A Liberal View on Trade and Development

This is the pre-edited text of an article that will shortly be published in World Commerce Review (https://www.worldcommercereview.com)

The liberal tradition in political thought is by no means unified. The original ideas developed in the (Scottish) Enlightenment, most importantly by David Hume and Adam Smith, have been modified extensively. This has led to different definitions and practical applications of individual freedom, the core idea of liberalism, but also of most other ideas associated with the liberal tradition.[i] Regardless this proliferation, the wide liberal support for free trade and globalization as a means to alleviate poverty and foster human development more broadly has been rather constant, although the ideal of trade free from all government interference has never been within reach. With the World Trade Organization at shambles, the increase of bilateral and regional trade treaties which often hamper free trade more than fostering it, and a general anti-liberal sentiment across the globe, the liberal ideals may not be a very popular at present. However, this does not say anything about their empirical or moral validity. Liberal recipes to fight poverty and to foster development still work and need support, both through domestic and international policies. 

Global inequality

In international relations inequality is the norm, in many different fields. Often this is not problematic in liberal eyes, as long as individuals get the chance to use their talents in the way they see fit. Grave hindrances, for example caused by a lack of basic needs and insufficient protection of classical human rights should be removed, as they often make individual flourishing impossible.

In contrast to what is often thought, liberals are convinced it is possible for all countries to implement policies that foresee in these basic liberal preconditions. Most often, bad circumstances don’t just happen to countries, nor should they be seen as the inevitable result of regrettable historical events such as slavery, imperialism, let alone the alleged detrimental effects of capitalism. As Lomasky and Téson show, the fate of the inhabitants of developing countries lies not in the hand of failing rich countries, but are mainly due to poor domestic policies, lack of, or failing, domestic institutions and a no respect for classical human rights, such as freedom of opinion, right to property, or a free press.[ii] 

Evidence

Of course, this is a broad topic, which can be approached from many angles. In this short piece, the focus is on the above-mentioned classical liberal rights and measures, but also includes broader topics such as governance and the development of human capital, in Sub-Sahara Africa. This is made visible through an -admittedly- rough measure: the outcomes and ranking of countries in a number of well-known and internationally respected indexes. These indexes compare countries on domestic policies.

A presentation of this kind has to be treated with caution. Methodologically, the indexes are different and a comparison is not always easy or fully warranted. Definitions and operationalizations differ, just like the way results are aggregated into (final) scores.

Nevertheless, these indexes provide a useful indication of good policies from a liberal view. Especially for the countries of Sub-Sahara Africa, which mostly contain low income countries. Contrary to some assumptions that is no barrier for some governments to implement different policies. Being a low income country does not automatically lead to bad policies!

Indexes

Given space limitations, the five indexes are introduced by a broad outline. Please use the references for further information. For practical purposes 5 indexes are used, published in 2018 and 2019.     

  • Since the 1970s, Freedom House publishes the Freedom in the World Index, which determines how individual rights and liberties are applied and protected, on the basis of 25 indicators. It groups countries in ‘free’, ‘partly free’ and ‘not free’. The top 5 free countries in Sub-Saharan Africa are Ghana, Botswana, Namibia, Benin and Senegal.[iii]
  • The International Property Rights Index is published by the American Property Rights Alliance (PRI), expressing the degree of protection of property rights, both material and intellectual, per country. The PRI emphasizes that property rights are also human rights, and that they are essential for economic and social development. In 2019 Rwanda (42nd), South-Africa, Botswana, Ghana, Burkina Faso and Tanzania (73th) were the highest ranking Sub-Saharan countries.[iv]
  • Transparency International publishes The Corruption Perception Index, ranking countries to the degree there is corruption and fight corruption, surveyed among business people and experts. Corruption undermines the trust people have in the political and social-economic systems within societies. In the ranking, Sub-Saharan Africa is perceived as the region with the most corruption, still the countries that score best are Seychelles, Botswana, Cape Verde, Rwanda and Namibia.[v]
  • The Ibrahim Index measures the governance of African countries, defined as ‘the provision of political, social and economic public goods and services that every citizen has the right to expect from their government, and that a government has the responsibility to deliver to its citizens’. In the overall governance category, we find Namibia, Botswana, Ghana, South Africa and Rwanda.[vi] 
  • The World Bank publishes the Human Capital Index, which focuses on different indicators, such as infant mortality, life expectancy, and the chances on education for girls and boys. Countries that score best are: Zimbabwe, Gambia, Ghana, Namibia, Botswana and Senegal.[vii]          

This leads to the following summary:

IndexTop
Freedom in the WorldGhana, Botswana, Namibia, Benin, Senegal
International Property RightsRwanda, Zuid-Afrika, Botswana, Ghana, Burkina Faso, Tanzania
Transparency InternationalSeychellen, Botswana, Kaapverdië, Rwanda, Namibië
IbrahimNamibië, Botswana, Ghana, Zuid-Afrika, Rwanda
Human CapitalZimbabwe, Gambia, Ghana, Namibië, Botswana en Senegal

Especially Botswana, Namibia and Ghana succeed in implementing relative liberal policies, with South Africa, Senegal and Rwanda following their lead. It must be noted that a position on an index is always relative. None of the Sub-Saharan countries are in the absolute top, although some score surprisingly high. Also, this is not to claim these are countries without problems, or that they are liberal countries, let alone liberal-democratic ones. Their absolute rankings do not warrant such a suggestion. It does indicate that being a low-income country does not need to be a barrier to implement relatively liberal policies, which provide individual citizens more (social-economic) opportunities than is the case in other Sub-Saharan countries. Hence, the liberal emphasis on domestic policies is fully warranted.

Liberal international policies

Liberals believe domestic policy is most important to promote development. Still, the perennial practice in international relations also is: what can other countries do in support of this? The short liberal answer is one of restraint: stay clear, do not (militarily) interfere, be modest about the possible success of ‘helping’, while ensuring the best global economic conditions.

The latter is done through ensuring free trade, also the foreign economic policy liberals are most strongly associated with. The popularity of free trade has known its high and low tidings, ever since the Ancients.[viii] Therefore the current low esteem of free trade is nothing new. There have always been people who distrust trade, for economic, political or moral reasons.[ix] On the other hand, there are also too many liberals who have claimed way too much on behalf of free trade, especially its peace-enhancing effects, which are erroneous.[x] The lack of support for trade still deserves to be fought. Friedrich Hayek and Milton Friedman, to name two great thinkers, have shown the importance of continuing to argue against the topical grain.

The evidence continually shows the superior results of even relatively free trade, which has real effects for the improvement of the life of (poor) people. Countries that are committed to free trade become richer and are able to create more possibilities for (economic and human) development. Columbia University’s Arvind Panagariya is just one of the many who found clear evidence for that. In his book Free Trade and Prosperity he shows that developing countries have enormously profited from the recent wave of increasingly free world trade.[xi] The World Bank is even clearer:

Trade is an engine of growth that creates better jobs, reduces poverty, and increases economic opportunity. Recent research shows that trade liberalization increases economic growth by an average by 1.0 to 1.5 percentage points, resulting in 10 to 20 percent higher income after a decade. Trade has increased incomes by 24 percent globally since 1990, and 50 percent for the poorest 40 percent of the population. As a result, since 1990, over one billion people have moved out of poverty because of economic growth underpinned by better trade practices.[xii]

Yet, in contrast to Richard Cobden’s famous argument, it must be acknowledged free trade is no panacea. Domestic policies are needed to see that trade benefits find their way to the wider population. Also, when some groups are out-competed at the world market, they (temporarily) need domestic support. Still, the less than perfect trade arrangements of the last decades have had enormous positive effects on development.

Foreign Aid

By way of a closing remark, in contrast to trade, governmental development aid is not supported by liberals. It still largely is, as Lord Peter Bauer had it, ‘bringing money from the poor in the rich countries, to the rich in the poor countries’. The research of his modern day successors, most notably William Easterly and Dambisa Moyo, largely confirm this.[xiii] The structural effects of governmental foreign aid are minimal and often detrimental, resulting in ‘aid addiction’ in the receiving countries. Liberal have the same doubts about the structural effects of aid by private donors such as NGO’s (positive local effects are possible, for example in health care or education). Yet as long as these private donors donot use public money, this remains a case between donor and recipient. However, in liberal eyes it fails as an international policy to foster development.

