73. Brave New World

Note: This post is the seventy-third in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.


-----
"The world is turning Disney and there's nothing you can do
You're trying to walk like giants, but you're wearing Pluto's shoes
And the answers fall easier from the barrel of a gun
Than it does from the lips of the beautiful and the dumb
The world won't end in darkness, it will end in family fun
With Coca-Cola clouds behind a Big Mac Sun"¹


This week's post is about the book, Brave New World, by Aldous Huxley. Brave New World is a dystopian novel about a future world where scientific advances have led to a society where people are programmed to seek out happiness and are thus controlled, in order to maintain a stable society.

I was reminded of this book when I came across this cartoon illustration of some of the differences between George Orwell's 1984 and Brave New World.

1984, to some extent, imagines a world with the Guardian syndrome run amok, taking a far larger role and intruding in areas it was never meant to.

My first thought was that Brave New World, on the other hand, was an attempt to portray a world in which the Commercial syndrome had run amok in similar fashion.

But as I read through it again, I realized that a more accurate description would be that it describes a world in which neither syndrome exists, the Guardian syndrome because it is unnecessary and the commercial syndrome because it is destabilizing.

A while back we saw that David Gauthier argued, in his book Morals by Agreement, that morality consisted of a constraint on behaviour and that the perfectly competitive market would remove the need for morality by perfectly aligning people's natural instincts with what was socially optimal.

Huxley takes this logic further, imagining a society in which everything runs on this principle. The best expression of this thought comes in a section of the end of the book when the protagonist(s) meet up with the Resident World Controller for Western Europe, Mustapha Mond².

Mond explains that,

"Civilization has no need of nobility or heroism. These things are symptoms of political inefficiency. ... Where there are wars, where there are divided allegiances, where there are temptations to be resisted, objects of love to be fought for and defended - there, obviously, nobility and heroism have some sense."

The wording, that morality is a symptom of inefficiency, is almost a word for word match with Gauthier, but Mond's topic is politics whereas Gauthier was only talking about markets.

There are other elements of this scene that show the lack of a need for morality (in particular guardian morality). The meeting shows a complete lack of ostentation on the part of the Controller, who simply walks ('briskly') into the room and shakes their hands and has a face to face conversation with them in his study. There is no need for Mustapha to intimidate or overawe the people he is visiting, because they are firmly enough under control that they wouldn't do anything rash like use force on him.

The conversation starts with the Savage asking the Controller why something is banned and the controller replies, "Because it's old; that's the chief reason. We haven't any use for old things here." This cuts out the Guardian belief in respecting tradition.³

Mond claims that the ultimate guiding objective in the Brave New World is happiness - the same as the commercial syndrome. But in fact, the Brave New World subordinates happiness to stability. Ongoing scientific research could lead to much more comfort for man (heated leather seats in SUV's!) but the Brave New World has cut-off further scientific inquiry in many areas due to its potentially destabilizing nature.

"Our Ford himself did a great deal to shift the emphasis from truth and beauty to comfort and happiness. Mass production demanded the shift. Universal happiness keeps the wheels steadily turning; truth and beauty can't. ...

[but] People still went on talking about truth and beauty as though they were the sovereign goods. Right up to the time of the Nine Years' War. That made them change their tune all right. What's the point of truth or beauty or knowledge when anthrax bombs are popping all around you? ... People were ready to have their appetites controlled then, Anything for a quiet life. We've gone on controlling ever since. It hasn't been very good for truth, of course. But it's been very good for happiness."

I think that, in some ways, Huxley was overly optimistic about human nature. He seemed to believe that only through genetic breeding to make people dumber and forced drug consumption could people be induced to work at mindless drudgery without rebelling. He didn't seem to appreciate that people could be made cooperative in the all-consuming pursuit of happiness using far less coercive methods.

He believed that the pursuit of status would inevitably lead to civil war if left unchecked, but didn't consider that people would be happy to chase status in the form of simply greater comfort than others, achieved via promotion of comfort and convenience for others (think Steve Jobs).

He also fell into the trap of thinking that automation would remove the need for work. Ironically, even Huxley, who imagined an entire world build around the principle of the pursuit of happiness and comfort, didn't comprehend the truly insatiable nature of the human desire for greater comfort and convenience. He thought that if the government didn't maintain a large percentage of the population in agriculture, people would have no work to do, when instead the gains from no longer needing everyone to work the fields were easily absorbed by building ourselves 4,000 square foot houses and flying on planes all over the world and building cars with air conditioning, and airbags, and anti-lock brakes, and seatbelts, and warning lights, and so on.

