Response to Tabarrok

Alex Tabarrok from Marginal Revolution recently posted a very generous notice of Enlightenment 2.0 as well as a long review at The New Rambler (under the heading “Does Capitalism Make Us Stupid?”) I’ve been an avid reader and fan of Marginal Revolution for over a decade now, so this was very exciting for me. The review also raises a number of interesting issues, which I thought I might take a moment to comment on.

I’ll start somewhat in reverse order, because Tabarrok’s most significant criticisms arise towards the end of his review. There he makes the observation that the final section of my book is the weakest – that’s the part where I try to propose some “solutions” to all of the gigantic problems that I’ve spent the previous 300 pages diagnosing. Many people have pointed out that these chapters – specifically, the last two – seem to lack conviction, and that the positive proposals I make are all small beer, manifestly not up to the task of solving the enormous problems that I previously identified.

To all these charges I plead guilty. Substantively, the book is actually a work of profound pessimism. The key point of chapters 6 and 7 was to show that rationality does not just come and go (or as Jonathan Kay suggested, “these things move in cycles”), but that there is actually a hazardous dynamic at work in our culture that tends to crowd out rationality. The real model for my thinking here is addictive substances, the accumulation of which is clearly directional, and the net effect of which is to create an environment more hostile to rational life-planning. As if this were not pessimistic enough, the central point of chapters 10 and 11 was to explain why the old Enlightenment remedies – some of which Tabarrok still seems partial to – are not very robust, and why we have probably already reached the limit of their effectiveness (in liberal-democracy societies). In particular, I think Brian Wansink’s research – showing that just teaching people about biases is pretty much useless – is something that we should all be paying attention to.

And finally, I really wanted to avoid falling into the trap of trying to explain how one can “fix” American politics, or political institutions. That’s because I do not think they are fixable – the U.S. is, as far as I am concerned, locked into an inescapable trajectory of long-term civilizational decline. My major efforts, as a public intellectual in Canada, have all been aimed at trying to prevent them from dragging us down with them, or at least slowing that process. That’s why I wrote that:

Criticizing the American political system has, unfortunately, become something of a mug’s game, simply because the deficiencies are all mutually reinforcing, and so no matter how much sense it would make to change one thing or another, nothing is going to get fixed. Campaign finance reform might be a good idea, as would an end to the gerrymandering of electoral districts, but it’s difficult to see any plausible sequence of events that could lead to that outcome. (342)

I cringe even to mention “campaign finance reform,” just because it’s become such a cliché. American political theorists are basically fiddling while Rome burns, talking about pie-in-the-sky versions of democracy, when they can’t even figure out how to keep crazy people out of positions of significant power. And yet when you point this out, all they ever say is “we need campaign finance reform” – which at this point I’m inclined to treat as merely an excuse for not thinking seriously about the depth and severity of the problems that afflict American politics.

So why the chapters at the end, recommending “solutions”? Partly because of the exigencies of publishing for a trade market. When The Rebel Sell came out, the criticism that Andrew and I encountered most often was people saying, “good book, would have given 5 stars, except they don’t explain how to fix the problem of consumerism.” Initially we were baffled by this, because it seemed to us a fairly obvious upshot of our analysis that the problem of consumerism could not be fixed. But it turns out that non-academic readers really don’t like books that just criticize, without any attempt to be constructive.

In this book, I succumbed to the temptation to give the people what they want, and so tried to say something encouraging (also, the subtitle of the book is “Restoring Sanity to Our Politics, Our Economy, and Our Lives” not “Why Our Civilization is in a Death-Spiral”). At the same time, I wanted to avoid having those solutions be just a recitation of my own political-ideological commitments. (In my mind, the paradigm example of what I wanted to avoid sounding like is Jane Jacobs, in her book, Dark Age Ahead, where she basically foretells the apocalyptic decline of Western civilization, all driven by… by… by what exactly? By our failure to follow a set of principles that bears a suspicious resemblance to the electoral platform of the NDP. And so what can we do to avoid this new “dark age”? Easy, we just need to implement the electoral platform of the NDP… Of course the Toronto Annex crowd lapped it up, but I found the overall effect to be rather comical, and so desperately wanted to avoid that.)

