Sunday, April 29, 2012
But, given my post yesterday, it seems to make sense. At both a personal level and a social level, our ability to choose from any number of available states of the world is driven, in some measure, by our aesthetic sensibility. With no sensibility - the metal rod through that part of the brain - we have no way to choose; we're perpetually Buridan's ass, indifferent between every possible outcome and thus paralyzed, without a utility function. Now, some people have taken this to then condemn rational choice (choice isn't rational! It's emotional!) but that, of course, misunderstands the point of rational choice.
For some reason in my half-asleep dream state, these thoughts combined with a movie Anna and I watched yesterday - Star Trek: First Contact. The Borg, a collective entity bent on assimilating the universe, had hitherto been presented to us as a collective: every individual Borg was pursuing the same plan, had the same thoughts. First Contact changes this vision and introduces the Borg Queen. Instead of speaking with the voice of the collective, she speaks in first person. She is supposedly a manifestation of the collective, but she is presented as a leader with the drones acting as her agents. Instead of a well operating machine, the Borg become like an ant colony.
I was always somewhat unhappy with the turn they took with the Borg, though for that particular story it worked out perfectly. But what had made the Borg distinct was their lack of hierarchy and individuality. With a queen, the Borg were hard to distinguish from any other enemy - for all we could tell of the Romulans, all but a very few might well be drones for the purposes of the show. After my half dream last night, though, I think I have changed my mind: if the Borg really are a passionless race, how could they possibly be driven to expand? At least with Data there's the plot device that he's 'programmed' to evolve, which keeps him from being a mere tool. The self-motivation of the Borg makes no sense - but with a Queen, even if she is just a manifestation of certain aspects of the collective, the Borg become possible to understand. Without some sort of passion, how can the Borg choose between conquering the galaxy and mastering the square dance, stuck as the Phineas Gage of the galaxy?
None of this excuses what Star Trek: Voyager did with the Borg, though. That's a different story...
Saturday, April 28, 2012
There are two economics. In Buchanan's conception, which can be seen in either his Cost and Choice or in "The Domain of Subjective Economics," Buchanan distinguishes between two realms that economists speak to: the predictive, scientific, positive realm, and the subjective, choice-oriented realm. In the first realm we conceive of humans as rats - we try to predict action in a way that is subject to testing. In the second realm prediction is impossible: "The objects for analysis are the choices of persons, which cannot be genuine choices and at the same time subject to prediction." The first realm is science and useful for prediction, the second realm is closer to philosophy, and is useful for understanding (verstehen) choice.* Tyler Cowen, quoting Plato, speaks of the "quarrel between poetry and philosophy." Philosophy is the 'Walrasian box,' or the tight prior of efficiency that the Chicago school types insist in their models (with great success, I note!), and Poetry is Israel Kirzner's attempt to carve out a theory of entrepreneurship that cannot be reducible to search. Tyler, and others, argue that Kirzner fails to break out of the Walrasian box. Mises succeeds, perhaps, by arguing that there are aspects of human contributions to the world beyond that subsumed by 'human action,' of which he includes genius. Cowen quotes Shackle as best articulating the 'poetry' of economics: “The business of choice, I am maintaining, is the business of imagination. The business of historiography, therefore, is the effort to penetrate one man’s imagination by another’s. Evidently, such art of historiography will be precarious and unsure, it will be ’poetry’. The Greeks believed it was the poet who could get nearest the truth.”
The distinction between the two economics is somewhat mirrored in Kuhn's distinction between 'normal science' and 'extraordinary science.' Normal science is puzzle solving, or search. We have some idea about what we are going to find, we just do not know the exact values we will find. What is the elasticity of demand for economists? This question can be answered to some believable degree for relatively small changes in wages. Extraordinary science is different - this involves questions like "What is the object of our study?" "What counts as facts?" "What answers count as scientific?" These cannot be answered by normal science, because these questions define what normal science is. These questions are answered by rhetoric, by whether the community of scientists finds different answers to these questions persuasive.