What stands out most for me from Brave New World was the ambitious attempt to imagine a world where people's commercial syndrome desire for happiness has supplanted the need for any guardian style virtues. In the end the Savage (who has grown up outside of the Brave New World) cries out some inefficiency in the Brave New World that will allow him to demonstrate his prowess, to show his honour.

"But I don't want comfort. I want God. I want poetry, I want real danger, I want freedom, I want goodness. I want sin."

The weakness, for me, was that Huxley did not go far enough in imagining how far a commercial mindset could go on its own in reducing the need for guardian ethics, without needing to be supported by coercive methods, selective breeding or restraints on scientific inquiry and artistic endeavour.

At some point in the next few weeks, I'll explore the notion that the threat for the commercial syndrome is not just that it might succeed so well that it needs to be restrained, but rather that its continued prominence in our society depends on an ever-increasing, rather than stable level of comfort, and I'll look at the challenges we face generating an always-rising level of comfort and convenience for all.

----
¹From the Beautiful South song 'One God'

²Even the choice of the name Mustapha for the leader of Europe demonstrates a rejection of the exclusivity that is part of the Guardian syndrome, showing that this society has no need for such tribalism.

³I put this in a footnote because it's not relevant to my post, but the next passage in the book is a complaint from the Savage about the 'modern' films that strikes so close to home, I wanted to mention it, "But the new ones are so stupid and horrible. Those plays, where there's nothing but helicopters flying and you feel the people kissing."

Practical Matters

Gordon Price linked to this youtube video the other day, offering various reasons why he liked it. For me, the reason I liked it is that it provided a link I could go to and sign down (opposite of signing up) for having my own body weight in yellow pages delivered to my door year after year without ever making any request for such service.



The link to the form to opt-out is here: Yellow Pages Opt-Out, and it seemed easy enough to fill in. I guess we'll see if opting out actually worked next time delivery season comes around (sadly it just passed for me).

I suspect this will turn out to be one of those things, like signing the B.C. online organ donor registry, that I keep trying to do again, only to remember that I already did it once.

On the topic of the yellow pages, I never understood why local chambers of commerce never coordinated local businesses to put out their own yellow pages (digital version these days), and cut out the middleman that was extorting them via a natural monopoly.

72. The Theory of Moral Sentiments, Part 2

Note: This post is the seventy-second in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

This week's post is the second of two on the book, 'The Theory of Moral Sentiments' by Adam Smith.

This week, I want to talk about the part of the book I found most interesting, which was not Adam Smith talking about his own theories on ethics, but his thoughts on the theories of those who came before him.

Smith starts off by stating that all previous 'systems of moral philosophy' can be classified into one of three types:

"The different accounts which have been given of the nature of virtue, or of the temper of mind which constitutes the excellent and praise-worthy character, may be reduced to three different classes. According to some, the virtuous temper of mind does not consist in any one species of affections, but in the proper government and direction of all our affections, which may be either virtuous or vicious according to the objects which they pursue, and the degree of vehemence with which they pursue them. According to these authors, therefore, virtue consists in propriety.

According to others, virtue consists in the judicious pursuit of our own private interest and happiness, or in the proper government and direction of those selfish affections which aim solely at this end. In the opinion of these authors, therefore, virtue consists in prudence.

Another set of authors make virtue consist in those affections only which aim at the happiness of others, not in those which aim at our own. According to them, therefore, disinterested benevolence is the only motive which can stamp upon any action the character of virtue.

The character of virtue, it is evident, must either be ascribed indifferently to all our affections, when under proper government and direction; or it must be confined to some one class or division of them. The great division of our affections is into the selfish and the benevolent. If the character of virtue, therefore, cannot be ascribed indifferently to all our affections, when under proper government and direction, it must be confined either to those which aim directly at our own private happiness, or to those which aim directly at that of others. If virtue, therefore, does not consist in propriety, it must consist either in prudence or in benevolence. Besides these three, it is scarce possible to imagine that any other account can be given of the nature of virtue. I shall endeavour to show hereafter how all the other accounts, which are seemingly different from any of these, coincide at bottom with some one or other of them."

So three different approaches, benevolence, prudence (enlightened self-interest) or whatever is appropriate to the situation.

The first philosopher that Smith discusses is Plato, and the moral system outlined by Plato in 'The Republic.' I'm going to quote Smith at length because his discussion of Plato cuts right to the heart of everything we've been discussing this whole series. In a way, it's funny, because I read The Republic myself while working on this series, but I didn't manage to extract nearly the same concise summary of it that Adam Smith did (which is not surprising, I suppose, since Smith is a renowned philosopher, and I'm just some guy with a keyboard!). Anyways, take it away Adam,

"In the system of Plato the soul is considered as something like a little state or republic, composed of three different faculties or orders.

