Ezra Klein and Tyler Cowen are having an interesting back and forth over whether they systematically differ in their models of human behavior. The latest installment, from Tyler, is here:
A very good post. On the specifics: relative to most libertarian economists, I am more likely to think -- or should I say admit -- that human beings are irrational, even when the stakes are high (see the self-deception chapter in Discover Your Inner Economist). But, relative to social democrats, I tend to think that politicians are irrational actors trying to pander to irrational voters and that it can't be any other way. I am much less optimistic about democracy as an instrument for fine-tuning good policy or for that matter as a medium for enforcing progressive sentiments.
Like Tyler, I believe the evidence for human irrationality from behavioral science supports government intervention only if you believe we can draw our bureaucrats and politicians from some other gene pool. But I wonder if there isn't an element of egotistical bias to the arguments between libertarians and liberals. We tend to assume that people who disagree with us are disagreeing about hte point we ourselves care most about--so if you're a liberal very worried about power accumulation in market institutions, or consumer irrationality, you tend to assume that libertarians who disagree with the conclusions you draw therefrom are simply denying the premise.
In reality, many libertarians are aware of, and believe, the research showing consumer irrationality; they simply think that government interventions, for a variety of reasons, tend to malfunction even worse.
Also there's an intriguing possibility that consumer irrationality is one of those micro phenomenon that don't scale up to macro irrationality. The institutional features of markets may simply correct those biases--market experiments generally show those same irrational consumers behaving pretty much like your average Micro 101 textbook would predict. (Though not, I understand, in asset markets, where you get bubbles and busts, just like the real world). Thus Milton Friedman's response to behavioral economics, which boiled down to saying that the rational actor model still seems to have the best predictive value. Personally, I very much believe in the behavioral economics work on consumer irrationality--but it still seems possible that it may fall into the category of "true, but not particularly useful".
Of course, symmetry implies that I, too, am thusly unfairly maligning those with whom I disagree.
Megan, believe me, I am not saying this with any great relish, but it seems to me from a behavioral perspective that one thing libertarians are is more argumentative, and more abusive, though I concede it's possible that it may not seem so them.
Please bear in mind that at one point I was extremely sympathetic to libertarianism, to the point that I actually did some campaign work for, Anderson? That doesn't seem right. Clark? Anyway, I was a part of the outer circle at least, having come by it honestly (Anderson and Piper, rather than Heinlein and Rand.), so I am not making this observation with automatic prejudice.
But how to account for this? I think that, at root, libertarians are people who are in love with ideas, love to argue them, love to work out their implications. But somewhat less prone to work out the nuts and bolts of real-life.
'Liberals', by contrast, are not so enamored; for them theories are useful organizing prinicples, but not things that have merit in and of themselves.
The modalities of both groups have their good points, both have their drawbacks. In another era, say the early 70's, the 'liberals' were definitely foundering. Without any real overarching theory to indicate a goal, their actions became more diffuse and ultimately splintered once their main policy objectives had been achieved. And humans being humans, it's very hard to define a philosophy by what it is not when it has achieved it's primary goals, hence absurdities like all heterosex is rape, or that minorities cannot be prejudiced, positions that came to define liberalism in later years.
The term "the narcissism of minor difference" comes to mind...
Well then SOV, I guess argumentative and abusive are in the eye of the beholder. Libertarians tend to say so much about liberals. :)
But Megan raises, what I think is a key area of real difference that many point out and fails to stick:
I believe the evidence for human irrationality from behavioral science supports government intervention only if you believe we can draw our bureaucrats and politicians from some other gene pool.
IOW, complain about markets if you will but considering that intervention basically involves these same people's actions and flaws and is further perverted by incentives in politicians that are not what we would romanticize them to be, the likelihood is that such interventions can very well be worse than the "market failures" they are supposed to be "correcting".
Sigh. Yes, John. But as explained to you at length on more than one occasion that I'm aware of, 'liberals' have a pretty good idea of what it means to be a libertarian.[1] In contrast, to libertarians, it seems that a 'liberal' is anyone who doesn't agree with them.
The asymmetry is obvious. Did you get why this might be so from from my analysis?
