Stumbling and Mumbling

Constraints, real & imagined

Simon's post reminds me of Sidney Webb's reaction to Britain leaving the gold standard in 1931: "nobody told us we could do that."

The 1929-31 Labour government tore itself apart because it thought the gold standard was a binding constraint which demanded fiscal austerity. But in fact, the constraint was imaginary. Abandoning the gold standard had no great ill-effects.

European social democrats are in the same position Webb was. They are seeing binding constraints when in fact there are only illusory ones. In the euro area, a relaxation of the stability and growth pact to permit fiscal expansion would probably have the same benign consequences as Britain's leaving the gold standard. And in the UK, Ed Miliband's claim that "we won’t have the money" after the next election is illiterate drivel; he's imagining a constraint where none really exists.

This question broadens way beyond fiscal policy. Hopi says that "the constraints on the next government will be so tight". But which of these are genuine, and which imaginary?

To some extent, it's a matter of degree. For example, a living wage of £50 an hour is obviously infeasible, but one of (say) £8 isn't. And a top tax rate of 100% is infeasible, but one of (say) 50% might not be. (Note: feasible isn't the same as desirable.)

In another respect, the issue here is the old one of the role of MPs. If you think politicians should enact voter preferences, then you'll regard their demands for (say) immigration controls as a binding constraint. But if you take the Burkean view that politicians should serve interests rather than preferences, you won't.

It's a cliche on the left that we need a debate about something. But here the cliche is true. We should ask which of the many alleged constraints on a future social democratic government are real and which imaginary. Richard Murphy complains that politicians "choose to shackle themselves to the interests of the corporation and so voluntarily curtail their capacity to act." To what extent is he right?

My personal suspicion is that Labour is not constrained much by the fiscal position, nor by the power of the media, but it is tightly constrained in its ability to raise long-term growth. I suspect that some shadow cabinet members believe the exact opposite.

Herein, though, lies a problem and two paradoxes.

The problem - and first paradox - is that a debate about constraints is unlikely because of a constraint imposed by the Overton window and the traditions of politcal discourse. In recent years, politicians have tried - often successfully - to close off debate. Be it Thatcher's claim that "there is no alternative" or Blair's appeals to modernity, some of the most successful political rhetoric of our time has been the pretence that constraints rule out all policy options bar one. To debate whether constraints are real or imaginary requires a break with this managerialist mindset.

Which brings me to the second paradox. We Marxists are somtimes accused of believing in historical determinism. And yet on this point the opposite is the case. It is a Marxist who is inviting you to believe that politicians might have room to manoeuvre whilst it is rightist social democrats who seem to be the determinists who deny that freedom. 

Public vs private racism

Which is better - to be a racist in words but not actions, or in actions but not words?* This is one question posed by the Malky Mackay affair.

To see my point, let's juxtapose him (and football generally) with the film and TV business. Many black actors have felt the need to leave the UK to pursue their careers for want of good jobs here. But this is not the case for black footballers. I suspect that 20-something black men get a better deal relative to their white peers in football than they do in other walks of life** (though this might be a low bar), and - so far - there is no suggestion that Mackay's team selections or other actions were racist.

Which brings me to the paradox. Whereas Mackay is being kept out of work because of his racist words even though no black person is claiming that he victimized them, no individual in the arts is being accused of racism even though many black actors feel that they are victims of racism.

There are two things going on here.

One is that intentions are mediated by institutions. In football there is cut-throat competition and as Gary Becker famously said this compels managers to act non-racist regardless of their private beliefs***. Exhibit A here is Ron Atkinson. By contrast, the British film and TV industry is less competitive, and this provides room for nepotism, tradition or subtle forms of racism to exclude blacks. Racism or non-racism can be an emergent process; both can exist, independently of the motives of individuals. As Bernard Mandeville pointed out in 1732 in a different context, private vices can coexist with public benefits and vice versa. 

The other is that a nice guy image can be used to deflect attention away from misdeeds. As Machiavelli said,"it is unnecessary for a prince to have all the good qualities I have enumerated, but it is very necessary to appear to have them." Just as Jimmy Savile used his charity work as a front for serial sex abuse, and Bernie Madoff presented a trustworthy image to disguise his fraud, so images of liberalism and non-racism can hide racist actions; endless anti-racism statements and initiatives, for example, have not eliminated racism in the police. And not just racism, of course. We all know men who pretend to be feminists and yet treat women abominably.

