Wednesday, June 22, 2016

Expertise is Overated (On Average)

The recent hoopla surrounding Brexit has shined a dusty mote through the Overton Window. The media narrative surrounding Brexit consists mostly of an expert consensus that a Brexit would be disastrous for the UK. Let's unpackage this a little bit.

First, the Overton Window of acceptable political discourse in the UK appears to share commonality with the media narrative across the pond: politics is run by experts. Like a Matryoshka doll, we unpackage this idea and find another, smaller idea: politics, and the social sciences in general, are as a boat in a predictable sea of causation and experts are the captain who steers the till.

We could stop at this adorable, smaller Russian doll; but, then, we would deprive ourselves of smaller, more adorable dolls.

A politician or political consultant gains expertise by obtaining the necessary credentials; the necessary credentials are legitimate because the social sciences are, like physics, subject to the regular concatenation of natural phenomena; and, to tie up this memeplex in a nice bow, those credentialed at the most prestigious schools for social sciences are the experts who steer the worlds economic and political policies.

Thus, we arrive at the final doll: an adorable technocrat: a Harvard grad who spent time in the London School of Economics, did a stint at Goldman and is now an unelected official of a central bank or supranational entity like the UN or EU. While the technocrat is the height of expertise, there are many who would aspire to this position, but fall short. The opinion of these people (professors of economics, pundits at popular newspapers, talking heads, bureaucrats, etc...) still carries expert weight and when the opinions of all the experts reach critical mass, we reach the black hole of the social sciences: consensus.

The alternative view to technocracy, and a view that is outside the frame of the Overton Window, is that individual humans are the subject of the social sciences. The ideas that animate human actions are currently unmeasurable and by introspection we find that our own motivations are a complicated mess of competing interests. While humans in general display trends, they remain a rather unpredictable subject in contrast to the movement of particles in a vacuum whose interactions exhibit such regularity that we refer to theories of their behavior in some cases as laws.

Gravity, electromagnetism and mechanics are enough understood to the point that our complex society relies on the laws of their behavior remaining static. If gravity changed tomorrow, or oppositely charged particles no longer attracted, we would find chaos now ruled where order once did.

Conversely, if humans in my general vicinity tomorrow decide that aviator sunglasses are posh again, a new trend in human behavior has developed in favor of an older one. The individual human actions that create the market for sunglasses will respond by decreasing the availability of Wayfarers and increase the availability of aviators. If bomber jackets came to be preferred as well, we would all look like pilots in a very brief period of time.

What does this have to do with Brexit? If I google sunglasses, I am gifted with 174,000,000 results. If I click on one of the first links to Zappos, I am offered the option of browsing sunglasses by the geometric shape of my face. There are a lot of individuals interested in satisfying my need for sunglasses and it would behoove them greatly to know what I wanted before I did. The number of participants in the market makes evident the fact that very few people are successfully predicting and monopolizing the market for sunglasses. This is basically true for most markets, and is true in general about the predictability of human action.

In short: politicians, economists and pundits do not know what the consequences of Brexit would be. If they did, they would be billionaires and likely to be uninterested in trying convince other people of what they already knew: individual human action is impossible to predict and you'd be lucky to spot a trend.

Wednesday, June 15, 2016

Cultural Etatism (part 2)

When referring to goods for sale, prices reflect subjective valuations that take into account a bundle of information regarding what people expect to receive for what they must give up. If deciding to trade a shell for a coconut, I must consider the past uses of coconuts, my present need for coconuts, as well as any possible future uses of coconuts. If I expect to gain from trading a shell for a coconut, I will establish a price, the shell. If one thousand people establish a market for shells and coconuts and the going rate for one coconut is 1.25 shells, we can infer what people in general think about the relative value of those two goods. I do not need to poll all one thousand people to confirm the price of the coconut established by free exchange; and, likewise, I can not quantify all the various purposes, experiences and beliefs about uncertainty which are included in the price of the coconut. Suffice to say that price entails a lot more information than some objective rate of exchange.