The first is the judging faculty, the faculty which determines not only what are the proper means for attaining any end, but also what ends are fit to be pursued, and what degree of relative value we ought to put upon each. This faculty Plato called, as it is very properly called, reason, and considered it as what had a right to be the governing principle of the whole. Under this appellation, it is evident, he comprehended not only that faculty by which we judge of truth and falsehood, but that by which we judge of the propriety or impropriety of desires and affections.

The different passions and appetites, the natural subjects of this ruling principle, but which are so apt to rebel against their master, he reduced to two different classes or orders. The first consisted of those passions, which are founded in pride and resentment, or in what the schoolmen called the irascible part of the soul; ambition, animosity, the love of honour, and the dread of shame, the desire of victory, superiority, and revenge; all those passions, in short, which are supposed either to rise from, or to denote what, by a metaphor in our language, we commonly call spirit or natural fire. The second consisted of those passions which are founded in the love of pleasure, or in what the schoolmen called the concupiscible part of the soul. It comprehended all the appetites of the body, the love of ease and security, and of all sensual gratifications.

It rarely happens that we break in upon that plan of conduct, which the governing principle prescribes, and which in all our cool hours we had laid down to ourselves as what was most proper for us to pursue, but when prompted by one or other of those two different sets of passions; either by ungovernable ambition and resentment, or by the importunate solicitations of present ease and pleasure. But though these two orders of passions are so apt to mislead us, they are still considered as necessary parts of human nature: the first having been given to defend us against injuries, to assert our rank and dignity in the world, to make us aim at what is noble and honourable, and to make us distinguish those who act in the same manner; the second, to provide for the support and necessities of the body.

In the strength, acuteness, and perfection of the governing principle was placed the essential virtue of prudence, which, according to Plato, consisted in a just and clear discernment, founded upon general and scientific ideas, of the ends which were proper to be pursued, and of the means which were proper for attaining them.

When the first set of passions, those of the irascible part of the soul, had that degree of strength and firmness, which enabled them, under the direction of reason, to despise all dangers in the pursuit of what was honourable and noble; it constituted the virtue of fortitude and magnanimity. This order of passions, according to this system, was of a more generous and noble nature than the other. They were considered upon many occasions as the auxiliaries of reason, to check and restrain the inferior and brutal appetites. We are often angry at ourselves, it was observed, we often become the objects of our own resentment and indignation, when the love of pleasure prompts to do what we disapprove of; and the irascible part of our nature is in this manner called in to assist the rational against the concupiscible.

When all those three different parts of our nature were in perfect concord with one another, when neither the irascible nor concupiscible passions ever aimed at any gratification which reason did not approve of, and when reason never commanded any thing, but what these of their own accord were willing to perform: this happy composure, this perfect and complete harmony of soul, constituted that virtue which in their language is expressed by a word which we commonly translate temperance, but which might more properly be translated good temper, or sobriety and moderation of mind.

Justice, the last and greatest of the four cardinal virtues, took place, according to this system, when each of those three faculties of the mind confined itself to its proper office, without attempting to encroach upon that of any other; when reason directed and passion obeyed, and when each passion performed its proper duty, and exerted itself towards its proper object easily and without reluctance, and with that degree of force and energy, which was suitable to the value of what it pursued. In this consisted that complete virtue, that perfect propriety of conduct, which Plato ... denominated Justice."

Described in this manner, Plato's system of morals bears a resemblance both to the utility function hypothesized by Howard Margolis (where a central decision making process arbitrates being a public spirited Smith and a self-interested Smith) and also to the systems of survival envisioned by Jane Jacobs which had an honour driver Guardian syndrome contrasted with a comfort driven Commercial syndrome.

One thing to puzzle out is whether prudence belongs on top as an organizing principle (as Smith indicates that Plato intended) or as part of the self-interested, comfort-seeking set of behaviours as Smith himself, or Jane Jacobs would have it. Or perhaps there are just two different things being meant by the word prudence.

Good News for a Change

I'm a little late getting to this, but I wanted to offer a favourable opinion on the deal struck between Newfoundland and Nova Scotia which will hopefully finally get development started on the Lower Churchill Hydro project. The current deal is only for a portion of the potential power that could be generated at Lower Churchill, but once the undersea cables have been installed to route the power through Newfoundland and into the Maritimes, it seems all that more likely that the remaining potential will be tapped.

In my opinion, if Canada wants to reduce it's greenhouse gas emissions without having to sacrifice anything economically, by far the most obvious choice is to use hydro-electric power (and some wind) to displace our remaining coal plants. It seems as though our neanderthal government has scrubbed the handy list of the worst ghg emitting plants in the county off of the Environment Canada website, but this press release from Pollution Watch has a list of Canada's biggest sources of CO2 in the atmosphere, and it's pretty much a list of the country's biggest coal plants.