Now, I do not mean that the distinction between normal and extraordinary science is seen in the practice of economics, though certainly economics has grappled with these sorts of questions; but rather the distinction exists for the economic actor. People choose means to attain given ends - i.e., they optimize (given cognitive constraints). When optimizing, people are solving a puzzle. But people also deal with another level - the choice over ends. What is a good life? What is good? Who should I care about? If love is including someone's utility in your own utility function (with a positive derivative), the level of 'extraordinary choice' is the decision to put someone in your utility function (if this is even a matter of choice?) It's a matter of persuasion, not calculation.
So, what does this have to do with my dissertation project? Why do I have to work this out? Well, I'm trying to puzzle out the effect that ideology has on society, because I'm looking at how ideology spreads through society. According to Denzau and North, ideology is a "shared framework of mental models that groups of individuals possess that provide both an interpretation of the environment and a prescription as to how that environment should be structured." This is an annoying definition, because it contains within it both poetry and philosophy, optimizing and choice over what to optimize, a combination of extraordinary and normal science.
To unpack it: ideology contains within it an ideal view of society (or at least the subset of society that the ideology subsumes, perhaps a nation, or a state). This includes things like: what goals should be pursued by the collective? How should individuals live their lives? What is the connection between the two (for instance, how can the collective interfere with individuals who deviate from the ideal)? This ideal does not come about through puzzling, it is more like aesthetics. We adopt ideals because we find them beautiful, not because we have engaged in a search for our ideals. Now, aesthetics aren't 'exogenous,' we are all embedded in social reality, and the fiction we are exposed to, the beliefs of those we trust or admire, etc, all inform these ideals.
Given any ideal, there exists some hypothetical 'optimal' organization of society to bring about this ideal. This is 'normal science,' or optimization. Public and private organizations, policy instruments, formal and informal, etc. And, finally, ideology includes the interpretation of reality in light of the ideals. Of course, given the dispersed nature of knowledge, individuals with the same ideology in the same social world can interpret reality in a different way.
Peter Hall talks about policy as involving three levels - the first level is, *given* policy instruments, individuals in the system have some discretion. This is the first level of policy - it can change simply through trial and error or social learning. The second level is the choice over policy instruments. *given* any set of policy goals, or ideals, there is any number of instruments people can use to achieve those goals. If a given ideology gives the government the goal of providing full employment, monetary policy could be an instrument, fiscal policy, and so on. A change in the second level of policy necessitates a change in the first level. The third, and highest level is the choice over ideals, or policy goals. While the first two levels can change largely within the organization of the state, the third level requires a change in public discourse, of what people view as legitimate and illegitimate. Here is the realm of poetry, again. A change in the third level of policy necessitates change in the lower levels.
With a new ideology, certain policy instruments become unintelligible, and other previous unimaginable ones become possible. My research goals involve change in the third level of policy, though not only with respect to the state. What effect does the entrenched interests from one ideology have on potential changes in ideology? More on that later.
* Buchanan's words: "There is a legitimate domain for predictive economic theory. Or, to put my point differently but somewhat more dramatically, in some aspects of their economic behavior, with appropriate qualifications, men are indeed like rats. They are essentially passive responders to economic stimuli; they react; they do not choose. They are programmed, whether genetically or culturally, to behave in potentially predictable ways to specific modifications in the constraints that they face. The scope for this predictive theory of economic behavior is enormously extended when it is acknowledged that it is the behavior of some average or representative member of a group that is to be predicted here, not the particularized behavior of an individual."
and... "There are also aspects of human action that cannot be subjected to explanation in an operationally meaningful theory of economics. Any attempt to derive even conceptually refutable hypotheses about such action would amount to epistemological confusion. I have labeled this domain that of subjective economics or subjective economic theory. The objects for analysis are the choices of persons, which cannot be genuine choices and at the same time subject to prediction. Theory or analysis can be of explanatory value in this domain without the attribute of operationality in the standard sense. Theory can add to our understanding (verstehen) of the process through which the economic world of values is created and transformed. Subjective economics offers a way of thinking about economic process, a means of imposing an intellectual order on apparent chaos without inferentially reducing the status of man, as a scientific object, to something that is not, in kind, different from that of animals."
Wednesday, December 28, 2011
Sunday, December 18, 2011
Capital is, of course, anything that is a means to satisfying some ultimate goal.