Herein lies my concern about the Mackay affair. Punishing men for sexist and racist words, in the absence of any actions, might amount to hurting not the most racist and sexist men but rather those with the least self-control and who get on the wrong side of vindictive billionaires. And it might wrongly exonerate those who succeed in hiding their racism and sexism behind a front of hypocrisy.

* It should go without saying that it's better still to be neither, but this option isn't always available.

** There are no black managers in the league, but that's a story about club owners not about Mackay. And of course we should not suggest that billionaires are guilty of wrong-doing.  

*** I'm not saying here that competition completely precludes injustice; there might still be space for some racist and homophobic actions.

Olivier Giroud & social change

Watching The Arsenal last night reminded me of a saying by Niels Bohr and Jon Elster - that the opposite of a great truth is sometimes another great truth.

What I mean is that some Gooners have long been critical of Olivier Giroud and have called for the signing of a big-name striker. But what sort of things could a top-class striker do? Pull back a two-goal deficit against a top team away from home, that's what...which is exactly what Giroud did. Had a new £50m signing turned the game as he did, everyone would be saying today what a fantastic signing he was.

To some degree, Giroud is a victim of the phenomenon described in those old sayings, familiarity breeds contempt and the grass is greener. Sometimes, we undervalue what is known and familiar to us, and overvalue what we don't have. As Joni Mitchell said, you don't what you've got till it's gone.

Gooners are of course not unusual in this regard. Last Christmas, when West Ham were in the relegation zone, some Irons wanted Sam Allardyce sacked. But then it was pointed out that the sort of manager West Ham needed was just the sort that Mr Allardyce was. He stayed, and the Hammers have since improved.

The grass is greener/familiarity breeds contempt effects help explain why fans often want their manager sacked (though of course sometimes the calls are rational), and why we get so excited on transfer deadline day - because the players we are about to sign are more thrilling than the ones we actually have. They also explain why men cheat on their wives, somtimes with unhappy effects (as Olivier himself knows).

So far, so obvious. But here's where Bohr and Elster's saying comes in. The opposite phenomenon also exists. Sometimes, we overvalue things simply by virtue of owning them; the endowment effect has been established in laboratory experiments (pdf). This helps explain a range of behaviour such as why housing transactions tend to slump when prices fall (because homeowners overvalue their houses and so set too high a reservation price) or why people tolerate inequality - it's (partly) because they over-rate the merits of existing inequality.

What we have here, then, is something that is quite common in the social sciences. We have two opposing mechanisms, which poses the question: in what circumstances will one mechanism be more powerful than its opposite?

Often, this question can only be answered in hindsight: as Elster stressed, prediction and explanation are two different things.  

There is, though, (at least) one circumstance relevant to our case - aspirations. Demands for social change tend to be greatest not so much when people are abjectly poor and oppressed, but rather when their aspirations are higher than their objective conditions. It is then that the grass is greener effect outweighs the endowment effect. This helps explain discontent with Giroud. It those Gooners who expect Arsenal to win the league who are most unhappy with him, whilst those with lower expectations see his merits.

I've said it before, and I'll keep saying it: football can illuminate important issues in the social sciences.

Politicians' biases

All professions - yes, even economists - tend to have a biased perspective on the world; the French call this deformation professionnelle. Reading Theresa May's proposals to combat Muslim "radicalization" reminded me that politicians are prone to such biases too.

I say this because they are selected to have certain dispositions. It costs time and money to enter politics, and success does not necessarily go to the most meritorious. This means that politicians, even more than others, will tend to be over-optimistic. Also, you tend to enter politics if you think policy can make a difference. This tends (there are exceptions) to select against those with an Oakeshottian conservative disposition, who believe that bounded rationality plus the innate imperfections of human nature mean that some social evils cannot be eradicated.

There's a third selection effect. Politicians are selected for their emphasis upon rhetoric and persuasion. Many would-be pols were active in the Oxford Union. But if you emphasize some things, you naturally de-emphasize others. And one of these other things might be the dull grunt work of day-to-day policy implementation; the soaring rhetoric of Winston Churchill excites more admiration among politicians than the quiet administrative ability of Stafford Cripps or Norman Fowler.