As a result, a lot of what I present as “solutions” are not really solutions, but are actually just further diagnoses of problems, posing as solutions. For example, in his Globe review, Ivor Tossell complained that I attempt “to diagnose and prescribe a balm for America’s race problem in three pages, flat.” If you look more carefully, you can see that what I’m doing is explaining, in three pages (pp. 333-335), why Americans have not and probably cannot succeed in solving their race problem. By claiming that the major issue is not so much racism as it is race consciousness, my intention was to subtly suggest that the current state of affairs is actually an equilibrium sustained by all Americans, including those who conceive of themselves as “progressive” with respect to race. The implication was that much of what gets presented by Americans as solutions are actually part of the problem, which is one of the reasons that the problem never goes away.

Many of the other “solutions” that I present are not so much put forward as solutions, but rather as examples of the way that I think we should be thinking about solving problems (e.g. the Bloomberg soda ban). In other words, what I’m doing is not so much trying to solve problems myself, but rather encouraging other people to think about how to solve them in a particular way. There is admittedly something rather lame about this, but two things can be said in my defence. First, I do actually think that part of the reason that our remedies for irrationalism have not been more effective is that people have not been thinking about rationality in the right way. My special expertise as a philosopher qualifies me to say something useful about rationality, and not much beyond that. My hope is that if people were more clear about reason – what it is and how it works – they would be able to think more productively about how to encourage its exercise. Second, I am hugely impressed – somewhat awed in fact – by the level of sophistication of the discourse in design, where people do actually spend a lot of their time thinking about how to solve many of the problems posed by human cognitive shortcomings. So I was dead serious when I wrote that:

Within the field of design, there has been a long-standing emphasis on the relationship between human cognitive systems and the built environment, with a relentless focus on structuring the environment in such a way as to amplify our abilities, to make us more capable and more effective in our interventions. Under the rubric of “cognitive design,” an extremely sophisticated discussion has developed about ways of making our biases work for us, rather than against us. The consequences of this can be seen all around…. We might dream about a day when an equally concerted effort is made to improve our social institutions, in order to achieve the same effortless integration. The ideal would be a world in which we work together to create environments that make us smarter, instead of environments that make us dumber, not just with the objects that we manipulate but with the institutions with which we interact.(328)

Although I didn’t come out and say it, I was thinking here in particular of the way that Bruce Mau has been talking about institutions and design lately (e.g. interview here). I probably should have mentioned that, but I didn’t want to come across sounding like a Mau fanboy. Circling back to Tabarrok though, I think it’s worth emphasizing that some of the more exciting work that Mau has been doing involves reconceptualizing the way that schools are organized. I don’t think it’s an accident that the institutions he chose were in the public sector – it’s because there you can find something like an alignment of interest between the managers of the institution and the “clients” that it serves. This is what makes schools different from, say, supermarkets, where the lack of alignment between the interests of the corporation and its clients is a huge obstacle to the creation of an environment that is not hostile to the latter.

I’m not naive enough to think that this provides any sort of important argument against capitalism. But I do think that it needs to register as one of the costs associated with the organization of particular domains of interaction through markets – that the standard ownership structure of firms tends to encourage the production of consumer environments that are increasingly hostile to the exercise of reason. And I do find it rather perverse that as our tools are becoming so much more user-friendly, so many of our environments are becoming increasingly user-hostile.

In any case, I thought that what I said about the market was fairly mild. Tabarrok though is concerned:

By focusing on advertising, Heath sees only one facet of the relationship between markets and rationality. Markets may want and sometimes even generate irrational consumers but markets also want and sometimes even generate rational producers. Work is where rationality is most evident in our lives and, by and large, markets reward education, IQ and reasoning ability.