[1]It's also the case that when you were being abusive, many people called you on it; as I recall you then complained that no, everyone was being abusive towards you, that this was your 'perspective'. Again the asymmetry is obvious, and to say that it makes no difference is to make a blanket accusation of bad faith. While this may be true of some places, I don't think the Economists View is one of them.
I simply disagree, SOV.
IMO, you have a very tainted view of events. Most instances you describe were quite peaceful until you chimed in. Naturally, then, people who are more generally sympathetic to your POV either remain silent or pile on in a biased. Of course, you don't see things this way but, LOL, it really doesn't matter to me.
You simply strike me as incredibly presumptuous and as having an agenda that involves defending the meanings of Left, Right and Center. In doing so, I've watched fish out words and phrases (wit no regard for context)in my writing to attribute motives to my comments that simply are not there.
This quote shows my point:
In contrast, to libertarians, it seems that a 'liberal' is anyone who doesn't agree with them.
Patently false.
You zero in on words like "moderate" and "non-liberal", pass them thru your filter and assume far too much. How do I know this? Because I know myself than you do.
We can just dispense with the "sighs" and smugness.
This debate doesn't interest me. Had I known beforehand how you read into things, I would have tailored my wording differently and we wouldn't be having this pointless discussion about imaginary issues.
I believe the evidence for human irrationality from behavioral science supports government intervention only if you believe we can draw our bureaucrats and politicians from some other gene pool.
An all-asperger's government! Sounds like a hoot.
I'm tempted to accept SOV's premise that libertarians are, on average, more argumentative and more abusive than liberals and then follow that such a claim says very little about the relative merits of the two schools of thought.
I'm not convinced that libertarians are more idealistic than liberals. I do think that libertarian theory is somewhat simpler (not meaning to assign positive or negative value to the word simple), which allows libertarians to use a somewhat smaller set of ideas to defend their positions.
I believe the evidence for human irrationality from behavioral science supports government intervention only if you believe we can draw our bureaucrats and politicians from some other gene pool
whaa? Starting with laws I know something about, government intervention has worked spectacularly well in the Clean Air Act, the Clean Water Act, the National Environmental Policy Act, and CERCLA. The Endangered Species Act works less well. The 1933 and 1934 Acts on splitting investment banks from commercial banks and creating the Securities and Exchange Commission made the US financial markets the envy of the world for half a century. The Federal Reserve does a very nice job of keeping inflation in check. Social Security is the most effective antipoverty program ever. Medicaid prevents the elder poor from dying in public parks.
Where libertarians seem to check their brains at the door is with the idea that legislation which creates the proper mix of checks and balances in an administrative context can work very well.
yes, there are many times when I'd prefer that legislators follow the idea "Don't just do something; sit there!" instead of the reverse. But the notion that democratic institutions cannot create effective measures to market failure, due to the venal nature of government bureaucrats, is simply ridiculous.
Francis,
with this: "The Federal Reserve does a very nice job of keeping inflation in check."
see: http://www.minneapolisfed.org/research/data/us/calc/hist1800.cfm
see if your supposition still holds true..
Megan,
On the subject of markets with irrational consumers, here's a paper you might find interesting. David Laibson and Leeat Yariv argue that in a GE model with irrational consumers, competition limits the extent to which irrational consumers can be taken advantage of by the market. As behavioralists, their goal is to refute "money pump" arguments against the existence or importance of irrationality, but along the way they show the importance of competition in limiting the harm that irrational consumers can do to themselves.
http://www.economics.harvard.edu/faculty/laibson/files/LaibsonYariv.pdf
I disagree with Tyler on this one. I think rational actor models are pretty good at explaining the political process when you factor in information costs.
Most politicians are pretty clearly maximizing their chance to get reelected and seem to have preferences that value power and prestege highly, both of which are delivered effectively through public office. Not to say that they don't have any other values, but that successful politicians will have values that can be harmonized with their ambitions.