This is where Ms May comes in. These raise some obvious questions: do we really want to keep potential terrorists in the UK where they can cause trouble here rather than let them kill themselves in Syria? If the security services devote resources to people plotting terrorism overseas mightn't they be distracted from those plotting terrorism here? Might a clampdown on "radicalism" reinforce some Muslims' perceptions that the west is at war with Islam and so encourage some hotheads into terrorism? Wouldn't such actions suggest to some that the "western value" of free speech is mere hypocrisy, thus further antagonizing some Muslims? (Nelson Jones has likened May's proposals to the Six Acts).

Now, like pretty much everyone else who bloviates upon these issues, I don't know how strong these objections are. But I do know that revenge effects are common in the social sciences. And I fear that politicians might be underweighting them because of their deformation professionnelle.

I stress that I'm not making a partisan point here. One thing for which this goverment deserves more credit than it gets is a lack of the legislative hyper-activism of the New Labour years. And Npower's claim that it hasn't cut gas prices for fear of a price freeze under a Labour government is - if true - an example of how Labour has under-estimated the power of revenge effects.

However, it's not just politicians who should be blamed here. So too should be voters (and the media). The tendency to regard politics in the spirit of partisans cheering for one side or another distracts us from some fundamental questions, such as: what can politicions actually achieve?

Women MPs & the nature of politics

Whilst I was away, I got a reminder of how I am out of step with modern politics.

Austin Mitchell complained about the feminization of parliament. This, he says, will lead to politics becoming "more preoccupied with the local rather than the international...and small problems rather than big ideas and issues." The reaction to this, gathered by Ben Cobley, has been hostile.

There is some important and interesting evidence on this point. It's this paper by Dinuk Jayasuriya and Paul Burke. They show that:

Over recent decades, higher representation of females in parliament has led to faster economic growth.

Now, "led to" does not mean "cause." It could be that this correlation exists because of an omitted variable; perhaps gender equality generally promotes growth - for example by encouraging women's education (pdf) - and more female MPs are merely a symptom of this equality.

However, this might not be the whole story. Perhaps preoccupations with local issues help promote economic growth - say, by ensuring better childcare (pdf) - in a way that bloviating about big ideas does not.   

However you interpret their finding, it suggests that, at worst, a feminization of parliament would not have adverse material effects and at best it would benefit everyone (except for a few would-be male MPs).

However, as far as I can tell, nobody has cited the Burke and Jayasuriya paper. In one sense, I find this depressing. This omission corroborates my fear that politics has become a post-serious wrestling match in which scientific evidence is ignored in favour of narcissistic cheering and booing.

In another sense, though, I wonder whether it might be me that's wrong. In hoping for a dispassionate scientific debate, mightn't I be guilty of the mistake of which I accused Richard Dawkins - namely, assuming that emotion-free politics is both possible and desireable?

I'm not sure which it is. Either way, I'm out of touch.

Optimum deaths

What is the optimum number of migrant deaths? The answer is not zero.

Think of this from the point of view of UK voters. They want tougher immigration controls. But these impose the risk of death upon migrants. If people can't enter the UK legally and safely, some will try to do so illegally - and this will sometimes entail taking risks by travelling in containers or unseaworthy boats.

I suppose it might be technically possible to have fully secure borders which do not impose a risk of death upon migrants - say, if all lorries and boats entering the UK are searched before they set off - but doing this would be prohibitively expensive. Feasible border controls invite some migrants to risk death by using dangerous routes.  

It might well be rational for some migrants to incur this risk. They must weigh the costs of trying to enter the UK - which include payments to traffickers as well as the risk of dying in transit - against the benefits. If the latter are high enough - as measured by expected wage differentials or the risk of death or imprisonment if they stay in their home country - then it might be rational to incur a risk of death in transit.

Just as the criminalization of drugs generates risky behaviour among drug users who take drugs of unknown purity and composition, so the criminalization of immigration generates risky behaviour among migrants.

But let's be clear. Such risks arise inevitably from preferences and technology: the preferences of voters to restrict immigration and of immigrants to come here; and the imperfect technology of border controls which leaves open some dangerous routes into the UK.

There's an analogy here with the economics of crime. Just as there is a (positive) optimal amount of crime because the costs of completely eradicating it are prohibitively high, so there is also an optimal number of migrant deaths.