So, credit to Danny Williams who's been the driving force behind the development of the Lower Churchill Falls.

Finally, here's a good article in the Globe from Jan Carr that explains how the main thing holding Canada back from fully exploiting it's hydro resources is lines on a map, in particular the lines between provinces.

71. The Theory of Moral Sentiments, Part 1

Note: This post is the seventy-first in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

This week's post is on the book, 'The Theory of Moral Sentiments' by Adam Smith.

The Theory of Moral Sentiments is a long rambling book, and I only plan to cover a small part of it here. Much of the book is taken up with Smith's argument that sympathy is one of the prime motivators of our moral senses, whether positive sympathy with other people's happiness and well being and benevolence, negative sympathy with their anger and fear and hatred or a more muted sympathy with their more personal emotions such as grief and joy.

What I want to spend more time on this week is Smith's comment that, "The great division of our affections is into the selfish and the benevolent." Accordingly, he has a chapter on each.

First up is selfish affections. Here are a few quotes from Smith, who treats 'prudence' as the name for all the properties that lead a man to his own benefit.

"The preservation and healthful state of the body seem to be the objects which Nature first recommends to the care of every individual."

...

"As he grows up, he soon learns that some care and foresight are necessary for providing the means of gratifying those natural appetites"

...

"Though it is in order to supply the necessities and conveniencies of the body, that the advantages of external fortune are originally recommended to us, yet we cannot live long in the world without perceiving that the respect of our equals, our credit and rank in the society we live in, depend very much upon the degree in which we possess, or are supposed to possess, those advantages. The desire of becoming the proper objects of this respect, of deserving and obtaining this credit and rank among our equals, is, perhaps, the strongest of all our desires, and our anxiety to obtain the advantages of fortune is accordingly much more excited and irritated by this desire, than by that of supplying all the necessities and conveniencies of the body, which are always very easily supplied."

...

"We suffer more, it has already been observed, when we fall from a better to a worse situation, than we ever enjoy when we rise from a worse to a better. Security, therefore, is the first and the principal object of prudence. It is averse to expose our health, our fortune, our rank, or reputation, to any sort of hazard. It is rather cautious than enterprising, and more anxious to preserve the advantages which we already possess, than forward to prompt us to the acquisition of still greater advantages."

...

"His conversation is simple and modest, and he is averse to all the quackish arts by which other people so frequently thrust themselves into public notice and reputation. For reputation in his profession he is naturally disposed to rely a good deal upon the solidity of his knowledge and abilities; and he does not always think of cultivating the favour of those little clubs and cabals"

...

"The prudent man is always sincere, and feels horror at the very thought of exposing himself to the disgrace which attends upon the detection of falsehood."

...

"is friendship is not that ardent and passionate, but too often transitory affection, which appears so delicious to the generosity of youth and inexperience."

...

"In the steadiness of his industry and frugality, in his steadily sacrificing the ease and enjoyment of the present moment for the probable expectation of the still greater ease and enjoyment of a more distant but more lasting period of time, the prudent man is always both supported and rewarded by the entire approbation of the impartial spectator, and of the representative of the impartial spectator, the man within the breast."

...

"If he enters into any new projects or enterprises, they are likely to be well concerted and well prepared. He can never be hurried or drove into them by any necessity, but has always time and leisure to deliberate soberly and coolly concerning what are likely to be their consequences."

...

"When distinctly called upon, he will not decline the service of his country, but he will not cabal in order to force himself into it"

...

"Wise and judicious conduct, when directed to greater and nobler purposes than the care of the health, the fortune, the rank and reputation of the individual, is frequently and very properly called prudence. We talk of the prudence of the great general, of the great statesman, of the great legislator. Prudence is, in all these cases, combined with many greater and more splendid virtues, with valour, with extensive and strong benevolence, with a sacred regard to the rules of justice, and all these supported by a proper degree of self-command."

Some of this aligns with what we have seen with the commercial syndrome in Jane Jacobs' Systems of Survival, but some doesn't.

In particular, Smith's concern of the prudent man for status, and the cautiousness of his prudent man, do not line up with the commercial ethics that Jane Jacobs described. In some ways, this description resembles Weber's description of the traditional economy that existed prior to the rise of 'The Spirit of Capitalism'.


* * *

After talking about man's selfish affections, Smith moves on to man's benevolent affections:

"The character of every individual, so far as it can affect the happiness of other people, must do so by its disposition either to hurt or to benefit them.