Two things: First, he must have overlooked the part where I discussed the rationality of producers, and of the work environment (pp. 303-304). There I specifically addressed the question why “corporate decision making more closely approximates the ideal of economic rationality.” My answer, somewhat different from Tabarrok’s, is that “it is not because the people are more rational, it is because they are operating in an institutional environment that is more conducive to rational thought and planning”(304). (Here, by the way, I am just channelling Andy Clark, and his amazing paper “Economic Reason: The Interplay of Individual Learning and External Structure” – anyone who hasn’t read it, go do that now).

Second, on this IQ stuff, Tabarrok goes on to say that “Heath also glosses over the fact that in the modern era measured IQ scores have risen, not fallen. IQ scores have risen especially in tests of abstract reasoning ability.” This is a strange criticism, since in the very same discussion of Idiocracy that Tabarrok cites from, I point out that “In the United States, average IQ scores have increased by approximately 3 per cent per decade, for a total gain in average IQ of just under 22 points between 1932 and 2002”(209). Maybe by “glosses over” what he means is just that I don’t make a big deal out of it. And it’s true, I don’t make a big deal out of it. That’s because I think Keith Stanovich’s concept of dysrationalia is extremely important, along with the research he has done to show that performance on IQ tests is not predictive of rationality (see discussion on pp. 138-139 of my book, but also Stanovich’s What Intelligence Tests Miss). I actually think the fetishization of IQ is an incredibly pernicious feature of American culture, because it encourages so many bad habits of thought. To simplify greatly: IQ is basically about the quality of your hardware, while rationality is about the software you’re running. Too many people think that, because their hardware is so great, they don’t have to worry about what sort of software they’re running. Big mistake.

Finally, Tabarrok suggests that I am “too sanguine about the role of politics.” I thought I was being fairly pessimistic about politics. I think the nub of the disagreement between Tabarrok and myself on this point – and certainly the basis of our major differences of political ideology – is that I am much more sanguine about the role of the state than he is. This is not the same as being sanguine about democratic politics. For example, he points out that:

In a large electorate, no individual’s vote is likely to change the outcome of an election. As a result, it doesn’t pay to be informed about politics nor to think about politics in objective and rational terms. Consider an individual who spends time and effort to be informed about politics. What does this individual receive in return for their investment? The same thing as the uninformed individual. Since better information doesn’t lead to better consequences, it doesn’t pay an individual to be informed.

I couldn’t agree more. Indeed, I was completely bowled over by the section in Capitalism, Socialism and Democracy where Joseph Schumpeter first made this point. (And it makes me crazy that so many “deliberative democrats” can’t see the force of this argument, as an objection to their view.) Here is how I put the point in a paper, about a decade ago (concerning the problem of voter ignorance):

Of course, these sorts of problems could be corrected, in principle, if people were to be supplied with more adequate information and a better education. But that does not guarantee a solution. People need not only information, they also need to be adequately motivated to assimilate it. Unfortunately, in a modern mass democracy, politics is necessarily conducted on a vast scale. This means that the connection between individual action and its eventual consequence will be extraordinarily attenuated. This in turn encourages a sense of irresponsibility in the formation of political opinions. As Joseph Schumpeter observed, one need only compare the care and precision with which, say, a doctor studies a patient’s chart with the casual manner in which he reads the morning paper and forms his political opinions. In the former case, he brings the full force of his intellect to bear upon the task, precisely because the quality of his analysis has real consequences for his livelihood. In the latter case, the quality of his analysis has no tangible consequences, so unless he has some particular interest in politics he is unlikely to exercise much care in the formation of his opinions.

Indeed, the sort of considerations that motivate Tabarrok’s enthusiasm for making decisions through betting markets are, I would guess, quite similar to the ones that motivate my own enthusiasm for cost-benefit analysis. The key difference is that Tabarrok (and Bryan Caplan) tend to assume that democracy gives “the people” much greater control over the behaviour of the state than it actually does. In the background there is, I suspect, a somewhat public-choicy picture of legislation as a complex process of preference-aggregation. By contrast, I follow Ian Shapiro in thinking that we need to get past these sorts of “general will” theories of democracy.