I have been reading a book on linguistics, because i am becoming increasingly curious about the potential relationship between the study of language and the study of the economy. Language is, of course, unpredictible in its future course, just as new capital combinations are by their essence unpredictable (because to envision a future, profitable, combination of capital is to bring it about; that doesn't mean that one cannot imagine new innovations or, for that matter, the direction of language).
I'm also becoming convinced that the term 'labor' is vacuous. To work on is necessarily to apply higher order goods to solving an economic problem. Labor without any previous knowledge or experience in the world would be useless - everything that is in labor is.the accumulation of a lifetime of experience, and is a specific type of capital. The only question that hangs out there is regarding time; but that is not something specific to 'labor.'
To start, here is my reasoning: The use of tools is universal among humans, just as language use is. It also has no meaning outside of those subjectively given. The capital structure, just like language, is built up from ever more complex combinations of simple factors, which can then be used to combine with other simple and complex entities to form even higher level entities. The complexity only arises when the nature of what must be communicated (produced) calls for it - complex, large combinations of words (capital) don't necessarily crowd out simpler ones, but the large ones depend on the small ones... The problem with much development policy seems to be putting the cart before the horse, introducing complex physical elements into a populace whose experience does not match...
Edward Sapir, who's "Language: an introduction to the study of speech" I'm reading, breaks down a 'word' thus: 'unknowingly' - the root word is "know", un, ing, and ly are adjuncts, thus (b) + A + (c) + (d) where.he parentheses note an element of a word that has no fundamental meaning on its own. (Of course, fundamental meaning is determined only in context; in the case of a discussion of language all of the adjunct elements of speech become independent elements on their own.) One could do a break-down and map the elements and relations in a short story, but that would be a lot of work.
The 'radical' (or fundamental) element is the simplest symbol that corresponds to anything we would recognize, yet on its own it cannot convey a thought (outside of a context suggesting another element). For example, if I were to come up to you and just say, "know," you would have no clue what I mean. Any attempt to communicate a thought requires three things: two fundamental elements and a specific relation between them. Thus, the farmer kills the duckling.
The same seems to be true for any capital good as well - a single capital good has no value, until it is combined (in some specific way) with a second piece of capital, usually a skilled person or people. It is the combination and the relation that is important: each on its own does not make a production process.
Different words mean different things at different times, which is true for capital as well. Words are also never single-specific: if you can't remember a word, you can usually come up with some close substitute, or approximate the word using other words. The same is true for capital goods: a hammer might be the most useful tool in the situation you're in, but a rock will substitute for whatever you need to hit. Words, like capital goods, carry different meanings as time advances, some becoming obsolete and some being invented, and others still being plucked from obscurity into a surprising role.
The structure of a language (all of the elements and their relations) is also analogous to the structure of production. Simple language elements, like words, must be understood in order to construct a sentence, a more complex thing. Whether an epic poem, a short story, a novel, or an academic paper, the more and more complex elements that make up a language rest on the strength of the simpler objects. If the simple objects are ambiguous or ineffective at drawing ideas out of the reader, the whole novel will surely be worse. Business organizations will involve as many elements and relations as a novel. Picturing an organization using its net worth captures as much of the image of the whole organization about as well as a page count does the contents of a novel (organizational economists, of course, know this well, as do management/economic sociology scholars)...
The main deviations between capital and language, I think, primarily involve the fact of scarcity, which is necessarily true for capital, but I'm not sure is meaningful in language.
My primary interest in this is wondering whether the methods of linguistics can be applied to the study of the economy. The more belief-ideologically based our conception of the economy is, the more relevant my work is, so I am, of course, simply pursuing my self interest in this case...
Monday, August 1, 2011
Tuesday, April 26, 2011
The example that Walter Williams gave in class was that one would expect that couples with children would be more likely to go on nice dates to the theater than a cheap one to the movies, because the couples with children must pay a flat fee to a baby-sitter regardless of their choice of date.
The objection was raised in class (by Sam, I believe) that the baby-sitter should not enter into the decision making calculus because at the point where the couple makes the decision of which date to go on the babysitter is a sunk cost. The couple with children, therefore, would be just as likely to choose the movie over the theater as the couple without children.