From this perspective, it makes no more sense to mourn the death of a migrant than it does to mourn the arrival of a restaurant bill. Both are the inevitable result of our choices. Such mourning would be sanctimonious hypocrisy - and voters and politicians would never be guity of this, would they?

Heritability & inequality

I have pointed out before that rightists are prone to a rhetorical trick which I've called "small truths, big errors" - a tendency to use a small factual claim to obfuscate a bigger issue. Tim Worstall gives us an example of this today. In replying to Will Hutton's call for efforts to get more poor kids into top universities, he points out that intelligence is heritable, and so we'd expect some inequality in unversity admissions.

I'll concede this. But this misses two big points.

First, heritability of pure academic ability probably doesn't explain all of the inequality of which Will complains. Rich parents can increase their chances of getting their kids into top universities not just by giving them the right genes, but by buying houses in the best school catchment areas or by providing more cultural capital.

One big fact suggests that such non-genetic bequests matter. It's that greater inequality of income is associated with greater inequality of opportunity. As a World Bank report says (pdf):

The data reveal a positive correlation between inequality of opportunities and income inequality. Countries with a higher degree of income inequality are also characterized by greater inequality of opportunity.

This is consistent with Will's main point, that increasing equality of access to university requires "mobilising against inequality in all its manifestations."

Secondly, even if Tim were wholly correct to imply that heritability of ability explains all the inequality of access to university, it would not follow that such a situation was fair. In fact, from the point of view of luck egalitarianism it is not. This theory says that inequalities are unacceptable insofar as they arise from factors beyond an individual's control. And, obviously, a person's genes are beyond their control.

Of course, luck egalitarians would not argue that people should be accepted into universities regardless of ability. But they would argue that they shouldn't suffer (much) because of their inherited lack of ability. Herein lies one argument for a redistributive tax and benefit system; it helps to equals out the effects of the genetic lottery.

Indeed, luck egalitarianism predicts that redistribution should have increased since the 1970s, because since then the penalty for inability has increased. A mix of globalization, deindustrialization and technical change has reduced demand for unskilled labour, with the result that their relative pay and chances of getting a job have worsened. But this has not happened.

My point here is not merely to criticize Tim. It's broader than that. What I'm saying is that you cannot point to the heritability of ability (howsoever defined) to defend inequality. To do that, you must also argue against luck egalitarianism.

Two politics

"Local politician considers becoming MP" should, be rights, be a story only of interest to local newspapers. If the national media take an interest, it should only be to ask whether a man who has twice been sacked for dishonesty and who has conspired with a serious criminal is fit to enter parliament.

Which poses the question: why was this story the lead item on Radio 4's news yesterday and in the Times today, and in hagiographic terms?

Partly, it's because the media is so London-centric that it regards the North Circular Road as an iron curtain. But there's something else going on. It's that there are two types of politics which have become so distant from each other that they shouldn't share the same name.

Politics1 is politics in its traditional form. It asks how relations between citizens should be regulated.

Politics2 is the subject of political journalism in the media. And this is often a different thing entirely, being focused upon personalities and presentation. It is that makes Mr Johnson political2 news, because he is a "character" who fulfils a major function of politicians - to provide entertainment for journalists*.

It's become a cliche to say that politics2 is a soap opera. But this is an insult to soaps, which contain diverse and sometimes sympathetic characters, and which often raise important issues.

Even when politics1 and politics2 should coincide - for example on the Scottish independence debate - they don't: Radio 4's PM programme, for example, tried to reduce it to a matter of Salmond's and Darling's personalities. The fact that the BBC gives so much publicity to Mr Johnson and little to serious MPs such as Jesse Norman or Jon Cruddas shows that politics2 has displaced politics1. It's no wonder, then, that so many social and economic changes are happening without politicians' noticing.

I think of this as a political blog. But what's striking is that the things that I consider to be political1 questions are so rarely discussed by mainstream politicians, and certainly don't form the substance of the BBC's political reporting: is the wealth and power of corporate bosses justified? What should be the respective domains of market, hierarchy and cooperation? what is the relationship between institutions, culture and morality? What role should emotion, ideology and irrationality play in public life? How do bounded knowledge and cognitive biases shape politics?

For me, questions such as these (and there are more - these are just some of my interests) should be the basis of politics. But they are largely ignored.

