I ordered some Christmas presents from Amazon a few days ago. Today I got an email that began like this:
Greetings from Amazon.com.
We thought you'd like to know that we shipped your items, and that this completes your order.
It was on Facebook. I'm so glad to know they think I'm a heroin addict. Maybe this is why Facebook is having trouble selling ad space.
This was in one of my classrooms several months ago. I took it home intending to blog about it. And it ended up in my basement, sadly unblogged. Until now, that is.
I took the quiz. As you can see, the only question I answered "no" to is "wanting to make better grades." (It's a bit ironic, I think, that this advertisement for improving one's literacy is itself not exactly well written. "Wanting to make better grades"? That sounds like a Facebook status when you're too lazy to delete the "is." Come on.)
I guess I have inefficient reading habits. Mostly because I don't pay attention a lot of the time. I try to read Giovanni Pico della Mirandola (which is, by the way, the most awesome name ever) while surfing Facebook. I try to breeze through Dante during my Econ class. But I seriously doubt this seminar would have helped me. I read faster than anyone I know.
Let's look at those laudatory quotes.
Says a senior accounting major: "I learned more about improving my reading in this one hour, than in my entire educational history." Really? This improved your reading more than your going through all of elementary school? Where you actually became literate? And you still can't put a comma in the right place?
Says Terry Clancy, an Aerospace Engineering major: "My semester GPA increased from a 1.97 to a 3.28. Thank you for helping me." What is he doing as an engineer that requires strong reading skills? It's not like he's reading Joyce or Derrida. Reading mathematical equations isn't that hard.
I did not know that eating before an exam can be detrimental to my score. I guess I'd better stop eating, lest I have to take any tests in the future. Nor did I know that studying for more than an hour at a stretch lowers my retention. Then again, I don't think I could stand an hour of solid studying. I take breaks about that often. And highlighting and underlining are not the best ways to study. That doesn't mean they're horrible. They're often better than just plain reading.
Okay, this has stopped being funny, even to me. So I'm going to stop writing.
I had an Econ final at seven-thirty this morning. Determined not to miss it (like I have my last three seven-thirty classes. And my last nine o'clock class. And like I should have my last ten-thirty class), I set my alarm for five-forty-six. After getting out of bed at five-fifty-eight, I showered and got ready to leave for school. My plan was to leave at about six-fifty, giving me forty minutes to get to school. I left at about six-fifty-five. Thirty-five minutes left. That should be plenty. I've made it there in twenty before.
Everything was fine until I passed Gilbert on the two-oh-two. Then, just as I entered the three mile stretch where there is no exit, the traffic inexplicably congealed into a solid mass. Luckily, I typically travel well below the speed limit to save gasoline, so I didn't have to stop. Once I got past that mess, I was still making fairly good time. But then about Alma School, the same thing happened again.
I was stupid. Forgive me. I got off the freeway. Stupid, stupid, stupid. Three hundred times stupider than riding a bicycle from Tempe to my house. (And yes, I only included that to increase the number of numbers I put in this post.)
I got on Eighth Street going west. I have no idea why. What was wrong with University? Why did I choose to go on a road with a thirty-five mile per hour speed limit? And CONSTRUCTION? And a truck that drove through the construction on Rio Salado Parkway and then decided to turn around THROUGH THE CONSTRUCTION? THROUGH THE CONSTRUCTION! WITH A TRAILER!
Needless to say, I was pretty peeved when I got to the parking garage at seven-twenty-nine by the three-minute-behind clock in my car. I parked quickly, realized I wasn't between the lines, backed out, and parked somewhere else with no cars within five spaces of me. Then I ran to the business building to take my test. About twenty yards away from the entrance I realized that I had remembered to bring an extra eraser, but no paper. Oh well, I would just write on the test paper.
So I did. The test wasn't bad, though I did momentarily forget how to find a competitive equilibrium when the government spends a variable amount. The fact that I probably don't need to get above a fifty percent didn't hurt, either. When I gave the test to the teacher, indicating that I had forgotten to bring paper, she shrugged and gave that little "whatever" frown.
Then I went over to the music building to return my candle to Doc. I left it on the top of the name placard outside his office. I was surprised it balanced. I walked back to the Institute parking, grabbing a newspaper on the way, and realizing that it was a really, really lame collection of fake stories. They weren't even funny, most of them. I got to my truck, and noticed something really awesome. There were cars all around me, except in the parking spot directly behind me. I could back straight up into that stall and then just drive out. So I did. I drove home without incident.
Happy now, Leah?
