Econstudentlog

“Giving money and power to Government is like giving whiskey and car keys to teenage boys” (P.J.O’Rourke)

An experiment – and some comments

I’ve had this idea for a long time now – the most vocal proponents of libertarian policies are so ignorant of human inner life that they seem to have Asperger’s Syndrome.

The classic thought experiment: two choices: (1) you get $1000 and your neighbors each get $2000, or (2) you get $500 and your neighbors get nothing. Anyone with a modicum of understanding of human aspirations and need for status knows that case 2 is preferable, even though it departs from the simplistic economic model.

Yet libertarians and Asperger types don’t seem to understand this. And not only that, but they want social polices based on their idea that case 1 is preferable: i.e. low taxes for people with high incomes. Gosh, they say, if the rich do well, we’re all better off. Which misses the whole point of social policies in the first place. We’re not trying to increase GDP (as the economic models assume). We’re trying to increase overall well being. And status is incredibly important.

“Dirk”, in a comment here. Quite a few of those “vocal libertarians” with or without Asperger’s naturally found the need to comment on this. I don’t know if Dirk is a libertarian troll or if someone really thinks like this, but I shall assume he’s “for real” for the time being. I’ve heard similar arguments before.

I decided to do a poll on his question here. Assume when aswering that your neighbors will never know anything about the game or your choice, no matter what you choose. If you choose 1, they get the money without ever knowing that your choice had anything to do with it, if you choose 2, they don’t get the money and won’t know about your choice unless you decide to tell them (I decided that this setup would be the best way to minimize the non-monetary relative status effects. In my view, including neighbor-knowledge about your choice of 1 would make it more attractive to choose 1, -ll- 2 would make it less attractive to choose 2).

Some things I found interesting in the short piece:

I find the in the piece not so hidden assumption that proponents of the welfare state know more about “human nature”/”human inner life” and “what drives politics” than libertarians (or is it “everyone else”?), interesting. The “disease” angle (well, to be true Asperger’s Syndrome is not a disease, it is a personality disorder, but the use of a medical diagnosis nevertheless was not unintentional) is interesting too. The sentence starting with “Anyone with…” is interesting in many ways: The use of the word “knows” is interesting, the use of the word “preferable” (as an objective, not subjective, variable) is interesting, the use of the words “even though” is interesting (as if libertarians had no idea standard models are often flawed because of omitted variables ect.). It is interesting that “Dirk”, whether or not his claims have some degree of truth, does not realize that political reality (how humans make political decisions – “is”) and political preferences (how we want things to be – “ought”) are two different things: In his last paragraph, he first repeats his claim that libertarians don’t understand how “normal people” think, then instantly moves on – as if the two had anything to do with each other – to almost saying that it is outrageous that libertarians would like the government to enact policies that correspond with their political preferences, because they don’t understand other people…* Because if libertarians don’t understand other people, they are of course not allowed to have a political opinion, or at the very least of course their political opinion is wrong. It’s the good old is-ought problem that rears its ugly head: According to Dirk, because most people nowadays make political decisions based on what one might loosely term “feelings”**, that’s the right way to do things, which of course is faulty reasoning. A less gracious take on his position would be to state that because libertarians disagree with him about what social policy should be about, they don’t know anything about human nature and they are not allowed to have an opinion on social policy.

I’d of course choose option 1 without thinking twice.

*Think about what would happen if a knowledge requirement such as this was implemented in general in political economy. To take but one example, nobody but blind people should be allowed to decide which political compensation models should be set up for people with impaired vision, because nobody else would be qualified to decide on these matters, as they wouldn’t know what it was like to be blind. If you still don’t see the problem, assume that only people with a previous jail sentence would be allowed a say in which policies should be enacted when it comes to criminal law, because they are the only ones who would know what it’s like to be in jail. Well, you get the picture.