This ignorance serves a deeply reactionary function. In keeping fundamental issues off the agenda, whilst promoting an image of politics as a wrestling match between "characters", politics2 helps to preserve the power and wealth of elites by failing to ask the questions that might undermine their legitimacy.

* I'd even put another of the week's biggest news stories - the resignation of Baroness Warsi - into this category, because it is about what pose to strike about the middle east: would Benjamin Netanyahu ever say "Best seek peace with Hamas, lads, because the Brits are cutting up rough?"

Peer effects in companies

"Corporations are people" said Mitt Romney. He was more right than he knew, because two new NBER papers by Christopher Parsons and colleagues show that companies are like people, in the sense that they are prone to peer effects:

We find that a firm's tendency to engage in financial misconduct increases with the misconduct rates of neighboring firms. This appears to be caused by peer effects, rather than exogenous shocks like regional variation in enforcement. Effects are stronger among firms of comparable size, and among CEOs of similar age.

In this sense, firms are just like ordinary people in that they are more likely to commit crimes if their peers do. This might be one reason why so many banks were involved in fixing Libor and in mis-selling PPI.

Secondly (pdf):

We find that a firm's investment is highly sensitive to the investments of other firms headquartered nearby, even those in very different industries...
We, of course, cannot rule out the possibility that area co-movements arise because of irrational herding, which would be the case if managers put too much weight on the beliefs of their neighbors.

Again, there's a direct analogy here with people;there are peer effects in individuals' spending, perhaps in part because their expectations are infectious.

There is, I suspect, an important political point here. There's a tendency to defer to "business leaders" as if they have superior insight into the economy; how often are they uncritically interviewed on the Today programme, for example? Such deference is misplaced. Rosewell and Ormerod have shown that "bosses have very limited capacities to acquire knowledge about the true impact of their strategies." And Charles Lee and Salman Arif have shown that higher capital spending leads to disappointing profits, consistent with it being driven by sentiment rather than a rational assessment of profitable projects. We should read Parsons' research in this tradition. It suggests that corporate bosses are not wise and rational leaders but are instead as easily led as impressionable teenagers.

So, why are we paying them so much? 

Decorporatization

In the day job, I've coined a newish word - decorporatization.

My chart shows what I mean. It shows that in recent years we haven't seen just a squeeze on wages, but also a squeeze on profits; the share of these in GDP has fallen recently. One reason for this is that the incomes of the self-employed - measured by the ONS as other incomes - have increased. This hasn't happened because the self-employed are raking it in, but because there are so many more of them.

This is what I mean by decorporatization; we're seeing a shift from corporate sector activity to the self-employed.

Some of this might be due to firms employing freelancers and one-man subcontractors rather than staff - perhaps because transactions costs have fallen. However, whilst this might have have increased profits for particular firms, it hasn't increased them in aggregate.

What might also be going on is a shift in consumption patterns. For example, if we pay a gardener £100 we have £100 less to spend in the corporate sector. And it might also be that there are countless small-scale shifts in spending happening: for example from supermarkets to farmers' markets; from banks to P2P lending; from shops to eBay; from removal companies to men with vans; from chain coffee shops and restaurants to independent ones and pop-ups. And so on. You migh think these are small changes. But they can easily add up to a couple of percentage points of GDP.

I don't know if these changes will continue. Maybe Rick is right and that as the economy picks up, poorly paid under-employed freelancers and handymen will return to employment thus reversing these trends. Or maybe they won't, perhaps because more people will want to escape corporate drudgery and downshift whilst the fashion for artisanal goods and services will continue.

But futurology isn't my point. Instead, there are two others.

One is that culture matters for macroeconomics even over shortish periods. A cultural change towards self-employment - both the supply thereof and demand for its goods - is affecting profits now.

Secondly, those hipster twats who think they can sock it to "The Man" by tweaking their "lifestyles" aren't as stupid as they look. Small-scale changes can add up to significant discomfort for big capitalism. As I've said, social change can happen without formal politics realizing it. The transition from feudalism to capitalism didn't happen quickly or because of nationally organized political protest ("What do we want? Less socage! When do we want it? Now!") so perhaps the transition from capitalism* won't either.

* Clarification for the hard of thinking: by capitalism I mean a system of ownership, not a market economy.

Economists & the public

In a comment here, I propose the creation of a new job, or jobs - professors for the public understanding of economics, analogous to the professorships at Bristol and Oxford which do the same for science.