Walter Williams, then, was wrong, if the problem is framed as it is above. William framed it in such a way that he would be right – that there is a sorting effect due to the flat cost which makes the couple who wants to go to the theater more likely to pay for a babysitter, with the end result being that you see more couples with children at the theater than at the movies. There’s also the possibility that both prof. Boettke and Charity-Joy suggested, that couples make the choice of a high-quality or a low-quality date before hiring the baby-sitter, and don’t change their plan once they make the choice. Which saves Prof. Williams’s example as well.
That misses the main point of controversy though, which is this: if someone makes a plan to do one thing over an alternative because of a flat cost involved, do they change their plans if they pay the flat fee before making the choice between alternatives?
Option 1: Once the babysitter cost is paid, the couple with children will choose the same way they would have if they were childless. The A-A effect does not apply, except potentially in the selection effect.
Option 2: (my argument) At the point in time after the babysitter is paid but before the couple actually goes to either the theater or the movie, the couple still takes into account the flat cost because going to either the movie or the theater requires that the flat cost be paid again. So the cost, after the baby-sitter is paid, of going to the theater is the price of the theater ticket and the foregone movie, and the cost of going to the movie is the price of tickets and the foregone theater trip. The value of both the foregone theater trip and the foregone movie include the price of the babysitter because either choice in the future necessitates the hiring of a babysitter. Thus, even once the babysitter is paid this time, the movie and the theater still cost the same.
My intuition comes from the claim that on a trip to Maine, tourists will more likely choose expensive lobster than cheap lobster because in order to get expensive Maine lobster ever again one has to take a trip to Maine, so even though the current trip to Maine is a sunk cost the A-A effect still applies.
I’m interested in getting this resolved so that I can stop thinking about it.
Thursday, January 13, 2011
15 years ago, I don’t think I would have imagined it possible to look someone in the eye as I chatted with them from 5000 miles away. Not, that is, unless I paid substantially for the privilege. Today, a webcam-and-microphone combination is cheaper than dinner for two at Applebees and Skype software costs nothing but the time to install it. E-mail is ubiquitous, texting is close to free, facebook is available on cheap telephones, and twitter can seemingly show up on anything that runs on batteries. Rapid communication is shockingly inexpensive, with the predictable result that a whole hell of a lot more messages make it past the quality filter. The benefits of the communication revolution are readily apparent to anyone who has had to coordinate anything on the hoof (imagine how different is the procedure to make lunch arrangements with friends today than a decade and a half ago).
For Soldiers in the field, this means that instead of waiting weeks for APO deliveries (I’m not fond of the “snail mail” moniker), messages that takes seconds to compose whisk their winsome way around the world in mere milliseconds, fresh as a daisy. This, combined with the negligible out-of-pocket expense, means that messages that were once far too trifling to send come pouring in at a rate of knots. The Soldier of yore might have expected to hear about Uncle Frank’s surgery or the fire out by the ol’ barn, but by no means did he help junior with his homework. Today’s combat-deployed Soldier has one boot in theater and if not all of the other, then at least some of the laces still at home to a degree that was unimaginable to the average infantryman of previous wars.
Under normal circumstances, most of us handle split attention fairly deftly. We can track careers, family, football scores, pop culture minutiae, fashion, art, or any of the other tiny stars of interest in our personal galaxies with relative ease. Under normal circumstances, we are not under enemy fire. Think of two competing goods: mission-relevant information and all other information. Like other resources, attention is finite, and plain ol’ microeconomics show that if we make irrelevant information cheaper, people will consume more of it. Logorrhea from home is a tax on Soldiers’ attention and may contribute to a decline in readiness.
Without taking a closer look, it’s impossible to say exactly where the margins are, so the details end up in the good ol’ “it’s an empirical question” pile, so beloved by classroom economists, but that’s fine. There’s also a big steaming policy question I wish I could just ignore. Part of the equilibrium solution is that we’d have to compensate Soldiers for giving up the luxury of staying in contact with family back home (assuming we don’t have Jonesian 0-MP Soldiers), which may or may not be substantial and could hurt morale. At any rate, I’d like to run those crazy regressions. I imagine the data is out there.
H/T Dave Gauntlett