Proper resentment for injustice attempted, or actually committed, is the only motive which, in the eyes of the impartial spectator, can justify our hurting or disturbing in any respect the happiness of our neighbour. To do so from any other motive is itself a violation of the laws of justice, which force ought to be employed either to restrain or to punish."

...

"The love of our own nation often disposes us to view, with the most malignant jealousy and envy, the prosperity and aggrandisement of any other neighbouring nation. Independent and neighbouring nations, having no common superior to decide their disputes, all live in continual dread and suspicion of one another. Each sovereign, expecting little justice from his neighbours, is disposed to treat them with as little as he expects from them. The regard for the laws of nations, or for those rules which independent states profess or pretend to think themselves bound to observe in their dealings with one another, is often very little more than mere pretence and profession. From the smallest interest, upon the slightest provocation, we see those rules every day, either evaded or directly violated without shame or remorse."

...

"The love of our country seems, in ordinary cases, to involve in it two different principles; first, a certain respect and reverence for that constitution or form of government which is actually established; and secondly, an earnest desire to render the condition of our fellow-citizens as safe, respectable, and happy as we can. He is not a citizen who is not disposed to respect the laws and to obey the civil magistrate; and he is certainly not a good citizen who does not wish to promote, by every means in his power, the welfare of the whole society of his fellow-citizens."

...

"Foreign war and civil faction are the two situations which afford the most splendid opportunities for the display of public spirit. The hero who serves his country successfully in foreign war gratifies the wishes of the whole nation, and is, upon that account, the object of universal gratitude and admiration."

To be honest, I didn't find a lot of interest in Smith's description. There is brief mention of the importance of prowess, the role of deception, the desire to dispense largesse and the use of force when necessary, but not much more than that.

Of all the 'major' works of philosophy I've read as part of this series, Smith's 'Theory of Moral Sentiments' seems the most disconnected from Jane Jacobs and her 'Systems of Survival.' Nonetheless, next week I'll follow up by discussing what, to me, was the most interesting part of the book: Smith's description of the moral systems of the philosophers who came before him, in particular Plato.

70. War and Peace

Note: This post is the seventieth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

Many years ago, I read 'Century Of War' by Gabriel Kolko. It's not actually about war itself, but rather about the impact of the war on the society that wages it. I don't remember any of the details of the book (it was many years ago), but I do remember coming away completely convinced of his argument that the wars led to a shift to more progressive policies. And I also remember not being nearly as clear about why war had that effect.

This post will look into that question, in a roundabout fashion, first returning to a story I related way back near the start of this series, "One of my childhood friends happened to have his birthday on the same day as Halloween. Naturally, a group trick or treat outing was incorporated as part of his birthday celebration. Afterwards, the group of us would pile into his bedroom and dump out our accumulated loot into a pile on the floor (one pile for each person - not one big pile). Note that at this point, the distribution of loot has been determined by the random allocations at each front door, and does not take into consideration each trick or treaters particular tastes. This raises the possibility of making trades that benefit all parties involved. For example, I always liked the Rockets and Mint Laura Secord bars the best, whereas others preferred items such as the Coffee Crisp that I had little interest in.

So the initial distribution was Pareto-inefficient in that changes could be made that would benefit people without making anyone else worse off.

So, naturally, we set about trying to achieve a Pareto optimal distribution of candy in a free wheeling round of candy exchange that would last until everyone was satisfied enough with their adjusted haul such that no further exchanges could be made that were agreeable to both parties."

Now, imagine if you were one of the trick or treaters, and you were about to embark on the candy exchange when your friend suggested that the two of you team up in order to trade more effectively. The immediate question that comes to my mind is, how would teaming up help? In fact, teaming up might well be harmful since if the two of us had to agree to trades together, that might mean that I have to compromise and trade for things we both like. If I love malted milk but my friend hates malted milk, then teaming up makes me less likely rather than more likely to get what I want. The more correlated our tastes are to one another, the less compromise and less sacrifice comes from teaming up, but why make any sacrifices at all, why not just have everyone remain as sole traders. And of course, that is what we did as kids.

Now, let's imagine that a couple of your friends haven't learned proper manners and they begin to violate commercial (trading) ethics by stealing candy and a fight breaks out, with everybody trying to grab candy from everybody else's pile. And further suppose that your best friend turns to you and offers to team up. In this situation, the benefits of teaming up are obvious. A two person force would be much more effective in a physical battle than two people fighting alone, especially if you and your friend are able to place your piles beside one another in order to form a more geographically contiguous territory to defend.