Cultures, too, represent valuations, but along more metaphysical lines: cultures develop to determine what shared ends a people will acquiesce to striving towards and the acceptable means for striving towards them. All cultures say something about what a people respect with regard to property, family, law and religion. While we are raised in a culture, we often don't stop to consider the various costs of maintaining our participation in that culture. Some means are given up to respect the cultural boundaries set for relationships and laws, and some ends are given precedent over others such as the various bans on polygamy, assault and smoking in public places. While the price of goods and services allocate capital in ways that tend to increase overall capital, then the price of culture generates a system of interacting that is conducive to the long-term furtherance of shared ends.

The prices established by a culture are thus a sort of self-censorship or impulse discrimination, and, like the prices of goods and services, is established over time. As the individual process of valuation coalesces around a definite set of ideas, a coherent culture begins to take shape.

As governments pry into a market, either by regulation, tariff, monopoly or otherwise, the information provided by prices in that market is distorted to reflect an arbitrary set of information. Instead of prices reflecting the preferences and valuations of everybody, they reflect the goals and orientations of just a few people whose use of force to implement their own valuations disrupts the information transmitted by otherwise unhindered prices. Most economists understand the general effects to be expected from price floors and ceilings; and, it is generally understood that banning substances simply moves the market for the illicit items underground. So to with cultures.

When government regulates cultures as in anti-discrimination laws or by inhibiting certain forms of speech, they are suppressing the cultural prices established by otherwise voluntary interactions. Anti-discrimination cases does not eradicate discriminatory thoughts any more than banning cannabis has resulted in the disappearance of that drug from an accessible market.

Much like the government depends on the wealth extracted from the accumulated capital of its people, it also depends on the culture of those people to acquiesce to those ever greater intrusions on voluntary interactions. From the perspective of the politically-oriented bureaucrat or anyone supported more by government action than what would be offered voluntarily, culture is an impedance to the continuing growth and influence of government.

In the last 100 years of Western culture, governments have substituted legislation for voluntary interaction and have maintained these programs through force of law or subsidized them by taxation and monetary inflation. It is no longer enough that marriage is sacred because it was arrived at by generations of people learning to live and prosper together; today, it is sacred only by decree of the tax benefit derived and established by a license granted by the state (and taxed). Language used to be inhibited by good sense. Today, we find laws against various forms of speech, especially as related to various minority groups. Egalitarianism is the justification for force in the marketplace of culture, but it is a theory of justice that no marketplace of thought has agreed to.

As cultural bonds are replaced by interventionism, the movement of political and cultural thought will become more and more reactionary. As the grounds for implementing new legislation is based more on a historicist view of progress, the whole foundation of classical liberal ideas on which so much wealth has been created will be destroyed by the whims of short-sighted ego-maniacs and the support received from a people devoid of a sense of their own history.

Cultural Etatism (part 1)

The salient feature of the human experience is the dynamic process of valuation. From the philosophers of ancient Greece to the Pygmy tribes of the modern Amazon, humans have been universally faced with a scarcity of time and resources about which they must make decisions.

Man's primary end is survival and he has proven resilient among the animal species from one end of the globe to the other. While other animals live and die as a process of natural selection over which they can exert no influence, the mind of man has made him uniquely aware of his situation and capable of not just adapting to his environment but manifesting his imagination and building on top of the natural world his various civilizations.

As man conquered the limitations of mere survival, he found further unease with which to contend: a better roof, a warmer hut, a sharper spear. As man progressed from eliminating one unease to the next - in effect, as civilizations progressed -  another aspect of human nature is made clear by a methodological individualist understanding of history: the unceasing and various existence of unease experienced by man. Man seems to have an infinite capacity to experience unease. As his material standard of living grows further away from mere survival, new uneases begin to manifest that affect his psyche and his spirit.

Coincident with the leisure of time afforded by capital accumulation, the various philosophies of man have been constructed in order to deal with the intangible manifestations of unease: new ends beget new means and the various systems of thought were borne.