Conclusion

Inequality and poverty remain a global reality, which can have detrimental effects to the development of individuals. Liberals think this should change, but emphasize this is mainly done through improved domestic policy in low-income countries based on proven liberal principles. This is not just theory, it is a real possibility, as the some of the countries in Sub-Sahara Africa show. The best way the world can assist in this process is to provide truly free trade, while abandoning governmental foreign aid. Global development is too important to not make the effort.  

Dr Edwin van de Haar is an independent scholar specialized in liberal international political theory and political economy (see www.edwinvandehaar.com). This article is based on a chapter published in a Dutch volume entitled Difference There Must Be. Liberal Views on Inequality, published by the liberal think tank Prof. Mr. B.M. Telders Foundation (www.teldersstichting.nl) 


[i] Edwin R. Van de Haar, Degrees of Freedom. Liberal Political Philosophy and Ideology (New York and London: Routledge, 2015).

[ii] Loren E. Lomasky and Fernando R. Tesón, Justice at a Distance. Extending Freedom Globally (Cambridge: Cambridge University Press, 2015).

[iii] Freedom House, Freedom in the World 2019 (Washington DC).

[iv] Property Rights Alliance, Property Rights Index 2019 (Washington DC).

[v] Transparency International, Corruptions Perceptions Index 2019 (Berlin).

[vi] Mo Ibrahim Foundation. 2018 Ibrahim Index of African Governance (London and Dakar).

[vii] World Bank, Human Capital Index 2018 (Washington DC).

[viii] Ronald Findlay and Kevin O’Rourke, Power and Plenty. Trade, War, and the World Economy in the Second Millennium (Princeton and Oxford: Princeton University Press, 2007).

[ix] Douglas A. Irwin, Against the Tide. An Intellectual History of Free Trade (Princeton: Princeton University Press, 1996); Jagdish Bhagwati, In Defense of Globalization (Oxford & New York: Oxford University Press, 2004); Razeen Sally, Trade Policy, New Century. The Wto, Ftas and Asia Rising (London: Institute of Economic Affairs, 2008).

[x] Edwin R. Van de Haar, “The Liberal Divide over Trade, War and Peace,” International Relations 24, no. 2 (2010); “Free Trade Does Not Foster Peace,” Economic Affairs 40, no. 2 (2020).

[xi] Arvind Panagariya, Free Trade and Prosperity: How Openness Helps the Developing Countries Grow Richer and Combat Poverty (Oxford: Oxford University Press, 2019).

[xii] www.worldbank.org/en/topic/trade/overview#1 (accessed 19 November 2021)

Do we have the right to be wrong?

The pandemic, and the consequent decisions taken by our and other governments, have confronted us with the question of the extent of our autonomy. Although we are aware of the exceptional nature of the situation, the matter about the right that assists each individual to make decisions about their own life returns more strongly.

In this sense, we can wonder: How do we make decisions? Are we rational beings? Are thus our decision-making processes rational or we tend to act based on emotions, instincts, or heuristics? Even if we think in terms of choices rather than of actions, do we have enough evidence to think that we rationally choose between options? And if so, can we find the optimal solutions for our problems? Can we evaluate the optimality of our decisions?

The rationality of our actions and our decision-making processes have been widely discussed, not only in the field of economics but also in the legal, political, and sociological realms. Some authors have proposed that our decisions are not based on perfect information or precise though-processes, as Friedrich Hayek, who enlightened us about dispersed knowledge in society or Herbert Simon , who showed us how limited rationality works in real decision-making situations.

More recently, various theories such as behavioral economics and several experiments conducted by scholars from different disciplines, such as those conducted by Carl Sunstein, have showed that individuals act influenced by cognitive limitations and emotional biases. For example, some of these studies have shown how, influenced by these biases, we fail in our perception of the risk, miscalculating the odds we have of suffering certain diseases or how our choices are influenced by the way the relevant information is presented (framing). Thus, it has long been revealed that human actions and choices are not the result of a perfectly rational thought-process, and such discoveries were very useful in predicting certain patterns of behavior.

Personally, I have always found these theories fascinating, showing us that our mind does not work as the precise instrument that other visions have proposed. These “limitations” of our rationality and cognitive capacity have always led me to conclude that we must assume a humble position regarding what we can and cannot do in terms of public policies or the “construction” of social and political reality. Even this humility should be applied to scientific knowledge that manifests itself in constant change and revision. What is worrying is that, recently, this type of analysis has made a jump from the descriptive realm to the normative one, obtaining prescriptive conclusions from these experiments.

On the other hand, nowadays it is common to find that, from different perspectives and schools, subjective rights of all kinds are multiplied. It seems that individuals enjoy -at least theoretically- not only all the rights constitutionally recognized, the rights established by international human rights treatises and all the tacit or unwritten rights but also the collective rights (adding several generations). It is discussed from the right to elect and to be elected (i.e., lowering the age of vote) to the right to enjoy a healthy environment. In addition, from diverse political agendas, it is proposed the widening of all rights enjoyed by people, groups and even animals. We could discuss at length about these rights and obligations involving third parties – not only to respect them but also, in many cases, to take responsibility for the effective enjoyment of them.

But it would seem that, among all these rights that we enjoy or intend to enjoy, the right to be wrong does not appear. Everything is permitted (again, in theory) while individuals live according to the standards or goals to accepted by the community and the State at a given time. From different perspectives we are constantly offered advice and suggestions to achieve the ideal that is presented almost as indisputable: a long, healthy, and calm life (not without some ingredient of novelty or adventure). Not only from the philosophical and theological views -that indicate that human life seems to have happiness, virtue, personal flourishing, or any other transcendent purpose as its goal- but also from more scientific perspectives that provide us with details about what our limitations are in making the right decisions about how to lead a full life. They all seem to agree in proposing a “perfectionist” ideal of human life.

However, when combined these two tendencies of thought -that is, on the one hand, the perfectionist ideal of human life and, secondly, a clear vision about human limitations for making good decisions or planning courses of action, it appears this idea that it is necessary to “underpin”, help or direct the decisions of individuals with the intention to help them that they achieve such ideal ends.

Just to illustrate this point outside the case of the pandemic, we note that all political views coincide in “guiding” citizens when it comes to eating and healthy habits. In this regard, if directing citizens consumption is concerned, much of the political range (conservatism, social democracy, and even the left) seem to agree in wanting to provide healthy standards that everyone should enjoy. This is reflected in a variety of decisions made by governments from one “ideal individual” – which range from prohibiting table salt in restaurants, forcing stores to not sell alcohol at a certain time of the night (and not only limiting the sale to adults as might be expected), forcing food producers or distributors to include a lot of information about its components in packaging, etc. The question does not end here: smoking tobacco, for example, has been almost completely banned everywhere (and not only in closed public spaces but also in open spaces and even in many buildings or premises for exclusive private use).

Faced with this reality, we ask ourselves the question: Do we have the right or not to decide about our lives (our body, our health, etc.)? Can adults without serious cognitive problems -beyond those biases named above that we all “suffered”- with their legitimate autonomy, freedom, and responsibility and, if you like, access to public information about the possible consequences of their actions, choose to assume risks? Do them have the right to put salt to their food, although there are numerous studies that show a correlation between salt intake and high blood pressure? Don’t all those who choose to paraglide or drive a car on a high-speed avenue also take risks? Why are some elections forbidden or more “observed” than others?

So, from this perspective that combines perfectionism and observation of the cognitive limitations of individuals: Does this lead us directly to conclude that our decisions should be replaced or at least “influenced” or “improved” – as suggested by the nudge theory – by the decision of a public official or an expert scientist? Do we let a nutritionist tell us the ideal diet based on recent generic scientific studies? Do we allow an official or civil servant to indicate what activity / sport / food / drink / medical treatment / insurance should we carry out / practice / consume / submit to / hire considering the general statistics of the population for my age / sex / social condition? Would we allow this civil servant to “suggest” us the way of interacting with other individuals or habits to adopt?