There is one point in the last chapter where I say what I really think, but again, it might easily be overlooked. So let me just say, for the record, that I was also dead serious when I wrote the following paragraph (and that it comes closest to summarizing my considered view):

It is important to recognize that modern democratic political systems involve a delicate compromise between, on the one hand, the desire for public control of decision-making and, on the other hand, the need for rational, coherent policy. Democracies need to be democratic, but they also need to work, in the sense that they need to produce a state that effectively discharges its responsibilities. Thus they have a variety of institutional features that allow them to function even when the democratic public sphere is completely degraded. They do so largely by shifting power and control away from elected representatives toward experts. Even in the United States, where this is difficult to do, one can find examples all over. The most obvious example is the enormous role that the Supreme Court has played in making decisions that, in most other democracies, would be left to the legislature. But one can see it in other areas as well, such as the amount of autonomy that government agencies have or the increased use of cost-benefit analysis in public decision-making (338).

So if you want to know what I really think, it’s that we are not going to be able to fix the problem of increased irrationalism in politics — at best we will be able to limit its most toxic effects. As a consequence, the legislature will increasingly become a sideshow, with the two other branches of the state assuming more and more of the responsibility for actually governing. (That’s actually why I spend my time teaching in a public policy program, training future civil servants. The quality of public administration is far more important than most political theory would leads us to think.)

Last but not least, Tabarrok is unsatisfied by my discussion of Ayn Rand’s rationalism. “Heath recognizes the Ayn Rand problem but he brushes it aside. That’s a shame because a longer discussion might have been enlightening.” I’ve heard lots of complaints about this – that I don’t explain how we went from the left being so anti-rationalist in the ’60s, and Rand being the arch-rationalist, to essentially a reversal of the positions. There was initially a longer discussion in the book of conservatism, and why Rand is something of an exception in the broader tradition, which has always gravitated towards anti-rationalism. This got left on the cutting room floor, so I’ve brushed it off and cleaned it up. Let’s call it my one-minute history of conservative anti-rationalism. It’s still pretty sketchy, but at least it’s more than can be found in the book.


Response to Tabarrok — 11 Comments

  1. I think Keith Stanovich’s concept of dysrationalia is extremely important, along with the research he has done to show that performance on IQ tests is not predictive of rationality

    Stanovich’s research shows no such thing. All his research is on college students, which means that there is a lot of range restriction on IQ. This means that any associations between IQ and other variables are attenuated from what they would be in a population-representative sample.

    There is a long history of making false inferences about the nature of intelligence based on evidence from college student samples. See this study, for example. I would bet that if Stanovich’s rationality tests were administered to a sample with a wide range of ability, they would be shown to be run-off-the-mill intelligence tests in terms of general intelligence saturation.

    Another issue is that lots of what goes for “rationality” in the Kahneman-Tversky tradition is based on hoodwinking respondents with trick question. Such rationality tests have no ecological validity outside of the lab.

  2. I have difficulty grasping what you are trying to get across, though you announce it boldly. One thing you seem to have exactly backwards, though, is the following remarks:
    “I don’t think it’s an accident that the institutions he chose were in the public sector – it’s because there you can find something like an alignment of interest between the managers of the institution and the “clients” that it serves. This is what makes schools different from, say, supermarkets, where the lack of alignment between the interests of the corporation and its clients is a huge obstacle to the creation of an environment that is not hostile to the latter.”
    In the United States, and Canada as well, there is very little alignment between the interests the managers of public institutions and their clients, and very great alignment between the interests of corporations and their clients.
    Every institution of whatever kind, if left without competitive pressures will degenerate into behaving in the interests of those who run it and work in it. Government institutions, especially those that are well connected politically do so quickly and blatantly. Public schools, police, and in fact most public institutions treat their clients shabbily, and protect themselves. Their misbehavior are rarely punished. The way our public schools treat their most needy students is scandalous. Recent scandals in the VA provide another example. Corporations on the other hand when faced with competition, must provide their customers with what they prefer or lose them. If corporations do wrong, they will be pilloried in the press and in the courts. When government officials do wrong, they are protected by their knowledge of the wrongdoings of their fellows.
    You write as if you lived on the moon.