OK, another scenario. This time, you and your friends (let's say there are 5 of you in total) are getting along, but a couple of kids who are up to no good, start making trouble in your neighbourhood and come over and demand that you give them all your candy or they will beat you up. You figure that if all 5 of you stand together and fight, you can fight these older kids off, but if anyone gets scared and bails, you might well lose all your candy. In this situation, you need everyone to team together in an all or nothing battle.

So, let's say that you and your friends stick together and the older bullies are scared to attack you. So one of the bullies has an idea and makes the following offer, "The first one of you little punks to come over to our side gets an equal share of the candy after we beat up the rest of your friends." Now there is an extra incentive for one of your friends (or you) to betray the rest and side with the bullies. Strong bonds of loyalty will be required to keep the group together. A moral viewpoint that says this kind of trading, or selling out, is shameful behaviour wouldn't hurt either.

OK, final scenario, same as the last one, but this time, instead of the candy being divided relatively equally between you and your friends (as you might expect after a night of trick or treating together), let's say the candy is divided the same way that wealth is in the United States. So if you collected 100 candies in total, then one friend has 84 candies, another friend has 11, one friend has 4, the second last friend has 0.2 (one fifth of a pack of rockets, perhaps), and you have 0.1 candies (one measly rocket). Do you think the chances of someone selling out their friends to the bullies goes up in this scenario? I do. How much loyalty can the person with 0.1 candies really feel towards the 'friend' sitting across from them with 84?

In a situation where you need cooperation from everyone to succeed, then everyone has equal worth, since the withdrawal of any one person dooms the enterprise. And in a situation where people are tempted to defect, the more unequal the distribution of benefits, the greater the temptation to defect. The World Wars were just this sort of situation, and it's no surprise, looking at it this way, that they led to policies which tried to take care of everyone in society (more so than what came before, at any rate).

And now, 65 years since World War 2 ended and since any collective effort or sacrifice was needed in our society, we have settled into the mindset of candy traders, preferring private schools and health care to paying taxes for public services, driving our car exactly where we want to go, rather than compromising by riding transit, staying at home watching exactly what we want to watch rather than compromising by watching what others are watching as well, and bowling alone, rather than compromising by organizing our schedule around a time everyone can come.

Antidote

After the unpleasantness of the last post, here is a little sanity, courtesy of commenter, 'A Canadian Reader' on the Globe and Mail the other day,

"I'm very tired of this obsession with lower taxes. My neighbourhood is full of people with the latest great cars, wonderful homes, children in private schools.

It isn't clear at all why we need our taxes to be even lower than they are. I don't need a new car. Mine is nice enough.

What I do need is schools that prepare our young people for a future they will have to shape themselves, health care that really takes care of the elderly and the sick, a civilized environment that values people and shows it every day.

I'm proud to support these goals with my taxes, and ashamed that my government is so focused on saving rich people and big business's money, at the expense of the weak and vulnerable.

It's a stupid priority and leads to what the US has now--California in tatters, Utah trying to cancel grade 12.

Time for the strong in society to grow up and quit trying to get all the cake all the time."

Now we just need a few (thousand) people to cut and paste that comment on to every news story in any medium that mentions how all we need for happiness is lower taxes (with never a word about what will be cut or who will benefit most) and we might start getting somewhere.

Blessed Are the Meek

Some local news, for a change.

The Now, website for a local newspaper in northeastern Vancouver, offers an unusual warning for a newspaper, 'Editor's note: This story contains language that some readers may find offensive.'

If you bravely click through here is what you get,

Shelter debate turns nasty

Police attend Coquitlam City Hall as angry residents shout at council members

"The crackheads will be in the park with their needles and sh*t like that. I'll leave a bucket of needles right by your door, too. Don't you worry."

"Are you going to pay for my house as well, when the property value goes down? I want top dollar for that, too."

"Remember, I've got your address. I'll find you."

Those threats exemplified the chaotic mood in Coquitlam council chambers Monday, as about 200 residents packed in to voice their opposition to a proposed homeless shelter in the city's Westwood neighbourhood. At issue was the first reading of a rezoning process for land at 3030 Gordon Ave., where a 30-person transitional house and commercial facility is being proposed.

In what was a roughly 20-minute long exchange, council members rarely got more than a minute worth of speaking in before heated comments began raining down from the viewing gallery. The situation reached such a fevered pitch that Mayor Richard Stewart requested a "discreet" RCMP presence outside the council chambers in response to threats being uttered towards him and other councillors.

As soon as councillors entered the chambers at 7 p.m., Hoy Street resident Garry Badour began voicing his displeasure.

"We don't want a transition house," he said. "We want a safe neighbourhood."

Stewart took the unusual step of addressing the standing-room-only audience before the meeting began, stressing that audience outbursts and applause go against council meeting procedures.

It didn't matter.