To answer this question, it could help us to bring here the conceptual distinction proposed by Dr. Martín Diego Farrell in his essay on “Nino, democracy and utilitarianism”. There Farrell proposes two alternatives to justify democracy: The first one holds that all adults, free of physical or mental impairments, are the best judges of their interests and, in its turn, the second one points out that the same adults would be the best judges of their own preferences.

Farrell argues that the former is indefensible by the number of counterexamples we can find in which an adult seems not to know his best objective interest (perhaps knowable by an expert without his intervention) and, at the same time, other examples that show adults opting freely against their own interest. Instead, he openly defends the second argument: adults are the best experts and judges of their own (subjective) preferences. Although we will discuss in the next few paragraphs the assertion about the possibility that expert may have the objective knowledge of another person´s best interest, we will concede the point for now and agree with Farrell that each adult is the best judge of their own preferences.

This is how we could now answer the questions we posed before. I think that most of us would intuitively reject the proposal of experts/officials telling us what food to eat, what sports to practice, what form of social relationships to prefer and so. Of course, with the exceptions of exceptional situations of crisis in which we consciously seek help from experts in each subject, so that they can provide us with, in this case, personalized advice, considering our specific circumstances, beliefs and wishes. On the other hand, the pandemic has left us a clear image of the fallible, provisional, and changing nature of scientific knowledge.

I believe that the perfectionist and scientistic vision of individual life is based on a conception that responds and falls into the following errors:

a) Confusing correlation with causality: Studies on the influence of certain habit or the consumption of certain food or drink on individuals´ health show correlations and no causal links. That is, it cannot be reliably proven that this or that habit produces such a consequence but only that, given two variables, the values ​​of one vary systematically with the homonymous values ​​of the other. This coincidence may respond to an external cause to both (which produces or “causes ” both variables) or by multiple causes that are difficult to unravel at this level. This is obvious to any scientist or expert in each area, but it is forgotten when it is discussed in the public sphere, where not practicing sports “causes” obesity, salt “causes” high pressure and not wearing a face mask seems to “causes” the contagion of the coronavirus.

b) Studies always work with populations, that is, with a sample or group of individuals of a certain sex, age, physical characteristics, etc. that could have a probability of, for example, suffering certain disease. Let´s say- for the purpose of illustration- that certain group of individuals -men over 65 years have a 60% chance of having a heart attack. But this “class” or group probability does not tell us anything about each particular individual being part or not of that 60%. What if a public policy of restricting salt is being imposed on a man with low blood pressure and a very low probability of having a heart attack? Can’t this individual make the decision to consume more salt than recommended by public bodies or professional chambers at his own risk? Let´s remember all the atrocious examples that were experienced during the pandemic about relatives who have not been able to accompany terminally ill patients, penalties even of jail for people who circulated at prohibited hours and contradictory recommendations that prevented individuals from being able, with the public information available, to decide about their possibilities to work, circulate, see their relatives, etc. under threat of sanction.

c) Scientific studies and their practical conclusions are constantly changing. We have lived through this intensely in the last 20months or more of the pandemic, where what at first seemed irrefutable, months later seems shocking. Just as an example, the practically absolute prohibition -in countries as Argentina- for children to walk in the streets the first three months of quarantine. These major shifts in scientific criteria in one area can be observed (perhaps without the speed we see during the pandemic) in many other realms. Continuing with the nutritional example, we can say that the paradigms in this area seem to change drastically and quickly. Only in the last 20 or 30 years has it gone from suggesting that alcohol was bad to recommending a glass of wine a day to prevent heart disease; to try to eliminate meat in all its forms to currently attempt to eliminate all carbohydrates and sugars and to consume only proteins and fats and many more.

But, beyond all these characteristics of scientific knowledge that inform “perfectionist” public policies, we can also raise an even more fundamental point: Even if we could know, reliably and with certainty, -what science would never guarantee- how a certain habit can affect our health or what would happen if we do not met with the ideal, don´t we have any right to choose how to live our lives? When did we renounce to that right in favor of the experts of a group of professional councils or of the civil servants of a Ministry of Health? Should we forbid the individual who wants to dedicate his life to climbing the Himalayas to carry out such an endeavor because of the high risks of his life plan? And the one who practices hang gliding? Don’t these individuals know their own preferences better than anyone else?

And here are some more points added from a higher level of observation:

a) Levels of Abstraction: Why might we think that individuals choosing between options are “biased” and when individuals working as government agents in offices creating “nudges” are not biased as other individuals in their daily life? Individuals who work in the civil service or have some degree of professional or scientific specialty, don´t they suffer from the same biases and limitations described in the studies above mentioned, typical of every human being? For example, don´t they choose between theoretical or experimental options for those results presented in a more pleasant way (problem of the architecture of the election) or that confirmed more strongly their hypotheses (confirmation fallacy)?

b) Scientific theories are fallible. Also, some of the results of these experiments may turn out to be incorrect or incomplete in the future. Do we have the right to influence individual decisions based on studies that are, like any scientific theory or experiment, fallible and provisional? After all, isn’t it more worthy for the individual to pay the costs of his bad decision rather than paying the costs of a government agent’s bad decision?

c) Finally, a more philosophical point: How does chance or destiny influence on our daily decisions? Is there a case where the options are presented in a “neutral distribution” way? Let us suppose the case of an individual’s decision regarding the acquisition of medical or retirement insurances (issues that have also been very relevant during the pandemic). The individual must choose between “default options”. The options could be presented to consumers randomly or in a way decided by offerors – but without any central agent deciding-. In the latter case, the options are established by the offerors because they are trying to influence commercially on consumers´ choice and, therefore, it could be said that there is no neutral distribution even though it is not a “nudge” of the public sphere. But, on the other hand, there is a suggestion made by government agents, then the ” nudge ” is intervening in the market, albeit subtly. That is to say that private influence is being replaced by governmental influence, bringing an artificial “architecture” of the choice that did not exist before and, therefore, eliminating randomness. Here we are again facing “levels of abstraction” problem: Don´t “experts” -who propose the ” nudge”- have the same limitations as individuals that interact?

Recapitulating, during this long process we lived the last year and a half since pandemic, quarantine and all the -health, economic, political -measures taken by governments, the question about the scope of our autonomy reemerged. Standing on a platform where philosophical perfectionism and a misunderstood scientism are combined, it has gone from trying to discover patterns of behavior to prescribing ideal results and to opening the door to all kinds of measures, which establish from our right to move freely, if we can work, if we can trade, etc. And what has been more unusual, without explicit limits on the duration of such measures. I think this responds to a trend of thought that had started much earlier. But shouldn’t we take back the reins of our lives as adults? Don’t we know our interests better -or, at least, our preferences- by ourselves? If others believe they know our interests better than us, shouldn´t each of us, considering our preferences, be the best judges of how much risk we want to take? We could think that governments and expert organizations can, in good faith, publish all the information and studies produced and, likewise, could suggest, recommend, and even collaborate to follow the suggestions; but not to compel, prohibit and sanction those who are “wrong” at their own risk.

Of course, this implies taking responsibility for our actions and not demanding or claiming the governments to decide for us or to be accountable for our mistakes. If we decide to climb the Himalayas, we will have to train for many years, buy the appropriate equipment, take out the appropriate insurance, face possible injuries and if something goes wrong, even face death. Ultimately, in each election our desires, our beliefs, our projects, and our philosophical perspectives – that provides- meaning to our lives- come into play. So, we cannot ask the government or the experts to prohibit something from us (because it is risky) or, what is worse, to prohibit it from all citizens, so as not to face the dangers or costs of our eventual mistakes.

We find ourselves – by our decision – facing the paradox that we, given our limitations, cannot make personal and everyday decisions about our work, food or habits, but we can choose legitimately officials, experts or governmental agents that are going to lead us on such tasks. I propose, instead, to reassume our adulthood and start exercising our right to bring the life plan whose consequences we can assume. This, instead of taking it as natural that others decide for us in exchange of unloading on them the responsibility of our own life. Only then we will be able to claim, legitimately, the right to take our own decisions at the risk of being wrong.

