Wednesday, March 31, 2010

Markets and Communities

Interesting conversation between Will Wilkinson and Stephen Marglin of Harvard. I listened to this because Stephen Marglin is a distinguished radical/communitarian Economist and because I hoped that listening to a smart man I confidently expected to disagree with would kickstart my brain.

As expected, I disagreed with most of what he said. What was unexpected was that I largely agreed with him about what the costs and benefits of a market economy are. We disagree about the weights to assign to those losses and benefits.

The heart of his argument seems to be:
1. belonging to a community is extremely important to human flourishing
2. a market economy replaces a way of life where we contribute to the community, and depend on it, with one based on impersonal trade
3. this has led to tremendous gains in productivity and in the wealth of nations
4. however it has also alienated people from one another; we are no longer embedded in our local communities but are part of an vast, abstract, extended market system
5. this is nobody's fault; it is the unintended consequence of decisions taken by individuals over several generations
6. this has terrible consequences for many of the people in our communities, especially the weakest and poorest
7. to repair this damage, we must always consciously take into account the effect on our communities of the decisions we take; we need to choose what will bind our communities closer together, even if not a single member of our community is better off as a result of that decision. In a sense, the "community" becomes an interested party to all our decisions and choices.

Stephen Marglin explicitly recognizes the terrible costs of living in an all-enveloping community, but I wonder if he realizes how bad it can get.

I agree with much of what he says, especially about the costs borne by the weakest people in a society, but I am sure he recognizes just how impossible it is for a society to reverse such a move, even if everyone in that society wishes it. Simple Game Theory suggests that this genie can never be returned to its bottle.

More than that, I wonder if he recognizes how many people actually crave freedom from community, and welcome markets specifically for that reason.
Drawing on the experiences of a group of informants who participated in an ethnographic study of house moving in MontrĂ©al, Canada, my article shows that people often confront the social expectations and consequences of the gift economy—for example, they try to avoid indebtedness—by shifting back and forth between the gift economy and the market. But more importantly, and contrary to what the work of many consumer researchers would lead one to expect, it shows that people may escape to the market.

This is besides the obvious problem of deciding which community I belong to. If it is human to want to belong to a community, it is equally human to see those who do not belong to that community as not only outsiders, but also enemies, or even sub-human. Brad DeLong quotes Hirshmann and Adam Smith to show that classical economists believed that the growth of trade would be one more stage in the self-domestication of Man; as he notes
Even Smith's self-interested and calculating market agents are sociable ones: they exchange, and perhaps they cheat--they don't kill, rape, burn, and steal. Which is odd, given that fifty years before Smith was born not far from his house there were lots of people who saw others not as potential partners in acts of mutually-beneficial commerce but instead as either (i) clan allies, (ii) clan enemies to be killed, or (iii) strangers to be robbed.
I am glad I listened to the talk. I was not convinced by his arguments, but I do now better understand what I think, and why.

Wednesday, March 10, 2010

Sacred Values

Scientific American on negotiating sacred values
What truly distinguishes sacred values from secular ones is how people behave when asked to compromise them. When people are asked to trade their sacred values for values considered to be secular—what psychologist Philip Tetlock refers to as a “taboo tradeoff”—they exhibit moral outrage, express anger and disgust, become increasingly inflexible in negotiations, and display an insensitivity to a strict cost-benefit analysis of the exchange. What’s more, when people receive monetary offers for relinquishing a sacred value, they display a particularly striking irrationality. Not only are people unwilling to compromise sacred values for money—contrary to classic economic theory’s assumption that financial incentives motivate behavior—but the inclusion of money in an offer produces a backfire effect such that people become even less likely to give up their sacred values compared to when an offer does not include money.
A recent study observed this effect in the case of the Iranian nuclear program
After giving their opinions on Iran’s nuclear program, all participants were asked to consider one of two deals for Iranian disarmament. Half of the participants read about a deal in which the United States would reduce military aid to Israel in exchange for Iran giving up its military program. The other half of the participants read about a deal in which the United States would reduce aid to Israel and would pay Iran $40 billion. After considering the deal, all participants predicted how much the Iranian people would support the deal and how much anger they would feel toward the deal. In line with the Palestinian-Israeli and Indonesian studies, those who considered the nuclear program a sacred value expressed less support, and more anger, when the deal included money.

Tuesday, March 09, 2010


It was great fun to read Steven Landsburg's marvellous suggestions for electoral reform (of the US Senate) on the same day that the Rajya Sabha passed the Women's reservation bill in the midst of a riot by its members.
  • Divide senatorial constituencies according to the alphabet, so that instead of a senator from Alaska and a senator from Wisconsin, we’ll have a senator for everyone whose last name begins with AA through AE. The point being that it’s easy to think up earmarks and pork barrel projects that will benefit the citizens of Alaska at everyone else’s expense, but not so easy to think up pork barrel projects that will benefit everyone whose last name happens to begin with Q.
  • Give each voter two votes to cast in every senatorial election. You get one vote to cast in your own state and one to cast in the state of your choice.
    Again, this forces senators to answer to broader and more diverse constituencies, diluting the power of localized special interests.
  • This one’s not in the book but should have been: Give each senator a personal budget so that once he;s voted for $X billion worth of spending, he’s not allowed to vote for any more spending until he gets re-elected. This pits his various sub-constituencies against each other, so that the New York Senator who lobbies for subsidies to New York City is sure to get a negative earful from upstate.
I am normally against reservations; I think they are a clumsy way to get the results they are meant to achieve. If we are looking to achieve social justice, a combination of land reform and a Citizen's Basic Income would be far preferable. However, I am actually inclined to support reservation for women in Parliament.
These are MPs, for Gods sake: they don't need to know anything, or have any skills. Most of them are ciphers at best and criminals at worst:
The disclosures seemed to have little impact on the 2004 election: 128 of the 543 winners had faced criminal charges, including 84 cases of murder, 17 cases of robbery and 28 cases of theft and extortion. Many face multiple criminal counts—including one M.P. who faces 17 separate murder charges—and no major party is beyond reproach.
They certainly cannot claim that reservations would displace better qualified candidates. In fact, looking at the process which generates such winners, it would probably be a good idea to ensure we let in a large fraction of those who would otherwise never get through. Success in these races is nothing to be proud of.
The one issue with reservation for women is that the women who eventually do stand will be proxies for the violent, stupid men who would otherwise have stood for election.
The electoral model I would really like to see is one the ancient Athenians were familiar with: a system based on lottery. Everyone participates by default, and those who "win" the draw serve as MP for 5 years before returning to civil life.

Monday, March 08, 2010


Daniel Drezner was hoping it would win, but surely it should have been at least nominated for Best Picture?

Saturday, March 06, 2010

The end of the Western World

Wonderful, thought-provoking talk at George Mason University by Stephen Davies on the death of Western Civilization. While listening to it, I had to take breaks almost every 15 minutes to think things through.

By the "death of western civilization", he means something very different from what Spengler and others like him have in mind. He believes that there was a meaningful sense in which there used to be a civilization we could call "Western", which was a bridge between one civilization you could call "Christendom", and another we can call "Modern" (a curiously archaic term).
Whether you agree with his thesis depends to some extent on whether you agree with his definition of "civilization": a collection of people who share a certain collection of concepts and possess a shared understanding of a set of symbols. Whether you agree with all that he says, he is well worth listening to.