"Put it next to your house," Badour countered.

It was much the same as clerk Jay Gilbert read the rezoning item from the council agenda. Badour said, "We're opposed to that. We want to end it now."

Coun. Mae Reid, chair of the city's land use committee, tried to explain that passing the first reading of a rezoning application allows members of the public a forum to voice their views on the topic. Council eventually unanimously passed first reading, allowing a public hearing to go ahead.

"When we get something that's this contentious, the fairest thing we can do is move it to all the neighbourhoods that are affected," she said.

As Reid tried to continue, Badour cut her off again. From there, the meeting quickly descended into chaos, with multiple residents yelling at, and threatening, members of council and the local press.

...

I just thought I'd pass that along.

69. Selfishness, Altruism and Rationality, Part 2

Note: This post is the sixty-ninth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

This week's topic is a continuation of last week's post on the book, Selfishness, Altruism and Rationality, by Howard Margolis

In the last post, we talked about how Margolis explained the failings of the traditional rational choice theory to explain human behaviour in situations where self-interest conflicted with group interest. This is a pretty common observation, generally taken for granted outside of economic circles, but Margolis goes a step further and proposes an alternative model of human motivation.

Margolis calls his model the Fair Share model and it is based on the notion that people feel a desire to 'contribute their fair share' to the public welfare. He describes the underlying motivation of people in this model as follows:

"The larger the share of my resources that I have spent unselfishly, the more weight I give to my selfish interests in allocating marginal resources. On the other hand, the larger the benefit I can confer on the group compared with the benefit from spending marginal resources on myself, the more I will tend to act unselfishly."

Margolis imagines that a person (who he calls 'Smith') contains two separate components, 'G-Smith' who values (Smith's perception of) the general welfare, and 'S-Smith' who values only Smith's personal welfare. Smith stays in equilibrium by adjusting the level of his spending on the public interest so that the marginal value of more public spending by Smith (to G-smith) equals the marginal value of more selfish spending (to S-Smith).

Margolis argues that, from an evolutionary point of view, it would be easier for this sort of limited, 'fair share' altruism to be maintained over time, because it would be less vulnerable to being exploited by selfish people than an unlimited altruism that didn't keep track of how much a person had already sacrificed their personal interests for the public good.

Margolis further notes that,

"The notion that human beings might have the kind of dual preference structure posited by this study is very old, going back at least to Plato's distinction between man as a private individual and man as citizen."

In chapter 6, Margolis goes into more detail on how his model differs from the classical rational choice model, and helpfully unpacks some of the assumptions which are embedded within the rational choice model (but often go unstated or unnoticed):

1. Smith can be treated as narrowly self-interested
2. Smith's utility function is a goods function (i.e. he only cares about what goods people possess, not how they got them or what role he played in determining the allocation)
3. Smith chooses in conformity with the principle of consumer sovereignty (i.e. Smith thinks what's best for society is that everybody get what they wants, as opposed to Smith having a vision of what's best for society which might conflict with what other people want).
4. Smith has only one utility function (as opposed to having one for his own interests and one for the social interest).

As Margolis explains, economists, if confronted with these assumptions might deny that they are a necessary part of the model, but after their denial, they will then go right back to building models and making predictions that only make sense if those assumptions are there.

He also explains how, in the marketplace, where the public interest and private interest are in alignment (subject to all the caveats he have discussed in this series), the difference between the predictions of his 'fair share' model and a traditional rational choice model that posits self-interested behaviour by all participants is not that big. It is primarily in political situations where the differences will be clearer, because here the contrast between private and social objectives is sharper.

If you've had the same struggles as I have over the years trying to pin down how economists come to the (often wrong-headed) conclusions they do, this chapter is a must read. Margolis is that rare bird who knows enough economics to be able to explain things clearly using the language of economics but has still retained enough common sense to be interested in models of people as they actually are as opposed to making unrealistic assumptions so as to have a model that is easier to work with mathematically.

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Later on, Margolis talks about how his fair share model explains why people might act differently in different circumstances, pursuing their own interest in one and the public interest in another,

"If I am a producer facing reasonably competitive markets (even the experience of Ford in trying to promote safety features in automobiles in the mid 1950-s is instructive here), then I will scarcely be in a position to do anything very different than produce what the market seems to want. Even if my choices affect only me and my customers, I will not have any customers to benefit unless I offer them things they want at a price they are willing to pay. If there are external effects (environmental side-effects), the dilemma is even worse.

However, if I am in a senior position in my government, my decisions on public matters often affect society in a large way. This being so, there will be no necessary inconsistency between my behaving as a narrow profit maximizer (to a good approximation) as a private businessman; as a rather casual decision maker, as a voter, and as a very serious decision maker, working very hard and feeling great personal responsibility for the social effects of my decisions as a high public official.