Monday Links, sticks and two (or maybe three) smoking sentences

Gangsters vs. Nazis (Tablet)

How the Jewish mob fought American admirers of the Third Reich. An excerpt:

Judd Teller, a reporter for a New York Jewish daily, relates how he met one day with “several men who said they were from ‘Murder, Incorporated’ and wanted a list of ‘Nazi bastards who should be rubbed out.’” Teller took the request to Jewish communal leaders. They told Teller that if the plan would be put in motion, “the police would be informed promptly.” Teller relayed this warning to his Murder, Inc. contact. Upon hearing this, the mobster angrily replied, “Tell them to keep their shirts on. OK, we won’t ice [murder] the bodies; only marinate them.” According to Teller, this is exactly what they did. He said the attacks by the Jewish mobsters was sufficient “marination” to drastically reduce attendance at Nazi Bund meetings, and discouraged Bundists “from appearing in uniform singly in the streets.”

The Inimitable Orwell (Commonweal)

On the Politics and the English Language essay. I try to stick to the six rules, but I fear I am not totally “outright barbarous”-proof. Another list with writing rules – a more light-hearted one – comes from Umberto Eco, the noted Italian scholar:

Umberto Eco’s 36 Rules for Writing Well (Openculture)

Speaking of proper phrasing, here is a passage from Lysander Spooner (Thomas L. Knapp posted it in the comments section of a NOL piece by Jacques Delacroix):

[W]hether the Constitution really be one thing, or another, this much is certain — that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case it is unfit to exist.

Now, I may have found the second prospective opening for my public policy course, should I ever offer one (the absurd part is that I lack almost everything else to supply it, demand included). It is pithy, sharp and, importantly, timeless. The alternative one-liner I would possibly pen day one at the imaginary class:

Property imposes obligations. Its use by its owner shall at the same time serve the public good.

Weimar Constitution (1919), art. 153(c)

While not as punchy as Spooner’s aphorism, it has qualities and can raise eyebrows. Both phrases are metal. Independent of context, they have more or less exactly what it takes to pick and stick. Perhaps both of them should set the opening, leaving the audience free to choose the way forward.

Back to Spooner. Another prominent figure (of American individualist tradition this time) I had not heard of till this day.

Lysander Spooner (Online Library of Liberty). The particular passage comes from his No Treason. No. VI. The Constitution of No Authority (1870).

The Wings of Competition in Things Daily – Source

I took note that he challenged the government monopoly in mail services (a field with quasi-military structure, typically used as a matrix to consolidate state bureaucracy/ power, btw) with his American Letter Mail Company, on ethical and economic grounds. The state finally forced him out of business in 1851, though competition temporarily drove fees down.

(If you care about post stamps – I don’t – USPS to issue Ursula K. Le Guin stamp this month (Book Riot). I enjoyed Le Guin’s Earthsea and plan to read The Dispossessed, a veiled study of social systems I hear, before summer end)

If anything, Spooner seems to have shared the fiery convictions and language of his contemporaries at the First International. That was a time of memorable lines, obviously. This easily comes to mind:

The history of all hitherto existing society is the history of class struggles.

The Communist Manifesto (1848)

They also sported some serious beards. Those of Spooner and Marx are respectable, but I would award James Guillaume’s bonus points for the extra menacing vibe.

Caging the leaders of the future

My journey back to school has made me realize the skill school forbade me from learning is the single most important one I use in my job: delegation.

I have been running a research company I founded for 5 years now, and no single skill I have learned matters to my leadership abilities more than delegation. The only reason our company thrives is that other people do things I could never do myself, and it would be self-destructive and short-sighted to even try to hog the work on any task.

However, I returned to law school to finish my degree, and felt the limitations of my student life fall again squarely on my shoulders. Every assignment, every class felt uncomfortably heavy almost immediately, not because they were meaningless or useless, but because I could not treat them like a problem seeking a solution. Like an obstacle for me to overcome with my greatest asset–my team.

This simple rule, that I must turn in only my own work, makes sense only in the sterile world of the bean counting metric junkies, who worry not about whether I build great things but whether I built them alone. No client has ever peered suspiciously over my work, suggesting that perhaps I may have gotten outside, illicit assistance. Or worse, Googled and found someone else’s solution.

I’m not saying that all schools must immediately revise their grading systems to teach leadership or fit my needs. Far from it–I am telling anyone else struggling under the burdens of leadership, your school simply cannot help you. Recognize that there is no way to prepare for real challenges by getting high grades on fake ones. And learn to value the skills of others, lest you drown in your own inbox and incompetence.

American Classical Liberals Suck

This week Kevin Vallier published a new entry on neoliberalism in the Stanford Encyclopedia of Philosophy: Neoliberalism (Stanford Encyclopedia of Philosophy). It is a well-written, well-researched piece. However, it is also symbolic for the greatest deficiency of American classical liberals: they are unable or unwilling to defend the name, or label if you like, of the ideas they are associated with. Given the influence of American academia and thinks tanks on the rest of the world this is especially important. It has happened before, and it is happening now. It sucks.

This is how Vallier starts his entry:

“Though not all scholars agree on the meaning of the term, “neoliberalism” is now generally thought to label the philosophical view that a society’s political and economic institutions should be robustly liberal and capitalist, but supplemented by a constitutionally limited democracy and a modest welfare state. Recent work on neoliberalism, thus understood, shows this to be a coherent and distinctive political philosophy. This entry explicates neoliberalism by examining the political concepts, principles, and policies shared by F. A. Hayek, Milton Friedman, and James Buchanan, all of whom play leading roles in the new historical research on neoliberalism, and all of whom wrote in political philosophy as well as political economy. Identifying common themes in their work provides an illuminating picture of neoliberalism as a coherent political doctrine.”

The problem is in the words: ‘“neoliberalism” is now generally thought…’’.  Neoliberalism is a hotly debated term, there is certainly no consensus on its meaning. As Oliver Hartwich has emphasized in Neoliberalism, the genesis of a political swearword, it is still most often used as a swearword by the left for all that they think is wrong with capitalism, (classical) liberalism, (more or less) liberal policies by IMF, WTO and World Bank, et cetera. These left wingers are also found in academia, policy and in media circles, which has led to its routine use. However, it is not true that the work of Hayek, Friedman and Buchanan is generally thought to be covered by a neoliberal label. Only those who disagree with it call them neoliberals. It is painful to see that the ideas of these three Nobel Prize winners are now used to explain neoliberalism in a leading online source. They self-identified as classical liberals and just because opponents of their views use a different label is no reason to comply with that malicious practice.  

The worse thing is, it has happened before, also commencing in the US. Fairly recently, classical liberals began to use the label libertarian, as the Cato Institute has been promoting, for example on their (very useful) website  Libertarianism.org, or in David Boaz’ The Libertarian Mind.  Jason Brennan’s Libertarianism, what everyone needs to know is another example. The issue here is that the three aforementioned classical liberals, and others, are now thrown onto the same heap as Rothbard and Rand, to name a few rather different thinkers.

Decades earlier, Hayek and others noted with regret that the Americans were unable to defend the original meaning of the word liberal, with the result that a liberal in the American sense is now what people in other parts of the world call a social-democrat. It is also the reason Hayek and other started to use the name classical liberal.  

The result of all this changing of names is confusion and vulnerability. Nobody knows what label belongs to which ideas, which gives rise to a petty industry on liberal labels, yet without any clarity in the end. It also provides ample opportunity for opponents to negatively attack ideas loosely associated with the (classical) liberal movement, which results in a negative image, which also make liberal ideas less attractive for outsiders. The lack of clarity also makes vulnerable for any kind of criticism. Actually, embracing the swearword other use for you, by offering the ideas of your greatest and brightest thinkers, is a shameful act at least.

American classical liberals should stay firm and defend their ideas under the proper labels. There is no reason for change (see my Degrees of Freedom: Liberal Political Philosophy and Ideology), there is only a need for explanation and defense. Giving up clear and proper labels plainly sucks.         