Why do we humans do what we do? The answer is obvious: we act because we want to. In short, we do things because they are in our own self-interest. Yes, there are people who do don’t do so, but we have special names for them, names like “masochist” or “psychopath.” People generally act in their own rational self-interests.
Of course, this leads to a problem. As we all know, there is more than one person in the world. At some point, their self-interests are bound to conflict. What then? Many situations like these are called market failures, in economic terms. The traditional solution? Government intervention.
But government is not famous for its stunning efficiency or heartwarming friendliness. No, it seems like more of a seething morass of faceless bureaucrats who spend their time finding new ways to torture each citizen who walks in demanding service. But there is another problem with government—not its inhuman bureaucracy, but the fact that the law of self-interest doesn’t stop at the door of the White House (or Congress, or the FCC, or the IRS, or the FDA, or the Federal Reserve or…).
Elected officials act in their own self-interests. Voters act in their own self-interests. Regulators act in their own self-interests. Thus, even if the government should act to correct a market failure, there is no reason it will—or will do so correctly. After all, it was the same self-interest that got us into the problem in the first place.
For example, let’s look at monopolies. Since they have no competition, they are often overpriced, poorly run, and inefficient. We’ll use Microsoft as our representative monopoly. I find Microsoft’s software slow, buggy, and expensive. Windows is an awkward, bloated piece of junk.
Now compare that to, say, your local Department of Motor Vehicles. I don’t think it would be too far of a stretch to call the service slow, the procedures buggy, and the system, as a whole, expensive. Both are monopolies, and both represent a failure to align people’s self-interests.
How does this come about? Consider that the average voter bears very few of the direct costs of a new government program. Many Americans pay no income tax at all, so anything they get from the government is essentially free. We could end up with a group of citizens in the lower tax brackets voting themselves perks mostly at the expense of the higher tax brackets.
Or consider the case of financial regulators. If they enact and enforce stringent rules, conservatives will roundly criticize them for stunting economic growth. But in a massive collapse, what happens but cries for more regulation? Since public workers often want to expand their programs, these regulators might actually want to provoke crises.
With that in mind, look at our current financial crisis. It seems fairly clear that we had some sort of market failure—that the markets organized self-interest in a way that led to absolutely disastrous results. Some say that more regulation would have solved this problem. But what regulations would have stopped the pooling of debt, the risk spreading, and the insane housing speculation? Should we have, say, banned home buying? Would any regulator actually want to end the party? Did anyone foresee the full extent of the problems this would cause?
Of course not. What should have been done may be obvious now, but it was far from obvious then. Why would regulators have any better chance of seeing the problems than the people actually involved in them? Regulation as a cure-all is nothing more than a magical fairy that will stop anything bad from ever happening, and we can all live happily ever after. The end. Like any fairy tale, such a solution is appealing, but it’s not something to base a theory of governance on.
Welcome to the wonderful world of public choice economics. By beginning with the assumption that people are rationally self-interested and respond to incentives, it forms a somewhat cynical theory of political science that denies our power to produce a utopia through government.
Now, maybe the self-interested model of human behavior is not valid here. After all, it can lead to some fairly odd conclusions, like economist Amartya Sen’s sarcastic interaction between two perfectly self-interested humans:
“Can you direct me to the railway station?” asks the stranger. “Certainly,” says the local, pointing in the opposite direction, towards the post office, “and would you post this letter for me on your way?” “Certainly,” says the stranger, resolving to open it to see if it contains anything worth stealing (qtd. in Ooms 3).
But the standard economic model has proven remarkably robust in the financial world; why should it not in general hold in other fields? Indeed, so long as people do not generally have the public good as their overriding concern, their actions in a democracy will not serve the public good.
As much as I’d like to believe in the free market alone, I realize that it has its flaws. But I also know that market failure itself implies government failure.
Eight months ago, my friend, whom we’ll call Michael, because that’s his name, announced that when he went to college he was going to move into an apartment. He was going to spend $723 per month on rent. Plus utilities. No, he wasn’t going to get a roommate. And living in a dorm was out of the question. I thought this was the most moronic idea ever. After all, my own plan was to live at home and spend as little money on the necessities of life as possible. Any rational person would have agreed with me.
In June, when he finally moved in, he became the biggest cheapskate in the world. Food? Cheap bologna and white bread. Laundry? The bathtub works just fine. And he’s turned his air conditioning on exactly twice since he moved in. My disbelief and frustration grew without bound. How could he justify his huge monthly expenditures yet starve himself to death? The entire situation seemed an inane farce.