I'm not thinking that such jobs should necessarily be part of a free market priesthood; there's more to proper economics than "Markets work, ner, ner". Instead, the role would be to try to inform the public of what economists know and don't. This would consist of at least three objectives:

 - to narrow the distance between the academic consensus and public opinion which is especially wide in the cases of fiscal policy and immigration.

 - to enhance the public image of economics - for example, by demonstrating that there are rough consensuses on many issues, and by telling people at every opportunity that macroeconomic forecasting is not proper economics.

 - to help people make better personal financial decisions by promoting financial literacy and by alerting people to the systematic cognitive biases that cause bad decision-making. For me, economics is not just - or even mainly - about policy, but about helping people with everyday decisions. There's tons that economists can do here.

I've no doubt that such positions are desirable. What I doubt is whether they are feasible. Even if such jobs existed, I'm not sure their holders could succeed. There are (at least) four big barriers here:

1. Incentives. The traditional "publish or perish" academic environment has incentivized new research over the public engagement I have in mind. It's not clear how far this will change with the REF's inclusion of "impact" as a factor in determining department's funding.   

2. The "gee whizz" factor. Scientists have an advantage over economics in that they can highlight new discoveries or the wonders of the universe. Economics is inherently less exciting - in part because it often reminds people that there are very few free lunches and no easy road to riches.

3. Public prejudice. People - and the media - don't want to be told that the facts don't fit their prejudices. Telegraph readers won't want to hear evidence against austerity, nor Guardian readers evidence that markets sometimes work. And as Jonathan Portes knows, telling people facts about immigration is like reciting poetry to a pig.

4. Vested interests. Economic literacy would be a threat to many firms. Lobbyists for tax breaks would fall foul of the fact that the best tax systems are flat(tish) and simple; payday lenders would suffer if people knew the power of compounding; and few high-fee fund managers would survive in a world where investors knew that the efficient market hypothesis was a good working assumption.

What I'm saying here is the counterweight to what I said yesterday - as Jon Elster said, the opposite of a great truth is sometimes another great truth! Yes, there is a gulf between academic economists and the public. But the blame for this doesn't lie with academics alone.

What use are academics?

What are academics good for? asks Simon Wren-Lewis. I'm tempted to reply along the lines of Edwin Starr - absolutely nothing, as least for British academia.

Simon is right to say that the academics are correct to take a dim view of austerity. However, many of the same textbooks that tell us that austerity doesn't work also perpetuate guff about the money multiplier and central banks creating money. Here's Simon:    

The textbooks are out of date. The core of what is taught to undergraduates has not changed in fifty years, whereas macroeconomic thinking has changed substantially. However we are not using fifty year old textbooks. You will actually find a great deal of the more modern stuff in the textbooks, but essentially in the form of add-ons. So first students are taught that central banks fix the money supply, and then they learn about Taylor rules.

The non-economist can surely be forgiven for not giving sufficient credence to the anti-austerian view, when the same sources are plain wrong on another matter*.

In this sense, academics are failing us. The other day, I wanted to know: what is the present state of research on the link between education and economic growth? Where would I go to answer this, or questions like it? Yes, there's the great Journal of Economic Perspectives and the partially paywalled Journal of Economic Surveys. But these are international ventures. Where are the British academics who are content to do similar services?

I have two other gripes.

First, many academics are idiots, in the ancient Greek sense of the word: they don't participate in public life. It's still the case that only a minority blog, for example. Yes, the few that do are great - but we're talking quality not quantity here.  

Secondly, the quantity of research is actually rather low. I'm in the unusual position of being a consumer of academic work. A large chunk of my day job (and blogwork) consists of scouring Repec, SSRN, IZA and CEPR for new research. Remarkably little of what I find comes from British academics. (Some still persist in keeping their work behind paywalls, which I regard as pure criminality.) Granted, I might have a biased perspective here; my interests are in finance, labour, macro and behavioural economics and perhaps UK academia is strong elsehwere. But I'm not sure this fully exculpates them.

Now, I'll concede immediately that these flaws - if such they be - aren't wholly imdividual failures. It's likely that, just as the financial system can cause rational individuals to produce institutionalized stupidity, so the academic system - with the twin pressures of the REF and teaching burdens - cause academics to become institutionalized idiots.