I am going to digress for a moment. I make the points above in order to make evident the innumerable ideas which have needed to grow and evolve in order to animate the various actions of modern man. The collections of humans tentatively organized around common systems of thought from social networks to loose cultures to whole civilizations share common threads in the valuation of certain ultimate ends; but, the means to attain them are enormous and unquantifiable being that they are the subject of thought.

As people gathered together, they began to share ideas about ends and means. Those people whose experience differed greatly from others were able to pass on a priori understanding of possible future situations, probabilities and uncertainties, new ends and new means. No longer was personal experience necessary to gain understanding about the world. Ideas about what to strive for and how to strive for it were shared between humans who saw in others a common rationality and the benefits conferred by a shared system of ultimate ends.

Cultures formed first around the need to survive and grew to encompasses ideas about more metaphysical ideas like family, marriage, religion and law.  I contend that these experiences formed over generations and solidified into institutions as a result of meeting highly valued ends. In a sense, one can perceive culture as a fractal composed of the experiences and valuations of individuals and settling around the most shared values. Cultures thus can be analyzed around their shared ideas.

Tuesday, June 14, 2016

The Overton Window and Historicism

"[Thymology] is what a man knows about the way in which people value different conditions, about their wishes and desires and their plans to realize these wishes and desires. It is the knowledge of the social environment in which a man lives and acts or, with historians, of a foreign milieu about which he has learned by studying special sources."Mises, Theory and History

A once popular conception of history seems to have crept back into the Overton Window. Although historicism has been defined in numerous ways, it seems to refer to an understanding of history in which individual volition plays only a small part: individual actions are bound by time and place, by culture and history. So of WW2, we might say that Churchill acted in accordance with a nebulous historical and cultural force; we might even allude to a greater destiny being worked through a man whose actions were in a position to have significant influence on the same history that seemed to be moving him. How convenient!

The same views seem to be consistent with a Great Man view of the past in which the turning points of human history rested on the actions of incredible men (and women: I'm looking at you Cleopatra and Helen of Troy). However, this view seems barren in light of individuals whose actions were never recorded and whose histories have never been told. The view also belies a concept of complexity where a world in which the flap of a butterflies wings may not necessarily cause a hurricane, but the coordinated actions of hundreds of thousands of individual human actors are explained away as the necessary lurch of progress.

Several problems exist with a view of history consistent with historicism, not the least of which is that no general laws of human conduct can be inferred from such a view; and, thus, no science towards a better understanding of realizing particular ends can be achieved. Perhaps the most pernicious outcome of the outlook of historicism is the opportunity which is created to justify death and destruction. In light of WW2, of the millions who died in pursuit of their individual ends, we may only say of them: they were valiant cogs in the struggle towards a better, more prosperous and peaceful future. Under this view, we may not say that perhaps those millions died in vain to serve the ends of a few ambitious men's desire for greater power and glory. Almost any outcome of any event can be construed as a satisfaction of historical progress. This is comparable to Marx's view that the proletarian would inevitably struggle towards the realization of a perfect Communism through the material productive forces of history. So, when Stalin starved several million farmers, they were only part of the larger struggle towards a more perfect future - which still fails to materialize more than a century later.

The Overton Window encompasses bundles of ideas which public discourse uses to make sense of the complexity of the present. The Window is influenced heavily by academic, political and commercial forces who rarely have as an ultimate goal the better understanding of truth. Their constituents, rather, benefit in one way or another by continuing the discourse, especially regarding public policy, in line with their individual interests, both economic and otherwise.

"Why one man chooses water and another man wine is a thymological (or, in traditional terminology, psychological) problem. But it is of no concern to praxeology and economics. The subject matter of praxeology and of that part of it which is so far best developed─economics─is action as such and not the motives that impel a man to aim at definite ends."
Mises, Theory and History

Not only does historicism suffer from a lack of theoretical underpinning, it fails to account for the dynamics of human consciousness that we all experience. Historcism substitutes relativity for understanding and, as a direct result, favors a status quo interpretation of past events. As an object of the Overton Window, historicism maintains that the common man has no power over his destiny and, at best, can hope to work towards the ends of their enlightened leaders whom history has seen fit to elevate to positions of power.