**Maybe this is not the best word to use, as all preferences could be considered “feelings” in the strictest sense, but as the particular political choices resulting from these particular sets of preferences are most often considered “irrational” from a classical economic perspective with formal modeling, and as this concept probably is the one in standard terminology most close to the one I’m looking for, I shall use this word for lack of a better alternative.

juli 1, 2009 - Skrevet af US | politics | | 5 Kommentarer

5 Kommentarer »

  1. Valgte osse 1 uden at blinke, men efterfølgende er det gået op for mig, at det dog er med betingelsen, at “my neighbours” vitterligt er det begrænsede udvalg af mennesker, det antyder at være. Hvis det derimod fx var samtlige mennesker, der benyttede valutaen, så ville det at vælge 1, blot være en inflationslignende omfordeling af goderne med mig selv som eneste sikre taber.

    Comment af Thomas S | juli 1, 2009 | Svar

  2. Ok, så – første kommentar i den oprindelige tråd indeholder et lignende forbehold ;-) Jeg og den anden kommentator er sikkert bare autisttyper.

    Comment af Thomas S | juli 1, 2009 | Svar

  3. Jeg nævnte specifikt ikke dette forbehold pga. brugen af ordet nabo. Hvis en mere bred formulering af spørgsmålet var anvendt i den oprindelige forespørgsel, eksempelvis “other people”, “everybody else” eller lignende, så havde jeg naturligvis medtaget forbeholdet.

    Comment af US | juli 1, 2009 | Svar

  4. I’m still trying to understand the dillema. If nothing else, “Dirk” made me think. If well being is determined by status, and if status can be increased by recieving 500 $ no one else gets, and that leads to increased well being, then well being is either determined by a high status or an increase in status or perhaps both.

    If social policies equals out differences in status, no one have a particular high status, neither is there much room for improving one’s status – so whichever is most important, equality making policies decreases the overall well being.

    If no politically induced equality is made, we can either have that if high status is most important, then well being will be concentrated at a group of particular individuals in kind of a zerosum game, that you at least can win. Or if improving status is most important, we can actually have a situation, where most people can enjoy the pleasures of well being, if we have a society where the basic direction for most people is “moving up” in this world.

    So – if the “Dirk”-argument was a an argument for equality making policies, I believe it to be faulty even within its own premisises, and the libertarian/Aspergertyp guys win again.

    Comment af Thomas S | juli 3, 2009 | Svar

  5. I agree that Dirk’s model is strange. Let me take a more formal approach. Dirk argues that:

    a) most people think “status” (“my personal utility”) is a far more important policy variable than “societal utility”. Otherwise people would _never_ choose 2.

    b) Dirk postulates that when people maximize their personal utility through the political process through the choices they make based on a) above, (strangely enough) they also simultaneously maximize societal utility. Or rather, he postulates that the specific choices individuals make when they participate in the political process (and make their choices based on ass. a above) yield better results when it comes to maximizing societal utility than a process that “merely” maximizes GDP.

    If Dirk’s argument is meant to be taken as an argument in favour of distributive policies, the specified utility functions that he’s working with, given his postulate that 2 is a dominating strategy for “anyone with a modicum of understanding of human aspirations”, demands that the Societal Utility derived from an aggregate finite set of choices of (0,500) are greater than a similar aggregate finite set of individual choices of (2000,1000). Even if there’s a tradeoff between efficiency of production and distributive efficiency, there’s no way a well-behaved societal utility function would ever look like that. People would favor living in a poor society where inequality is relatively low to a society where GDP was 10 times as high (if everyone has two neighbours) and their own income was twice the alternative. Ask the Poles or the people from East Germany if this is a reasonable model of the real world. Or you can ask the local Arab immigrants.

    I somewhat agree with Dirk about assumption a: People are greedy and vote mainly in order to obtain a larger slice of the pie. “Status” matters. But assumption b is just not true given his specified model. More generally, this assumption doesn’t necessarily hold.

    Comment af US | juli 3, 2009 | Svar


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