But is this the whole story? Might it also be that academic culture militates against academics contributing more to public understanding? A culture of pedantry, maximally ungenerous reading (and fear thereof) and obsession with methodology aren't conducive to an outward-looking contribution to open public life.

I say all this in a mood of sorrow and relief. Sorrow, because a potentially great resource is being wasted. Relief, because I might well have become an academic if there had been jobs available in the 1980s. Very often, I say a little prayer of gratitude to Lady Thatcher for saving me from that fate.

Limits of rationalism

The other day, I sympathized with Oakeshott's anti-rationalism. Bang on cue, rationalist-in-chief Richard Dawkins showed one of the weaknesses in rationalism. He tweeted:

Date rape is bad. Stranger rape at knifepoint is worse. If you think that’s an endorsement of date rape, go away and learn how to think.

When some objected to this, he replied:

I don’t think rationalists and sceptics should have taboo zones into which our reason, our logic, must not trespass...
I deliberately wanted to challenge the taboo against rational discussion of sensitive issues.

What this misses is that taboos exist because humans are emotional creatures. We feel upset and disgust, and taboos exist to protect us from such feelings. Introducing rape gratuitously into a public discussion upsets some people unnecessarily. Etiquette dictates that we don't do this - just as it dictates that, on meeting Professor Dawkins, one should say "hello" rather than "you're a cunt aren't you." And disgust, like it or not, is the basis for some moral judgments - such as the belief that some things such as human organs or sex be not traded in markets.

Demanding that there be no taboo zones and that reason and logic go everywhere is, in this sense, a demand that people be dessicated calculating machines devoid of emotion. Even if this were desirable - which is very dubious - it is a futile call.

Nor is it obvious that the emotions which give rise to taboos can be subjected to the tribunal of reason. David Hume, for one, thought not:

Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them...
Where a passion is neither founded on false suppositions, nor chuses means insufficient for the end, the understanding can neither justify nor condemn it.

I'll confess that this is true for me; my antipathy to inequality is, at root, an emotional one and my apparently rational arguments are the slave of that passion. I suspect - though cannot prove - that the same is true of Dawkins. Reading The God Delusion gives me the impression that Dawkins is motivated by an emotion of disgust at some of the effects of religion. I happen to share that feeling in many ways, but it is a feeling.

Here, I suspect, Dawkins is being inconsistent. What he's demanding is not so much that everyone be dispassionate but that they share his disgust at some things and his lack of disgust at others. He's complaining: "Why can't everyone be like me?"

And this brings me back to Oakeshott. The rationalist, he wrote, is:

something of an individualist, finding it difficult to believe that anyone who can think honestly and clearly will think differently from himself...
His ambition is not so much to share the experience of the race as to be a demonstrably self-made man.(Rationalism in Politics, p6-7)

In this sense, rationalism is close to narcissism.

Poverty: structural or individual?

Is poverty structural or due to individuals' failings? Matt Bruenig and Noah Smith are debating this. I'm inclined to agree with both of them.

I agree with Noah that the two are not mutually exclusive. A quick thought experiment shows this. Imagine a dictator were to set the distribution of incomes so that a few were very rich, many did OK but that a big minority were poor. And he then allocated positions in this distribution on the basis of various psychometric tests for intelligence, laziness and character. Would poverty in this society be due to structures or individuals?

Obviously, to structure - because the dictator has set the structure of incomes so that some are poor.

Obviously also to individuals - because there is a perfect correlation between poverty and low intelligence or other character failings.

The distinction, then, isn't robust.

Another thought experiment might help us distinguish the two. What would happen if everyone were to become intelligent, educated and hard-working?

The "poverty is individual" brigade would say that some form of Say's law would lead to the creation of sufficient good, well-paid jobs to eliminate poverty. The "poverty is structural" band would say that this won't happen, because inequality, deskilling and unemployment are inherent structural features of capitalism, which would condemn some to (relative) poverty even if we were all smart and employable.

What's the empirical evidence here? Immediately, we run into a problem. The research on the links between human capital and aggregate growth, whilst large, is not conclusive (pdf). On the one hand, Erik Hanushek among others thinks there might be big macro-level payoffs to higher cognitive skills. But on the other, there's lots of scepticism about the link between education and growth. Bryan Caplan's reading of the evidence is that the response is "low" - and Middendorf and Krueger and Lindhal agree (pdf). This is consistent to the private payoffs to education being due to signaling - which implies that it is one's relative, not absolute, level of education which determines one's income. If so, better education for all won't raise incomes much.