A view of history that treats consciousness as discreet rather than universal can not understand economic progress as acting according to natural laws, but instead must attribute progress to leaders and their policies. The Overton Window of the Soviet Union entailed a vision of the future in which capital accumulation resulted from the correct policies rather than adherence to a natural set of laws derived from a theory of human action. The US government today mainly sees problems as nails to hit with the hammer of policy. A shift in the Overton Window might eventually help recapture the gains attained from the application of a science of human action; a failure to shift will result in another historical collapse of an edifice that served a few individuals at the expense of the many.

Wednesday, June 8, 2016

Spotting Trends or Predicting the Future?

The social sciences today are built around collecting data. Polls seem very important. Opinions are gathered and regressions are performed and truth is finally synthesized. Except, there is a problem with social experiments: namely, they have proven quite difficult to replicate.

Much of what is being done in the social sciences today is what Steve Sailer aptly points out is marketing research. The reason that social experiments can't be repeated is because they have only spotted a particular trend, not identified a truth about mankind. This is a problem on several fronts, for instance: 1) predictable human behavior is often used to justify state force in the marketplace and 2) the people most interested in justifying state force are in position to fund or subsidize research.

Spotting trends is important for marketing campaigns aimed at reminding people to buy products or to convince new people to buy products. As a justification for state force: well... just imagine cigarette commercials from the early 20th century as being metaphors for political policies today.

Should policies be based on trends? In the early 2000s, housing prices maintained the same trajectory that they had been trending for decades. Understanding that this trend reflected a general truth about housing, policies were put in place to open access to mortgages for people who otherwise could not achieve the American Dream. Under the ostensible impetus of increasing drug crime, policies emerged to combat this rising trend. The housing policies turned out to be an incredible boon for people with variable rate mortgages and the economy in general; and, the drug crime of the late 80s has virtually been eradicated. And smoking Lucky Brand cigarettes builds vigor.

Predicting the future, on the other hand, tends to be a bit of a ball-and-cup game. Some people continue to make the same predictions, only to be proven right like a broken clock: the doom-and-gloom forecasters, the benevolent bureaucrats, the commodity analysts. These people have a consistent message and when they are right, you're wrong; and when they're wrong, it was a timing issue.

Science fiction has a had a pretty good track record of predicting technologies, institutions and cultural turns. Jules Verne foresaw the submarine and the scuba tank; Arthur C. Clarke predicted the sling shot maneuver; Phillip Dick presaged the pre-crime of DUI checkpoints and the various other guilty until proven innocent show trials of the modern day.

On another spectrum entirely are economists: part seers, part scientists. Cantillon described the process by which devalued money drives overvalued money under the mattress. This allows us to make fairly accurate predictions given a particular circumstance that it describes. Same thing with supply and demand curves. Perhaps the most famous (least talked about) prediction is that of von Mises logical assessment of the decline of the Soviet Union. While other prominent economists praised the foresight of a command economy, Mises explained that the lack of market feedback in terms of pricing would inevitably crush the Soviet Union. But that took 70 years.

Can we really say that people have had any success predicting the future? And if they haven't, how should our institutions reflect this general truth? Mises was right about the Soviet Union specifically; but his general ideas are rarely given proper, much less short, shrift. Complex economies require freedom of action to establish prices; prices bake a pretty complex cake with ingredients about past behaviors, present behaviors and possible future ones. Hayek called this process decentralized knowledge. Under this viewpoint, the future is unknown and ideas compete to allocate resources to satisfy future wants. The ideas of Mises and Hayek predict a general rise in living standards concomitant with freedom of prices, which appear to correspond to societies operating under those policies. Am I hedging or is that about as close a description of a natural phenomena that we can get?