Bi-Weekly "Less Wrong" Meetup
Details
Sorry I didn't post this up sooner - this time we'll be discussing economics, specifically (1) how the average person thinks using "folk economics", (2) how non-experts that consume "pop economics" media develop simplified theories known as "vulgar economics", and (3) the difficulties with understanding PhD-level economic theory and the idea of using "expert consensus" to guide us.
EVOLUTIONARY PSYCHOLOGY & FOLK ECONOMICS:
First up, I found an article at the Ludwig von Mises site. Since their view is libertarian, it's no surprise that the gist of the article is anti-socialist. The author argues that the popularity of socialism and anti-market bias are due to the fact that we evolved in a Paleolithic environment of small egalitarian tribes with a zero-sum economy based around reciprocal exchange. Primitive economies were basically static & zero-sum, with very little technological change or division of labor, so the only way people became rich was through exploitation. Reciprocal altruism gave us an aversion to middlemen & profiteers, and made us attentive to the symbolic aspect of gift-giving & charity. We tend to value intentions more than results, and we tend to overlook the 2nd & 3rd order effects. We're most comfortable dealing with people we know, so we're suspicious of foreigners and "faceless" corporations. We're very "loss averse" and we tend to focus on short-term benefits.
https://mises.org/library/evolutionary-psychology-and-antimarket-bias
Rationalwiki has several critical entries for what can be considered the folk economics of the political right wing. Those on the left often see the Protestant work ethic as being a repudiation of Christian charity and a celebration of wealth that feeds into the "just world hypothesis" - a cognitive bias that makes people blame the victim for their own misfortune. They also see "rugged individualism" and the "bootstrap myth" (a.k.a. Horatio Alger myth) as naively harking back to an earlier time when America was primarily an agricultural economy and the "means of production" (i.e. arable land) was readily available, and ignoring that we now live in an industrialized, global economy where pulling yourself up without capital is much more difficult and where the "cycle of poverty" traps people in a vicious spiral. They argue that the idea that poor people need only "summon the will" to escape from poverty is equivalent to certain forms of magical thinking such as "prosperity gospel" and the "law of attraction":
http://rationalwiki.org/wiki/Protestant_work_ethic
http://rationalwiki.org/wiki/Just_world_hypothesis
http://rationalwiki.org/wiki/Rugged_individualism
http://rationalwiki.org/wiki/Will
POP ECONOMICS & VULGAR ECONOMICS :
"Pop Economics" is the popular presentation of economics in business news, investment newsletters, best-selling economics books, and op-eds by business pundits and high-profile economists. Pop Economics gives interested amateurs a mid-level understanding of economic theories, but often leads to simplifications and distortions of those theories - especially when they're being communicated second-hand by a middlebrow journalist like Malcolm Gladwell or Thomas Friedman. Even when the public has direct access to the opinions of PhD-level economists in books like Steven Levitt's Freakonomics or in the op-eds of Paul Krugman, the average reader is liable to have a less sophisticated understanding of their theories. Joseph Ward, an econ blogger from GMU, makes this point well: http://makingofaneconomist.blogspot.com/2011/07/problem-of-pop-economics.html
Pop economics often leads to "vulgar economics", a term originally coined by Karl Marx to describe the "shallow syncreticism" of 19th century economic philosophers like John Stuart Mill who engaged in what he saw as bourgeois apologetics & motivated reasoning in their attempts to paper over the inherent contradictions of capitalism (e.g. Lasalle's "Iron Law of Wages" & Ricardo's "Law of Rent"). Today, "vulgar" is used as a prefix for a variety of economic theories to denote a clumsy appropriation of a more sophisticated theory. Current examples of "vulgar economics" include:
-
Vulgar Keynesianism - Paul Krugman's term for the fear that reduced consumer spending always leads to recessions and neglect of the Fed's ability to adjust interest rates down to raise employment and up to prevent bubbles: http://web.mit.edu/krugman/www/vulgar.html (http://web.mit.edu/krugman/www/vulgar.html)
-
Vulgar Libertarianism - Kevin Carson's term for the equivocal use of the term "free market" to mean both an idealized laissez-faire economy and currently existing capitalism, resulting in some libertarians (perhaps unknowingly) defending the results of cronyism & corporate welfare: http://mutualist.blogspot.com/2005/01/vulgar-libertarianism-watch-part-1.html
-
