the ISDJ. And he did complete these tasks to the satisfaction of the ISDJ. So Gary straightforwardly deserves, has a genuine moral claim on, exactly $50,000 from the ISDJ.

And the ISDJ pays, as justice requires. Now, Gary’s $50,000 earns him a certain place on List B. Suppose Gary is on line 1000 of List B (it’s a very small society). Does he deserve to be on line 1000? Hayek’s argument tells us that this is an ill-formed question; it contains a category error. As Will Munny so wisely observed in a different context, “Deserve’s got nothin’ to do with it.”

If the winds of supply and demand throughout the economy had blown differently, Gary might have moved up or down List B, and this obviously has nothing to do with anything Gary can take credit for. So there is something pretty contingent and normatively arbitrary about his rank on List B. A butterfly spits in a pitcher of lemonade and he moves up to line 1001. Whatever. Nonetheless, Gary really and truly morally deserves $50,000. But not from society, which makes no sense. Gary has no claim against you and your sister. He has a claim against the ISDJ, with whom he entered into an agreement within the context of the rules of a pretty Good Society. They owe him, because that’s the amount they agreed on, and Gary came through. He has it — the agreed-upon amount — coming.