...I wish to say enough here to indicate why [James] Buchanan's and [Gord] Tullock's 'paradox of bifurcated man' seems, from the [Fair Share model] view, to reflect a mistaken assumption that an internally consistent model could not account for a disposition for the same individual to behave in a very public spirited way in some circumstances and as a profit-maximizing economic man in other contexts."

Now this just seems like common sense to me, but then consider the surprise in the reactions of experimenters when they found, exactly as Margolis and his model would have predicted, that when they ran the exact same Prisoner's Dilemma experiment on the same people and only changed the name (in one case 'Wall Street Game' in the other 'Community Game') that people behaved very differently. As the abstract states,

"The results of these studies showed that the relevant labeling manipulations exerted far greater impact on the players’ choice to cooperate versus defect—both in the first round and overall—than anticipated by the individuals who had predicted their behavior." (emphasis added).

My one disagreement with Margolis in the passage above is that after stressing the role played by competition in preventing public interested behaviour in the marketplace, he then fails to note how the lack of competition in the public sector is an essential component of allowing the pursuit of the public interest there (although to be fair, it is somewhat implied in the text).

Finally, Margolis offers some interesting speculation on how caste might be partially explained by the fair share model. In the early stages of society, people who are more disposed towards public action would be more willing to undertake key tasks such as organizing irrigation schemes or a defensive army. In successful societies, these actions lead to large gains for the whole society, and those who were among the early organizers of the action would claim some of that gain for themselves, leading to greater wealth and influence. But under the fair share model, the more wealth you have, the more resources you will donate to the public interest. Richer people have more resources to donate in the first place, plus they donate a higher proportion of their resources, so there is a positive feedback whereby people with more power put more effort into the public realm which gets them more power in return and so on.

As Margolis says,

"As generations pass, the resulting division between those who manage and defend the state (often enough at real personal cost and risk) and those who labor comes to seem to accord with the natural order. What gives that presumption special potency is that there is some substance - something more than a self-serving myth - in the presumption that the noble and commoner are motivated in different ways. In terms of [the Fair Share model], that presumption is false at its root [because all people have an interest in their own welfare and the public welfare] but nevertheless consistent with observed behaviour. Our modern colloquial usage of words like 'noble' and 'peasant' is an anachronism but not necessarily a libel."

If you like economics but generally find economists irritating, and you are interested in the public welfare and the interaction between the two topics, this is a great book.

Modern Astrology

Here are some quotes from a recent Globe and Mail article in the business section. It's talking about Plutonic Power Corporation, but it could be talking about any company and it would make no difference.

"The charts for Plutonic Power Corp. (PCC-T2.320.125.45%) will give us a better idea of trend, support, and resistance in searching for opportunity. ... The three-year chart is not what I would call particularly attractive. PCC was range bound with support at $3.00 and resistance at $4.00 over the period May 2009 to May of 2010. After May of this year the stock broke below support at $3.00 and then held on to $2.40 but quickly found new lows at $1.50. PCC has caught a bounce from the rock bottom at $1.50 and is coming out of an oversold situation. ... The six-month chart illustrates the weakness in the stock and the inability to break the downtrend. There was an eight-day rise that took the stock higher in August of 2010, but it was short-lived.

The RSI signalled that the stock was oversold in October which attracted some buying. The MACD appears to be turning higher but notice the resistance at $2.20.

PCC has given bottom fishers lots of head fakes, baiting them into the market only to shred their capital. At this point, the stock is still fighting the downtrend and if you are thinking of stepping into this name, don’t be surprised if you get a shock."

This is what is referred to amongst stock market astrologists as 'Technical Analysis'.

As Wikipedia notes,

"Whether technical analysis actually works is a matter of controversy. Methods vary greatly, and different technical analysts can sometimes make contradictory predictions from the same data. Many investors claim that they experience positive returns, but academic appraisals often find that it has little predictive power."

The 'idea' of technical analysis is that there are patterns in stock market charts that will help you predict what will happen next. In my opinion, it's all about as plausible as the notion that an Octopus could predict the outcomes of World Cup games. But whereas Paul the Octopus was treated as a novelty, technical analysis is taken seriously by enough people that we get columns in our most serious national newspaper, talking earnestly about MACD's and RSI's.

I love the last line in the article, "Make it a massive weekend and Happy Capitalism!" If only Max Weber was still around today to hear people talking about technical analysis, the modern version of the mysticism and witchcraft of the middle ages that was supplanted by the rational capitalistic age, and referring to it, with no sense of irony, as capitalism!