  3. Interesting commentary.

    I propose the Third World of Tribal Thinking (we all come from in the distant past?) involves Tribal Control. The Second World of Control Thinking (we all evolved into in the past?) involves Control by all methods other than Tribal. The First World of Thinking is Liberty, wherein control is given up and rather maximum disbursed power is granted the individual.

    Hence, billions of individuals making liberty’s choices (dedicated to a civil society of mutual self-restraint) results in better decisions than any experts or any elites or any government officials (read control freaks) can make.

    Also, this First World of Liberty Thinking allows that some decisions are not to be made by man, but by all individuals’ decisions… or by simply refusing any God-like decision. Examples of First World refusing to decide that which is for God or a power higher than a leader or group of leaders: Interest rates. Money printing. QE programs. Death panels required with universal mandated insurance. Simply let people buy insurance, let individuals decide, never a death panel. The decision to kill an unborn baby, mostly not a decision a human should make. Humanity is about life, not death. Natural Law.

    What I am saying is that modern life affords elites and experts the opportunity to grab power above any human’s pay grade. It is not wise for a Central Bank to decide a certain interest rate. Let the market do that. Yes, human nature has booms and busts according to its greed and fear… but human individuals react faster, quicker, better to their own nature than does a government entity. Let reality self-regulate. And don’t fret that their are booms and busts. As long as humans have fear and greed, so will their be relatively manageable booms and busts. But introduce an elite power into this equation, and all hell will need to be paid… because the universe rewards individual human excellence, and punishes elite power-mistakes.

  4. A few prime examples of the excesses of irrationality: Cambodia and the Killing Fields, The French Revolution and the ‘Terror’, Mao’s Little Red Book and the ‘Great Leap Forward’.

    The excesses don’t destroy a society. Those societies were destroyed by the mere introduction of irrationality. The excesses are merely the most visible symptoms of the distortions caused by irrationality. They should be understood as the tools used to achieve goals totally different from those of more benevolent societies.

    Under irrationality, freedoms must be curtailed in order to enforce equality, which cannot be achieved without repression. By the time the results show that neither freedom nor equality can be had, the society is already too powerless to correct itself without outside intervention, or actual revolution, and the overthrow of the proponents of irrationality.

    You’re right about one thing. For certain, it is too late for American society.

  5. I think you might want to consider that the problems to which you’re drawing attention are not merely American problems but worldwide ones. I believe that one of the factors underpinning the changes you note are the transition from the written word as the primary way by which one obtains information to visual communication media, e.g. television, video.

    Just as the transition from orality to literacy produced cognitive changes so, too, has the transition from literacy to what I’ve been calling “visualcy”. It reduces what you’re referring to as “rationality”, fosters more agonistic discourse, encourages tribalism and other sorts of factionalism.

    As the basic requirements for republican government–temperate, rational discourse, moderation, and the ability to compromise–are eroded we are likely to see various forms of oligarchy take its place.

  6. Disclosure: I’m no philosopher and my comment is based only on this post as I have no broader knowledge of Mr. Heath’s work. I am an occasional reader of Marginal Revolution. (This post makes me tempted to read Mr. Heath’s book.)

    Mr. Heath seems (like many social democrats) to take as primary the group, whereas capitalist-ish folk like Mr. Tabarrok and Mr. Kaplan place greater emphasis on the individual. You can see it in the worry that “they” (America) will drag down “us” (Canada) and on the desire for rationality and “coherence”.

    The “anti-rationality” of some American conservatism is based on an idea that social institutions are evolved like common law from some mostly-unconscious distillation of what worked and what didn’t and we shouldn’t upset the rules just because we don’t have formal derivations for their purpose.

    The problem of the rational left is that they don’t differentiate between “limits of reason” and “limits of knowledge/knowability”. (Ms. Rand seemed to ignore this distinction on the right.) Rational leftists seem eager to throw off the old and messy _ancien regime_ to make way for a new, orderly, “coherent” (and often uniform) future, imposed by the state.