As for voters, the cost in time and effort of obtaining enough information on a given issue to sort through the bullshit is generally much larger than the direct impact of that issue on most voters, so most voters aren't going to seek out the information. This means most voters will vote based on a handful of issues that they care deeply about or affect them personally and leave the rest up to their gut. This is why the political process tends to be disproportionately influenced by interest groups organized around "big" ethical questions (ex abortion) or economic interests as either recipients of benefits or targets of regulation. Most congressional elections come down to who will bring home the most pork (normally couched in nonsense about "creating jobs") and makes the appropriate noises on abortion, homosexuality, etc.
Those of us who spend a lot of time in politically active spheres tend to not appreciate how little a vote impacts an election, how constrained the set of policy options offered by electoral politics is, how little policy impacts most people's lives, and how little politics and ideology factor into most people's images of themselves. We see people who react to this by allowing their petty prejudices to motivate their votes rather becoming knowledgeable as irrational, but we're the irrational ones. The partisanship and emphasis on petty symbolic matters ("Did you know that Obama said something that was sort of positive about Reagan?!" "OMG somebody said something negative about Ron Paul!!1!!!") that's common among the politically active is the real irrationality in politics; fortunately it is confined to a relatively small proportion of the population and their predictable voting habits makes them of limited relevance to actual electoral politics.
Megan,
you definitely do not have to draw your politicians and bureaucrats from different gene pools.
The difference is in the style of decision making and the level at which it is done. After all what the politicians should be getting is a considered analysis of a situation from a group of bureaucrats, which is what actually happens most of the time.
The worst case is usually a single poltician, or a small group of them, making decisions without considering facts
MattXIV: "information costs" sounds like half of a very good way to conceptualize the reasons why people often make ill-conceived choices. However, the other half of the equation is the intellectual infrastructure of the person who obtains, or fails to obtain, the information. "Information" isn't a neutral good that just sits out there with a fixed cost; it's processed and used entirely differently, depending on one's pre-existing worldview.
"Also there's an intriguing possibility that consumer irrationality is one of those micro phenomenon that don't scale up to macro irrationality."
Please. That's ridiculous. What about the short-sighted irrationality that leads millions of American college students to get shit-faced three times a week and survive college w/ a 3.1 gpa? You really believe that doesn't scale up to have any effect on the aggregate educational attainment?
What about the short-sighted irrationality that leads millions of American college students to get shit-faced three times a week and survive college w/ a 3.1 gpa?
Dude, we live once. I hardly find it irrational to maximize the utility of your booty while it's still young and desirable.
Anyone else burst out giggling at this one?
"Those who love sausage and respect the law should never watch either being made." (Often Accredited to Otto von Bismarck).
Anyone else burst out giggling at this one?
See, to me, the lack of balance between the libertarian and liberal positions is evidenced by the fact that there just aren't any liberals out there who literally believe that all businessmen are thieves or morons, or that profit is the same thing as embezzlement. That would be the Communist position, obviously, not the liberal one. And yet a significant portion of libertarians appear to believe that the notion that government employees often perform their missions in a competent manner, in part out of a sense of responsibility and duty to nation and to their fellow citizens, is just fucking hilarious.
How exactly do these people explain the fact that America's soldiers appear to do an excellent job of fighting wars, on salaries of $25,000 a year plus benefits with no bonuses for scalps or whatever? "America's soldiers are fighting for their country." "Ha ha! I just burst out giggling at that one." Such a sentiment is considered close to treasonous; a similar sentiment expressed wrt the people at EPA, however, is commonplace among libertarians.
Brooksfoe:
I agree that far too many libertarians view anyone connected with government as incompetent, foolish, and evil. There seems to be a significant split among libertarians between those who are mostly just "pro-freedom" and those who are simply "anti-government."
It's definitely a major problem. While there are reasons for the existence of this problem, it is something that hinders libertarianism's ability to grow.
That said, there are definitely a fair number of Progressives who think that all or most business people are inherently evil; they might not automatically equate profits with embezzlement, but they do have a general view that the profit motive is extremely harmful. Of course, these people are more likely to be college-age kids who haven't had any real world experiences, so you can't generalize much from them. But certainly Michael Moore has a lot of other fans who are attracted to his extremely anti-business, anti-profit point of view.