Transaction Costs are Injustice

Every Law Professor: ‘what is justice?’

In law school, I found that the central goal of legal academics and practitioners was to construct systems of thought, regulation, and courts providing justice. In that endeavor, my peers and professors constantly asked, “what is justice?”

I think well intentioned lawyers would agree, the law should provide access to justice via a system that is generally agreeable to those subjected to it, and that matches in rules what the general public aligns on in spirit. However, beyond these generalities, I find the conversation of ‘what is justice’ to be too abstract to be useful. However, that does not mean we should give up on it, we just need to change approaches, and instead ask ‘what is injustice?’

The Via Negativa

The basis for this is that it is easier to agree on what is unjust than on what is just: injustice in the form of concrete, tangible wrongdoing can be protested to, and people from diverse viewpoints can find agreement in what they mutually despise. Through the via negativa, then, we can fill in the negative space around justice, and by recognizing what it is NOT, we can start to give it form.

I know exactly where I would start, since I spend way too much time around lawyers, and I have noticed that they are open to any discussion of how lawyers can bring justice, but get very prickly if you suggest that the cost in time, money, and lost control by delegating justice to lawyers is in any way problematic. Let’s just say, lawyers don’t like being reminded that they are rent seekers in the process of achieving justice. So, my bold assertion is:

Transaction Costs are Injustice

Let me unpack this. What I mean by this is that, whatever a just outcome may be, it is unjust to delay this outcome when speed is possible, it is unjust to have complexity and opacity when simplicity is possible, and it is unjust to demand control when voluntarism and mutuality is possible. In effect, it is unjust to make the process of finding justice costly.

The Appeal Labyrinth: The Town of Castle Rock v. Gonzales

This issue actually came up to me in a conversation about the heartbreaking case of The Town of Castle Rock v. Gonzales. In June 1999, Jessica Lenahan-Gonzales was a resident of Castle Rock whose estranged husband kidnapped her children from her house, and when she called the police and asked them to enforce an active restraining order against him (he had been stalking her and her children). They did not react quickly, and 12 hours later, her children were found murdered in her estranged husband’s car after he engaged in a deadly shootout with the police.

Now, there is no good outcome from such a situation, especially for Jessica. However, one route for her was to sue the police department under, of all things, under a law originally passed to fight the KKK. In her lawsuit, she claimed the federal government had an interest in enforcement of the restraining order and alleged that the police department had “an official policy or custom of failing to respond properly to complaints of restraining order violations.”

Jessica’s case was initially dismissed by the District Court, but she appealed and, in 2002, it was reversed by the Tenth Circuit, which said she could recover under procedural due process but denied that she had a right to recover via substantive due process (for Scalia’s take on substantive due process in general, see this amazing video). However, the Circuit court also noted that while the town was liable, the officers were covered by qualified immunity.

The town appealed and actually was granted cert by the Supreme Court. SCOTUS reversed the Circuit Court in a 7-2 decision; Scalia wrote for the majority that officers were not required by law to immediately enforce restraining orders, that even if they were it would not give individuals a right to sue (instead, the right would be with the state). Lastly, he noted that even if enforceable, this would have no monetary value and could not lead to an individual payout via Due Process.

So, in the end, SCOTUS gave Jessica nothing. Now, we can all weigh in on whether Scalia ‘did justice’ to her; I have incredible sympathy for Jessica but happen to think his argument is correct, that under the law and Constitution, a restraining order does not give her the right to get money from the town. But I will say that the court did her a great injustice, in sending her down a 6-year rabbit hole of being denied, then allowed, then denied again from recovery. How, then, can we all agree that the court was unjust? The injustice was the delay. The injustice was the tremendous cost in time, money, and emotional damage. The injustice was that the process for answering the question of how a mother should react to the murder of her children and how a town should support her gave no closure, and instead just had transaction costs in landing her, in 2005, exactly in the same spot she was in 1999.

The Lazy Counter: justice takes time!

Now, angry lawyers out there, don’t mistake me here: I am not saying appeals never bring justice. I too am in awe of the work of the Equal Justice Initiative, which uses the appeals process to fight wrongful convictions. I am not arguing appeals are unjust. I am arguing that a legal system that takes 6 years and millions of dollars to answer any question is doing an injustice to EJI’s clients as well. Was Walter “Johnny D.” McMillian served well by a justice system that put him in jail for years while his appeal stagnated?

What is obvious here is that lawyers, in their blindered vision of pursuing justice, are doing their best to get to the right outcome, and while cost may be a consideration for process improvement, it is not a consideration for justice. Maybe a simpler, more transparent, faster court process would do a worse job. But I think that every complexity, opacity, and delay is an injustice done by our system to the people who are seeking justice through it, and I would be amazed if Johnny D would have been thankful for all the technicalities that could be used to get the right outcome after what the Alabama prison system put him through.

Is “justice” trying to do too much?

Unlike in the case of Johnny D, Jessica’s case may show how we stretch the bounds of the system to get to an outcome that feels right, rather than being by the rules. Johnny D was caught up by a racist abuse of criminal justice, which is intended to keep citizens safe; there was no ‘community solution’ available for the murder of which he was falsely accused.

Jessica, however, was simply not treated right by her town. Anyone, regardless of their politics or views, would hope that the town has some level of care for their aggrieved, and that the community could pull together around her. Obviously, this did not happen–and especially not by the town’s police department, which had the opportunity to admit it was asleep at the wheel under the knowledge that they had qualified immunity. Since community solutions were lacking, she brought a civil case, which had a desirable end–helping an aggrieved mother and recognizing that her case was mishandled–but inadequate and undesirable means: lawyers lawyering.

I would be amazed if Jessica herself thought of the connection of: restraining order->Ku Klux Klan Act->federal oversight of law enforcement->property recovery under the Due Process Clause->monetary damages for police inaction. From my legal education, this sounds like the highly technical argument of a creative activist lawyer, who wants to change the law as much as he wants to help his clients. So, were Jessica’s lawyers trying to do too much through the justice system? Was the better solution, then, not to turn back to the community and use public truth-telling or even honest requests for help?

The elites-for-the-people against the people

This made me react against a phenomenon I have seen across law schools, firms, and courts. At elite law schools, the administration touts the number of Access to Justice projects and amicus briefs written by faculty in cases like Gonzales. At elite law firms, they attract top performers with huge salaries, sure, but they mostly talk about how many interesting pro bono cases their associates can take on. And on top Circuit Courts, most famously the Ninth, my classmates go on to help judges think creatively about how to reach just outcomes via legal wrangling. All of these activities are done with a mix of noblesse oblige and self-importance, but are honestly intended to help find justice for the downtrodden. I simply think these do-gooders don’t notice that all these activities are costly.

If you are not a lawyer, you may not realize how systematic this cost has become. Non-lawyers view courts as places where people with causes of action come and get answers based on the law. Lawyers know better: this certainly happens, but in parallel, dozens of groups (plaintiffs lawyers and activist groups on all sides of every issue) are targeting certain laws and certain constitutional questions, and are searching madly for standing. As in, they comb the news and low-level lawsuits to find one they can fund through as many appeals as possible to get the law changed or even just to get a ruling on a fact pattern that is friendly to them. In this, let me pick on my own team: in Carpenter v. US, in which the government used the cell phone location records of Carpenter and his friends without a warrant to arrest and convict them of robberies, there were no fewer than 16 amicus briefs by privacy activists (the CEI, EPIC, EFF, the Fourth Amendment Scholars, and the list goes on). Carpenter v. US was about many deep legal deliberations on the importance of privacy, but I have to say, long before it reached SCOTUS, it was no longer about justice for Carpenter, who had been in jail for two years and who wasn’t getting out even if he won. While it was a victory for my ‘team’ in saying that the government needs warrants if it wants cell phone location records, maybe justice isn’t just about getting victories for my team, if that victory comes at the cost of multiple appeals, dozens of lawyers and clerks, national media coverage, uncertainty for cell phone users and companies, and those 16 institutions writing briefs.