But I later had a redemptive change of heart. Not only did I realize that his apartment was actually rather nice (maybe even worth the $723 per month), but I realized that I shouldn’t care. Michael’s apartment rentership and its accompanying thrift didn’t hurt me. It didn’t even seem to be hurting him. He was responsible, studious, and even had fun once in a while.
I was suffering from a set of cognitive biases. Although I was absolutely wrong, I could summon vast logical arguments to show that what Michael was doing would eventually prove disastrous. I had convinced myself, by numerous infallible proofs (or so I thought), that Michael was not ready to own an apartment or live by himself. In one of these biases, I only paid attention to examples that bolstered my own opinion: doing laundry in the bathtub or sweating through 120ยบ heat. I neglected the evidence that Michael was doing just fine. In fact, I still find it hard to muster a concrete example of his successful household management. Jeffrey Mishlove, in his book The Roots of Consciousness, calls this confirmation bias—seeking only for information that reinforces our extant prejudices. There are other cognitive biases, including the use of overgeneralized stereotypes and a reliance on extraordinary, well-publicized information. These cognitive biases are similar to optical illusions—what we think we see is not actually there; what we think we know is not actually true.
Because of these biases, no one should have the power to command, control, or coerce others. They make it impossible to objectively say if an action is right. Any judgment is filtered through these biases, making objective decisions highly unlikely. If I am absolutely certain that blue cheese salad dressing is a crime against humanity, should I be able to ban its sale? Probably not. The same is true even if I manage to convince a large group of people that I am right. After all, most of my friends agreed with me that Michael’s apartment would be a disaster. Even groups are not exempt from cognitive biases; indeed, biases are magnified through them in phenomena such as groupthink. Biases of individuals are not necessarily canceled or mitigated in group action situations. Psychological research indicates that groups are actually more likely to take extreme actions than individuals are (Moscovici 134). For example, cultural assumptions like racism are reinforced in group actions. Individuals exaggerate their views to align with community standards, thus increasing the power of the group’s views. Since all humans suffer from cognitive biases, not even a large group of them should impose their biases on others.
Enough of the veiled allusions. What I’m really talking about is government. A government inherently has the power to coerce, but due to the cognitive-bias problem, no government can hope to find what policies are truly optimal, even with the best intentions. Even democracies can act poorly due to the group manifestations of these flaws in thinking. No government can hope to be objective, even with masses of people supporting it. [1] Because of this, it is nearly impossible to have a government that will definitively do what is in the people’s best interest. It is extremely unlikely for any democracy to implement the best policy—if it even considers it. This means that government initiatives should only be undertaken with the utmost care. Only in the most compelling circumstances should a democracy’s coercive power be used, leaving most decisions to individuals where they can only hurt themselves.
Not even scientific analysis is exempt from this indeterminacy of policy. John Ioannidis, a medical researcher at the University of Ioannina in Greece, has demonstrated that the majority of scientific research does not contribute new information, but simply reinforces biases already present in the scientific community. This is not hugely surprising; after all, why should scientists be free of cognitive bias? [2] In fact, a number of French scientists in the early 1900s believed so adamantly in “N-rays,” a visible form of X-rays, that they hallucinated them in laboratory conditions (Mishlove). This dampens the power of an appeal to rational governance through science. A technocratic government built on scientific principles is as unlikely to be ideal as a democracy.
This all seems to lead toward Edward Abbey’s observation that “anarchism is founded on the observation that since few men are wise enough to rule themselves, even fewer are wise enough to rule others” (qtd. in Moncur). But let’s face it. It’s not at all likely that we will reach a state of anarchy in the near future, since most people’s biases—cognitive and otherwise—are skewed toward governmental power. And it’s far from clear that the absence of government would be better than an inefficient government. In light of this, it seems prudent to limit the power and scope of government within its own framework. Rather than actively undermining governmental authority, it is better to limit its power through the accepted mechanisms of government. Since governments faces the same judgment problem I did with Michael, we should make their default attitude permissive, not restrictive; “live and let live,” not “live and coerce.”
[1] Indeed, the justification for paternalism disappears in a democracy: The people don’t know what’s best for them, so they need to be restricted. So who is going to restrict them? The people. Hmm.
[2] It is somewhat ironic to use a scientific study to show that scientists are subject to cognitive bias, but the only consistent conclusion is that scientists do suffer from bias. For if they were not subject to bias, then their conclusion would be correct, but this conclusion is that they do suffer from bias. However, if they are subject to bias, they simply managed to come to the correct conclusion in spite of it.
So my Human Event teacher mentioned that the price of rice in Costa Rica had doubled since last year. My first thought was "hmm. That'd be a great place to study Giffen goods."