I will add that I don't think these extremists are anywhere near as large a proportion of Progressives as the anti-government absolutists are within the libertarian movement.
Giggling fits aside, consider the incentives for bureaucrats and politicians, given the rational ignorance of most voters. (There are long discussions of this on volokh.com. Short version, your one vote doesn't make enough difference to justify figuring out the issues for yourself.)
Bureaucrats may try to consider the good of the people in general, but they do better for themselves if they instead make the recommendations that best protect their jobs and enlarge their agency. The ones that are best at such self- and agency-aggrandizement rise to the top in the long run, and get to decide who works on which issue, and to edit the recommendations that go to the politicians.
So the politicians start out with untrustworthy information on complex issues, and they also have a choice: They can try to guess what really is best for all their constituents. Or they can ignore the 40% that are going to vote against them regardless of what they do, and the real interests of most of the others, in favor of satisfying those that are really paying attention to what they do on particular issues, even though this is often putting a special interest group above the interests of the whole. They just have to make sure that the majority won't figure out what they're up to from a few 15 second sound bytes. So you get 4,000 page bills that even the politicians can't read, with short catchy titles - and hardly anyone wants to be explaining during the election why he voted against the "Patriot Act", or took money away from (badly designed programs that really hurt instead of helping) children.
Further helping the deterioration are the various groups involved in politics. Many of these are special-interest groups, hiring the best writers to create 15-second sound bites to try to make it sound like helping them helps everyone, when more often the opposite is true. Then there are the political parties - associations of political professionals and their hangers-on, all very dedicated to getting themselves into government jobs. And these groups feed bad info to each other until most of the people involved couldn't figure out what the nation really needs even if they cared to sacrifice themselves in trying to get it.
By the time things get fouled up enough that "rationally ignorant" majority gets angry, they don't know who to get angry at. Witness all the people that still think FDR's morass of regulations and deficit spending helped America get over the Great Depression instead of deepening and prolonging it.
Businessmen aren't any smarter, and if anything are less driven by moral concerns - but those that set out to screw people usually don't last long. It's much easier to figure out whether you got your money's worth with a pizza, a car, or a house, than it is to figure out if thousands of government programs are giving you your money's worth as a taxpayer. And if you decide that XYZ Pizza isn't giving you what you should get for the price, you can stop spending money there right now. I've known for thirty years that large parts of my tax money are wasted, but I'm just one vote...
If a business goes out to screw it's customers fairly often, they are going to notice, and they are going to go elsewhere and tell their friends to avoid it. Likewise, businesses that screw other businesses will be cut out of future deals, until there's no piece of the pie left for the crooks. It doesn't work that way very often in politics.
Actually, I think that the primary difference between classical liberals and libertarians, and modern liberals, has more to do with values than their models of human behavior..
There must be a rather large group of people who think that it is perfectly acceptable to encourage someone to donate their organs – even to presume consent from those they have not asked – and utterly unacceptable to pay people to donate those organs.
There are those who think promiscuity perfectly acceptable, and that paying for sex should be criminal.
There are many who think it virtuous to encourage people to work charitably, for free, yet think it evil to pay people less than the minimum wage.
I think we can be pretty sure that this pairing of opinions is more common among modern liberals, than among classical liberals. Or Social Conservatives, for that matter. And this is a question of how humans should behave, not how they do behave.
It is tempting to conclude that modern liberals really think that to be given money is inherently degrading. However, they are much happier than others about giving people government benefits, that is, money. I conclude that that modern liberals differ from classical ones mainly in believing that it is degrading to be paid for a service. Those on benefits provide no service, so are exempt from degradation.
Megan, for example, had a post some time ago wondering why some liberals of her acquaintance had a moral objection to employing a cleaning maid. People cropped up to claim that such employment was degrading to the maid. Presumably they did not think it degrading to scrub their own floors (or, eg, those of their parents).
It seems that modern liberals think that maids are degraded, not because they think it degrading to scrub a floor, but because they think it degrading to be paid to scrub a floor.
*I prefer the term “classical liberal”, because anyone in his right mind would rather associate himself with Lord Acton than with Ron Paul.