I therefore ask proponents of justice, who are trying to use their elite position to improve the system’s outcomes for the downtrodden, to be a little bit more humble and self-focused. Instead of sitting in seminars or court sessions deliberating on ‘what is justice,’ ask whether the justice system is the right way to seek the right outcome. Ask whether, maybe, it would be better to go out and act positively toward your fellow man rather than demand money, time, and attention to the causes, cases, and opinions of the (all elite and elitist) members of legal groups.

Invasiveness is Injustice

Across all legal disputes, I think the thing that rankles me–and all non-lawyers–is how prominent law is in our lives. If I need to use the justice system, I know it will become a major part of my life’s spending, but even if I never am called into court, I know that court cases are going to continue to be high-profile, lawyers are going to continue to increase their share of the economy, and professors are going to keep publishing books, seminars, articles, and blogs about ‘how can people like me bring just outcomes?’

So, maybe, we can find some justice for all if the legal system simply recognizes that ‘what is justice’ is not a question of all-encompassing, existential values, but a question of how to run an institution. Maybe what is important here is not the rights that we seek to gain for the oppressed by any means necessary, but of building and maintaining a structure (a Constitution, if you will) where anyone can engage, or not, with a system that uses just methods. High cost, delay, opacity, and central control are not just methods and show that the system is not working effectively.

We can all agree, left and right, that regardless of the answer, the system, the method of justice is itself broken if it cannot help but be a burden. Justice should not be so costly in our lives, and it is a failing of lawyers and judges to make their own jobs so important, pervasive, in control. I hope, with all the fantastically intelligent amicus-brief-writers out there, we can find a way to at least cut back that injustice.

Monday’s hints and suggestions, rumors and hunches

Or, some Monday links – on thinkers, their devices and “ad hoc” cities, above/ below the sea surface

Back in February, Nick Cowen here at NOL pointed the 100th anniversary of John Rawls’ birth. At the time I somehow caught that this year also marks 50 years since his Theory of Justice book publication (a rather banal discovery it seems now, but still). The “veil of ignorance” was a strong introduction to the world of ideas and one of the few things to make it past my undergraduate studies.

The 1st American edition – source

Beyond those lectures (early 00s), I have yet to read the book. I suspect that it could belong to the “books everyone would like to have read, but almost no one actually reads” list, along with that Beveridge Report (this quip about the Report I read somewhere I cannot remember). Anyway, here be a fresh tribute proper:

On the Legacy of A Theory of Justice (Law & Liberty, there are responses to the main essay, too)

As far as round anniversaries involving nice thought experiments go, I would also note that Judith Jarvis Thomson’s “violinist” and Herbert A. Simon’s “alien telescope” papers were published in 1971 and 1991, respectively. The first is a defense of the right to abortion, while the second is a tool to discern social structures (guess what, I have not read the “violinist” paper either. It seems interesting and timely enough – the top courts in US and Germany decided on abortion in 1973/75 – but I firstly found out about it, and some relevant criticisms, only last year. Simon, the Nobel Memorial Prize in Economic Sciences laureate 1978, provided insights across a few fields over the years):

The trolley problem problem (Aeon)

Organizations and Markets (Journal of Economic Perspectives)

Getting to more recent staff, Brandon the other day expressed his doubts about the new charter city project in Honduras (Próspera). Find below a comprehensive read on the matter:

Prospectus On Próspera (Astal Codex Ten)

Now, as a pc gamer of yore, I have been expecting more nods to the underwater city of Rapture from the Bioshock game series, maybe. Rapture was a utopia free of state intervention, purportedly founded top-down on individualistic ideals in 1946, that failed. No, not quite libertarian ideals, more of a wildly objectivist kind, with a paternalistic edge. The adherence to laissez-faire, but not to laissez-passer (the founder forbid any relations with the rest of the world), brought smuggling, inequality and eventually the downfall of the city.

Not Rapture, but close enough style-wise (Moscow State University main building) – source: my own archive

At least this is how I understand it (right, I have not played any of these games. Survival/ horror FPS, nope. I do appreciate the games’ grandeur for 40s-50s ideas and architecture, though). As for any relevance to the Próspera project – come to think of it again – I admit the whole comparison is tempting, but way overblown, ok. Próspera is a public/ private law creature, envisaged in the constitution of a sovereign state. I desist.

Why Bioshock still has, and will always have, something to say (Ars Technica)

Ideology in Bioshock: A Critical Analysis (Press Start)

CTRL + C: How can ideas find freedom in a digital world?

I propose a debate! The place: The NOL podcast. The people: anyone with fresh takes on copyright and patent in software (and who contacts me). The question: what are actions that businesses can take to carry out a vision of open collaboration via IP strategy?

As a former law student and current software company CEO, I have become frustrated with how abstract and academic IP discussions are. I know enough to be dangerous, and actually want to center in on: how can people like me use IP strategy to make our projects more open to collaboration, without making them exposed?

I’d love to get strategic advice in a debate environment. I’d also like to lay out below the IP landscape as I understand it to exist, and recall to some of the great IP visionaries of the early internet days, especially the Grateful Dead lyricist-turned-IP scholar, John Perry Barlow. Enjoy, and I will update this post once Brandon lets me set a date!

Copyrighting Code: Function masquerading as form

When I was taught about intellectual property, I learned about Google vs. Oracle, a case where the US Supreme Court considered the question, “Are API’s functional?” This may seem a strange question (when I ask computer scientists this question they always laugh helplessly), but the background is: According to US Copyright Law, “In no case does copyright protection . . . extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.” This means that code may be copyrighted if descriptive but not if a functional, ‘useful article‘–and so, the esteemed Court needed to decide, effectively, is the Application Program Interface (API) code that allows softwares to request or send data purely decorative?

Until the Supreme Court, thank god, ruled that copying API code was in fact a “fair use” of API’s, the lower court’s ruling had actually held that: (1) API’s are creative, nonfunctional, and copyrightable, and (2) Google owed Oracle money for their impudent CTRL + C of API code. I’m relieved Google won, but I was totally shocked that the Supreme Court reversed only part two of the lower court decision, leaving part one unaddressed. I actually was speechless, because if they recognized it was a fair copying (in the case that API’s were useful), how could they still allow Oracle to claim copyright over them in the first place?

This is just one of the ways in which law school showed me that IP law had a reckoning, from the 1990’s to today, on how it should live on in a field that has undermined its very purposes for existing. By that I mean, if intellectual property keeps people from copying inventors and thus reducing their benefit (compared against patent-granted artificial monopolies) or raising their cost (from the cost of printing, one of the key justifications of copyright), how will it live on in the world where printing is free and inventions benefit more from CTRL + C than they suffer?

Patenting Code: Calling Dibs on How Everything Works

While my copyright classes mostly shocked me by showing me how much we lie and pretend useful things are ‘creative’, patent classes astounded me in the ways companies would assert that they invented general practices. Patents are only supposed to be eligible if they are novel, useful, and non-obvious, and they cannot cover nature, abstractions, or mathematical formulas. Or, rather, that is what the rules say; the actuality is that patents constantly used to monopolize basic processes like “one click” buying or “rounding the edges of a square.” However, rather than pick on low-hanging fruit, I’ll note that the current leading case in software process patents is Alice v. CLS, which like Google v. Oracle, struck down IP for a very limited reason that betrays the nonsense that patents are in a digital world.

Alice Corp. had patented a software method for financial trading systems to reduce ‘settlement risk,’ the risk that one party does what they are supposed to do and the other does not. This sounds fancy, but if you read the early opinions, even the district court judge noticed that the patent basically covered the idea “of employing an intermediary to facilitate simultaneous exchange of obligations in order to minimize risk.”

This made it all the way to the Supreme Court, and thank god, they decided that Alice failed the following test of patentability of methods related to abstract ideas: (1) does the software method contain an abstract idea? (2) If yes, did the patenter add an “inventive concept” that gives the idea “something extra.”

In case you were wondering, yes, they literally said “something extra.”