    Traditional conservatives have a visceral objection to this move and end up defending the wrong thing. The value is not the old set of rules, but that there were multiple, independent sources of rules, instead of a single, “coherent”, rationally devised set imposed by the state.

    I believe, like Rand, that reason is not limited. However, I recognize that individuals can have different information and different values leading equally rational people to arrive at different answers. That will seem messy and chaotic and “irrational” to social democrats, who place high value of togetherness and group belonging/participation. They seem to dream that, if only we could have the right rules to silence the wrong kinds of people (Campaign Finance Reform) so that people like “us” could have power, we could have a wonderful unified future like a Palo Alto or Cambridge, Mass. monoculture.

    The problem is that not everyone has the same idea of “us” or same desire to be part of an “us”. In the 60s, social democrats seemed anti-rational because they wanted to throw off all the rules of a society that had the wrong “us”. (“Why do we have to make gay sex illegal? Live and let live.”) In these 10’s (teens?), power has shifted and their “us” is now quite eager to use the power of the state to crush their former oppressors. (“We must not allow any public expression of disapproval of gay sex.”)

    The way forward, IMHO, is not a return to state-imposed small-town traditionalism, but is also not state-imposed “tolerant”, “enlightened” college-town liberalism. Rather, we should shrink the power of the state and let a billion cultures bloom.

  7. I’m trying to understand this passage. It doesn’t ring true to me:

    “I don’t think it’s an accident that the institutions he chose were in the public sector – it’s because there you can find something like an alignment of interest between the managers of the institution and the ‘clients’ that it serves. This is what makes schools different from, say, supermarkets, where the lack of alignment between the interests of the corporation and its clients is a huge obstacle to the creation of an environment that is not hostile to the latter.”

    Are you suggesting that public sector institutions are better at creating environments that are not hostile to their clients? That seems self-evidently untrue to me. I am unaware that there is a great consensus that supermarkets are hostile environments. On the contrary, over my lifetime they have become more and more adept at providing products, service and selection I want. Schools, on the other hand, are often actively hostile to the needs of many of the students.

    • I haven’t read Heath’s book, but I would look at the contrast in a different way. To me, it is obvious that supermarkets are way better than schools in getting their clients what they want. Supermarkets are also better at getting their clients to want what the institution wants them to want. It’s at that meta-level that there is potentially a conflict, since the supermarket customer might not want to want potato chips and sugary drinks. I think maybe Heath exaggerates this problem, since the supermarket is actually fine with the customer wanting organic produce and exercise equipment. But he’s certainly right that the supermarket isn’t interested in getting the customer to want what the customer should want, if that is independent of any meta-want.

      If the school becomes more like the supermarket, it will be better at giving the students/parents what they want, but it will be less able to push them to want something other than what they currently want. It may not even be able to get them to want what they want to want as opposed to what they just want.

      Whether that’s a bug or a feature depends on whether you think institutions should be trying to make us better than we are.

  8. I would second Dave’s point about communication media being critical to how these things shake out and also his point that the U.S. may be leading the charge but is not unique in how it is trending.

    The big question at this point is, what sort of world will ‘internet-world’ be? I fear this question is best answered by reading the comment threads on any mainstream news website.

  9. The book seems interesting but I think that some of the points could not be further from the truth. First, I do not consider the left rationalist at all because it ignores the problems that come when people with political power meddle and try to guide markets. Second, I do not think that the claim that markets are irrational stands up to scrutiny. Go and give a bunch of five year olds toys at random and watch just how quickly they try to exchange something that they prefer less for something that they prefer more. There is nothing irrational about actions in which human beings choose their highest preference over other options.

    We can also get confused by confusing what we consider a ‘wrong belief’ being promoted by someone with being irrational. There is nothing irrational about Michael Mann hyping the AGW myth or about the leadership of the NAS supporting the IPCC because both lead to higher incomes for the people concerned. There is nothing irrational about petroleum engineers hyping capital-consuming shale production if the end result is earning more during the period that the bubble lasts than they could have earned in a lifetime of working in the conventional sector. People respond to incentives and are sometimes willing to take a wrong but popular stand in order to benefit.