All this said, two bits of evidence - on top of my priors! - makes me side with Matt in believing that mass upskilling won't eliminate relative poverty.

1. Graduate over-education is significant in most countries. This suggests that Say's law doesn't work; good jobs haven't increased fully in response to a supply of educated workers.

2. There's no correlation between inequality in human capital and in incomes, either across countries or over time. This is inconsistent with human capital-based explanations for inequality, but consistent with the view that inequality is due to inequalities of power.

Personally, I suspect that the "poverty is individual" view owes a lot to ideology: system justification and the just world fallacy cause people to blame the victim. Actually proving this beyond doubt is, though, perhaps impossible.  

Am I a Tory?

Am I a Tory, or is Jesse Norman a socialist? I'm prompted to ask because the other day he reminded me of his superb lecture (pdf) on Burke and Oakeshott.

What I mean is that, as Jesse says, both men, in their different ways, supported tradition against rationalism. This anti-rationalism, says Jesse, is "one of the central intellectual roots of conservatism through the ages."

That small c in "conservatism" is well chosen. Take three examples:

 - You can read Harry Braverman's account of deskilling - which is as relevant today as ever - as being in this tradition. He's defending traditional craft skills against rationalist scientific management. Except that he's a Marxist.

 - In the miners' strike, it was leftists who supported traditional communities against "sophisters, economists and calculators” who wanted to close the pits. (The fact that the sophisters' sums were wrong merely reminds us that rationalism and rationality are two different, and opposed, things.)

- Oakeshott's complaint in Rationalism in Politics (pdf) that rationalists elevate their "reason" over traditions and institutions can easily be read as supporting resistance to the managerialist assault upon universities. Such resistance is, I suspect, found more among leftists than Tories.

Jesse continues:

Rationalism can be seen in totalitarian societies, which seek to capture and organize the staggeringly diverse potential of human beings, and frame  it on some Procrustean bed".

It certainly can. But for me, managerialist rationalism is also totalitarian, in the sense both that it wants to extend to places such as universities where it is unwarranted, and that it seeks to suppress diversity in favour of conformist careerism.

So, it seems that me, Jesse, Burke and Oakehott have much in common. And, indeed, Jesse is well aware (pdf) that crony capitalism and excessive CEO pay are inconsistent with conservative tradition he praises.

Where, then, do we differ? On at least two points.

First, I'm not so sure that Westminster politics can restrain crony capitalism whilst supporting free markets or what Jesse calls real capitalism. There are very powerful forces which mean that a free market economy tends to degenerate into cronyism.

Secondly, I don't regard rationalism merely as an intellectual defect. Instead, it serves an ideological function; it tries to justify the power of elites. As Alasdair MacIntyre wrote:

Do we now possess that set of lawlike generalizations governing social behaviour of which Diderot and Condorcet dreamed? Are our bureaucratic rulers thereby justified or not? It has not been sufficiently remarked that how we ought to answer the question of the moral and political legitimacy of the characteristically dominant institutions of modernity turns on how we decide an issue in the philosophy of the social sciences...
The realm of managerialist expertise is one in which what purport to be objectively-grounded claims function in fact as expressions of arbitrary, but disguised, will and preference. (After Virtue, p87 & 107)

I don't, though, want to emphasise too much the differences between me and Jesse. I just want to note that antipathy towards managerialism is based upon a wide and powerful intellectual tradition.

Another thing: Jesse commends Burke's statement that “Circumstances  ...  give in  reality  to  every  political  principle  its distinguishing colour  and  discriminating  effect”:

The  practical  public reasoner — let’s  call  him  or  her  the  politician — must  determine  what  the  relevant circumstances  are  which make Avthe right policy to achieve  it. A similar set might  imply  policy  B,  or  a  further  set  policy  C. An obvious policy A may fail depending  on circumstances, while an unobvious policy B succeeds".

But this is what I am getting at when I urge people to think about mechanisms rather than models - because mechanisms are local and partial and vary according to circumstance. And this is no mere theoretical point. The reason why I (and Simon I suspect) are hostile to Osborne's fiscal austerity is that whilst austerity might be justifiable in some circumstances - if interest rates are high - those circumstances are not here and now.