Thus ended a multi-year lawsuit over whether Alice could stop other companies from minimizing risk. As if we need any more proof that judges and lawyers simply cannot understand how coding works, or how invention works, or how natural law works, one appellate judge recommended extremely broad patentability of general principles, abusing the Einstein quote of “even gravity is not a natural law” to imply that, maybe, Einstein could have patented general relativity?

These sorts of vague precedents that leave the door open to patenting basic processes. Outside of software, there are a Myriad of cases (pun intended, about a case where the Supreme Court ruled that excised DNA was patentable because Myriad figured out how to slice it) where judges let companies patent things that stretch credulity. It makes me wonder, especially given that research on the history of patents in the physical world shows that patents often hamper and harm innovators that make me question what we restrict in the name of rewarding innovators. In DNA, patents have overreached in an attempt to control a growing, organic, copying engine. In software, they often do the same, leaving developers in fear of the power of CTRL + C.

The shared vision: Wine without Bottles:

In setting up this debate, I am stealing the creative work of IP pioneer and Grateful Dead lyricist, John Perry Barlow, who posed the following riddle:

If our property can be infinitely reproduced and instantaneously distributed all over the planet without cost, without our knowledge, without its even leaving our possession, how can we protect it? How are we going to get paid for the work we do with our minds? And, if we can’t get paid, what will assure the continued creation and distribution of such work?

Barlow’s central question cuts to the very core of IP. If the goal of restricting CTRL + C was to reward innovators for generating copies of their work, what is the point of these restrictions when generating copies is free? If we no longer must pay to produce bottles to hold our wine, and it flows forth as a bounty from the springs of invention, should we force this flood to be contained at all?

The riddle has but one answer, and I cannot say it better than Barlow; anyone who is interested should read his whole treatise on Wine without Bottles here. I will add only that, as an inventor, I know that his vision of bottlers minding their own business has not come to pass fully, but that the growth of open-source projects shows that bottling code does not, in fact, age it like fine wine. In fact, if you follow the money, “Smart developers like to hang out with smart code. When you open-source useful code, you attract talent.” This gives me hope, and I want to build on that hope with ways to make his vision a reality.

Let’s debate the best way to enact a vision, rather than the vision

As an inventor considering how to build a successful software company meaning that I literally face the question of how to engage with the IP system, this question is one in which I am deeply interested. I’d like to hear fresh takes on how entrepreneurs can realistically act when deciding, should we bottle our wine? Should we allow other people to bottle and sell it? If my goal is to bring wine to those who are thirsty, how can I think about bottles?

I’m looking forward to what I hear, and as a bonus, I’ll give you my most inspiring Barlow quote, from his Declaration of the Independence of Cyberspace:

Cyberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live.

We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.

We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.

Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here

. . . .

You [world governments] are terrified of your own children, since they are natives in a world where you will always be immigrants. Because you fear them, you entrust your bureaucracies with the parental responsibilities you are too cowardly to confront yourselves. In our world, all the sentiments and expressions of humanity, from the debasing to the angelic, are parts of a seamless whole, the global conversation of bits. We cannot separate the air that chokes from the air upon which wings beat.

Julian Simon’s life against the grain

I did not meet many of the postwar great thinkers of classical liberalism. There are two exceptions. In 2005 I had a chat with James Buchanan to ask him if I could translate the talk he gave to an audience of graduate students at the IHS summer seminar at the University of Virginia at Charlottesville. He agreed and I translated and published his ideas on ‘the soul of classical liberalism’ in a Dutch liberal periodical.

The other exception is Julian Simon. Perhaps not in the same league as Buchanan, he was certainly a maverick thinker and a classical liberal great. A navy officer, business man, and advertising expert who turned to academia, he is known, to name just a few, for his arguments in the field of population growth, immigration studies and of course the book The Ultimate Resource. In it he argues that all raw materials become cheaper, while humans are the ultimate resource, among many other issues. He also won a famous wager with his critic Paul Ehrlich, stating that the prices of the raw materials Ehrlich could choose (in fact copper, chromium, nickel, tin, tungsten) would decrease (inflation adjusted) over the period of a decade they agreed upon. But that is just the tip of iceberg of this most interesting man. You should really read his autobiography A Life Against the Grain, whenever you have the chance.

In 1995 a friend of mine and I founded the Dutch Benedictus de Spinoza Foundation, meant to group young people educated in (classical) liberalism. In our first public Spinoza-lecture in 1996 Simon agreed to be the speaker. If memory serves right he was on his way to or from a Mont Pelerin Society meeting in Vienna, and was willing to make a small detour. We spent two full days with him, touring The Hague, arranging an interview in a national paper, have a formal dinner with Simon as gues of honor and speaker, and so forth. He was the most congenial guest one can wish. He clearly did not want to be among the hot shots only. In fact he insisted that we should visit ‘the worst neighborhood of the city’. So we went to one of the poorest parts in town, which he found delightful, not because of the (relative) poverty, but because of the multicultural experience and multicultural food at the market.  An other remarkable feature was that in the half hour before we opened the lecture hall, he wished to take a nap on the floor right there!

In his autobiography he is open about his many rejected papers throughout his career, and the way he described how difficult it is to convince academic colleagues of a point that goes against conventional wisdom. No matter how strong the counter-evidence, people will choose to ignore the new facts or insights and keep the author out of the inner circle for as long as possible. I must say it sounds familiar to me, as an author who has attempted to change the views of (classical) liberals and IR theorists on international relations and (classical) liberalism. Even the obvious fact that trade cannot possibly foster peace seems impossible to establish. Alas, reading Simon one also learns to never give up, the truth shall be told, although there is no guarantee of success!

John Rawls at 100

Neoliberal Social Justice available April 2021

John Rawls, the most influential political philosopher of the 20th century, was born 100 years ago today. He died one year before I first read A Theory of Justice as part of my undergraduate degree in philosophy at University College London. This year, Edward Elgar publishes Neoliberal Social Justice: Rawls Unveiled, my book which updates Rawls’ approach to assessing social institutions in light of contemporary economic thought.

Mike Otsuka (now at the LSE) introduced us first to the work of Robert Nozick and then to Rawls, the reverse of what I imagine is normally the case in an introductory political philosophy course. Most people ultimately found Rawls’ the more attractive approach whereas I was drawn to Nozick’s insistence on starting strictly from the ethical claims of individuals. I wondered why something calling itself ‘the state’ should have rights to coerce beyond any other actor in civil society.

Years of working in public policy and studying political economy made me recognise a distinctive value for impersonal institutions with abstract rules. Indeed, I now think the concept of equal individual liberty is premised on the existence of such institutions. Although the rule of law could theoretically emerge absent a state, states are the only institutions that have been able to generate it so far. Political philosophy cannot be broken down into applied ethics in the way Nozick proposed.

Some classical liberals and market anarchists are increasingly impatient with the Rawlsian paradigm. Michael Huemer, for example, argues that Rawls misunderstands basic issues with probability when proposing that social institutions focus on maximising the condition of the least advantaged. Huemer argues that Rawls ultimately offers no reason to pick justice as fairness over utilitarianism, the very theory it was directed against.

I think these criticisms are valid for rejecting the blunt assessments of real-world inequalities that some Rawlsians are apt to make. But I do not think Rawls himself, nor his theory when read in context, made these elementary errors. Rawls’ principles of justice apply to the basic structure of social institutions rather than the resulting pattern of social resources as such. Moreover, the primary goods that Rawls take to be relevant for assessing social institutions are essentially public goods. It makes sense to guarantee, for example, basic civil liberties to all on an equal basis even if turns out to be costly. I can think of two reasons for this:

  1. In a society not facing acute scarcity, you would not want to risk placing yourself in a social position where your civil liberties could be denied even if it was relatively unlikely.
  2. Living in a society where basic liberties are denied to others is going to cause problems for everyone, whether through regime instability or fraught social and economics relationships that are not based on genuine mutual advantage but coercion from discretionary powers.

To be fair to utilitarians, J.S. Mill went in this direction, although one had to squint to see how it fit into a utilitarian calculus. But if Rawls was ultimately defending a more principled approach to social relationships using the tools of expediency, I see that as a valuable project.