Vulgar Austrianism - a caricature of Austrian economics marked by fears of stimulus spending & low interest rates causing hyper-inflation instead of malinvestment; often leads to a fixation on the gold standard and buying gold for the "inevitable" economic crash: http://www.devilsdictionaries.com/blog/austrian-economics-what-it-really-means (http://www.devilsdictionaries.com/blog/austrian-economics-what-it-really-means)
-
English Department Marxism - While "Vulgar Marxism" is an older term that indicates a Marxist form of economic determinism, "English Department Marxism" is essentially the middlebrow anti-capitalism often espoused by liberal arts professors and college students without much knowledge of Marxist economic theory. It tends to look at economics as a morality play rather than focusing on the means of production, thinks capitalists get rich through legalized theft instead of appropriating "surplus value", and implicitly believes in a medieval concept of "just price" rather than Marx's "labor theory of value": http://www.friesian.com/trade.htm#note-1
ADVANCED ECONOMICS & ECONOMIC CONSENSUS:
"Advanced economics" is essentially the highest level of economic understanding - i.e. that of economic experts who typically have a PhD in economics or a closely related discipline. The main problem for the interested amateur in approaching advanced economics is two-fold: (1) it's very hard to fully understand without formal training, (2) it's hard to know who to listen to when economists disagree. Rationalists often favor skipping the in-depth debates over economic theory and looking instead to polls of professional economists to determine the expert consensus on practical policy matters.
Technically, in terms of formal logic, appealing to "expert consensus" is logical fallacy that mixes "appeal to authority" and "appeal to majority", but many rationalist groups who favor Bayesian reasoning (which will probably be the subject of a future discussion) argue that it's still a good basis for credence - especially for non-experts.
Harvard's Greg Mankiw and GMU's Bryan Caplan have both pointed out that several free market principles - esp. the net benefits of free trade - enjoy wide consensus among economists. Here is Mankiw's list, which includes a variety of positions that are certainly not anarcho-capitalist but could be described as "moderately libertarian": http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html?m=1
- Caveat: As one of Mankiw's critics points out, "the devil is in the details" and broad questions used for these polls may conceal disagreements over the implications. Also, there may be some selection bias and group think going on... http://anti-mankiw.blogspot.com/2011/12/mankiw-on-consensus-view-within.html?m=1
If you want to know about how the public reacts when presented with the expert economic consensus, check out the social experiment that NPR and Planet Money did back in 2012. They got 5 economists from across the political spectrum, had them talk with each other & find some common economic policies they could all support, and then met with some political consultants & PR specialists to create a fake presidential candidate to test with focus groups.
The consensus platform the economists devised included six pillars:
- Get rid of the mortgage tax deduction
- End the tax deduction companies receive for employee health insurance
- Eliminate the corporate income tax
- Shift from income tax to consumption tax
- Tax carbon emissions
- Legalize marijuana
Unfortunately, as you can imagine, the politician who espoused these 6 policy reforms would come off as some sort of strange consequentialist libertarian / center-left Pigovian economic hybrid that sounds crazy... and it's ideologically unrecognizable in today's political climate.
Each of the 4 parts of NPR's series (linked below) goes into a different aspect of running a political campaign, including attack ads and testing policies in focus groups. It's illustrative of both the political process and the real problems actual candidates face when they propose something that agrees with expert consensus but clashes with folk & pop economics. As they find out, the most common sense ideas may not test well since they suggest difficult trade-offs rather than merely "soaking the other guy", and they may become fodder for opponents to lambaste the candidate. I realize this is a lot of material, but it's well worth listening to if you have the time...
Episode 1: The No Brainer Economic Platform
http://www.npr.org/sections/money/2012/07/18/156928675/episode-387-the-no-brainer-economic-platform
Episode 2: Free Heroin, And Other Ideas That Won't Get You Elected
Episode 3: Making Economics Sexy
http://www.npr.org/sections/money/2012/09/28/161967973/episode-406-making-economics-sexy
Episode 4: Our Fake Candidate Meets the People
Bi-Weekly "Less Wrong" Meetup