So, I think that the Rawlsian approach is still a fruitful way to evaluate the distinctive problem of political order. His theory offers the resources to resist not just utopian libertarian rights theorists, but also socialists and egalitarians who similarly fail to account for the distinctive role of political institutions for resolving problems of collective action. Where I think Rawls erred when endorsing what amounts to a socialist institutional framework is on his interpretation of social theory. Rawls argued that people behave pretty selfishly in market interactions but could readily pursue the public good when engaged in everyday politics. I argue otherwise. Here is a snippet from Neoliberal Social Justice (pp. 96-97) where I make the case for including a more consistently realistic account of human motivation within his framework:

Problems of justice are not purely about assurance amongst reasonable people or identifying anti-social persons. Instead, we must consider the anti-social person within ourselves: the appetitive, biased, narrow-minded, prejudicial self that drives a great deal of our every-day thoughts and interactions (Cowen, 2018). If we are to make our realistic selves work with each other to produce a just outcome, then we should affirm institutions that allow these beings, not just the wholesome beings of our comfortable self-perception, to cooperate. We have to be alive to the fact that we are dealing with agents who are apt to affirm a scheme as fair and just at one point (and even sincerely mean it), then forgetfully, carelessly, negligently or deliberately break the terms of that scheme at another point if they have an opportunity and reason enough to do so. Addressing ourselves as citizens in this morally imperfect state, as opposed to benighted people outside a charmed circle of reasonableness, is helpful. It means we can now include such considerations within public reason. The constraints of rules emerging from a constitutional stage may chafe at other stages of civil interaction. Nevertheless, they may be fully publicly justified.

Why is the Republic of India a Civilization-State?

Why is the Republic of India a Civilization-State?

On 26 January 1950, India’s Constitution came into effect amidst severe apprehensions about India’s balkanization. So, seventy-one years later, the Indian democratic republic may still appear to be a historical accident, but it is not. Here is why:

India has always been a fertile territory for experiments in governance, but surprisingly, there is no more than a casual reference to the ideas underlying non-western civilizations in Political Science courses or History of Political Thought. The neglect of Indian polity is particularly striking, for apart from Western political thought, Indic political ideas comprise the most extensive and most crucial body of political philosophy. Moreover, these political ideas are integral to Indic civilization—one of the only surviving non-western civilizations. Today, we know that Western ideas have clearly impacted Indian political thought. Still, what is generally not realized is that India has also contributed to Western political thinking in all probability. 

The problem of scant attention given to Indic political thought compared to Indic religion and philosophy was partly remedied with the re-discovery of Kautilya’s Arthashastra —the Indic equivalent of the Machiavellian, The Prince. However, other great works like Kamandaki’s Nitisara— Elements of Polity, the Raj Dharma (administrative ethics) section of the epic, Mahabharata, the epic Ramayana, Digha Nikaya (Collection of Long Discourses), and to some extent antiquated Hitopadesha (Beneficial Advice) also deal with an Indian way of thinking about the state-society relationship. 

Drawing from these essential texts and Indic political thinkers, the king’s role is viewed mainly as an administrator—the ruler is not an agent of social change. This view is radically different from its counterparts in the West. In Western political theory—Rousseau, Locke, and Hegel—political order means the subjugation of society to the state. In Indian tradition, the society and culture are always supreme, and the ruler is accountable to dharma (Indic ethics—a common internal bond) and society. Therefore, the conception of the “state of nature” in Hobbes and Rousseau is irrelevant to Indic tradition because ethics and civilization preceded the state’s development in India. In the Ramayana and Mahabharata’s grand narratives, an esoteric reading accounts for personal ethics and the path to profound spiritual freedom. But an exoteric view informs us of political power, administrative ethics, and the limits of provisional freedom. According to these epics, the state is created to protect against the disintegration of social order, and the state is given only those powers required to do so. Thus, a ruler’s powers are not like those of the Leviathan conceptualized in Hobbes.

Despite these radical Indic political concepts, the popular view on ancient and early medieval India is that it was merely a region invested in despotism with no knowledge of Freedom or Liberty. Hegel assumed that only one tribe of men were free in Asia, and others were their slaves. It is worth noting that for almost thousand eight hundred years after the Greek republics collapsed, the Western world also lived through monarchical despotism and tyranny. Likewise, apart from ancient Greece and Rome, in India too, there existed republics and proto democracies. A fair study of Indic history informs you that ancient Indian republics were not only in existence from the 8th century B.C. to 4th century A.D., but they were doing some fascinating experiments in state-society relations. With time, at least four different forms of constitutions emerged. 

  1. Arajya: A political community without a king. These communities self-governed using Dharma texts (Indic ethics).
  2. Ganarajya: A state or a political community ruled by a ‘gana’ or an assembly of people.
  3. Youvarajya: A political community ruled by a crown prince.
  4. Dvairajya: A political community ruled by two kings.

For various reasons, Ganarajya and Youvarajya systems thrived much more than the other two. 

The ‘Gana‘ seems to be the earliest Indic political forum of the entire community (Jana). The Jana’s formulation of political policies rested with the Samiti (Sanskrit for Committee) and the Sabha (an assembly of elders). Over time, these Ganarajya states developed into Janapada—a self-sufficing political and cultural unit. Every Janapada had its peculiar dialect and customs developed from regional interpretations of Indic Dharma (ethics). Several of these Janapada states even joined hands to form a federation of Mahajanapada (mega-Janapada). Over time, however, powerful Indic monarchies who performed the state’s integrative functions better than the assemblies of Gana overwhelmed them. Fortunately, imperial states incorporated these republics into their fold; republics were not entirely stamped out, even after repeated invasions by the Turks, Mongols, Portuguese, French, and the British. 

The Gana-Sabha system emerged from the shadow as soon as these imperial powers became weak. The Sabha system was active in the village setting as Panchayat (village associations) that included both notable big men and peasants, in contestation with each other and in opposition to the state. Here, different qualities of people and opinions were tested, rather than the scene of a pronunciamento by elders. Even the British acknowledged this system. Henry Maine, who was influenced by J. S. Mill, was sent to India in the 1860s to advise the British government on legal matters. He came across several accounts of thriving indigenous systems of autonomous village governments, whose structure and practice shared many characteristics of participatory democracy. Later, Maine articulated a theory of the village community as an alternative to the centralized state. In the Panchayat system, De Tocqueville saw an ideal model of a society with a limited state. He planned to study it, comparable to Democracy in America but overwhelmed by his political duties, he never managed a trip. So, while Indian electoral democracy was only instituted in the first half of the twentieth century, the practice of public reasoning, deliberation, and toleration of a plurality of ideas is a much older phenomenon, dating back to ancient Indic traditions. 

During the 1947 Constituent Assembly Debates of post-colonial India, there was an Alexander Hamilton vs. Thomas Jefferson sort of debate between Gandhi’s idea of Indic village-style, decentralized administration vs. B. R. Ambedkar’s —the principal architect of the Indian constitution—healthy centralized state. Although Ambedkar’s view prevailed, the village democracy did not entirely disappear from the Indian constitution. India officially called itself Bhārat Gaṇarājya, and the first two words of the Indian national anthem honor Jana and Gana. Hence, the constitutional democracy of the Indian republic was not an accident; it is a sui generis phenomenon reflecting the plural character and age-old but essential values of Indic civilization. Therefore, modern-day India is a Civilization-State. The West can only describe it from the outside, but it is for India to interpret herself from within—an ongoing process.  

Finally, it merits mentioning that Professor of international history Arnold J. Toynbee reminded the world, “India is a whole world in herself; she is a society of the same magnitude as our Western society.”

To know more about India’s constitutional debates, check this excellent ten-episode series. Subtitles are available in English.

You vote is your voice–but actions speak louder than words

On voting day, with everyone tweeting and yelling and spam-calling you to vote, I want to offer some perspective. Sure, ‘your vote is your voice,’ and those who skip the election will remain unheard by political leaders. Sure, these leaders probably determine much more of your life than we probably would like them to. And if you don’t vote, or ‘waste’ your vote on a third party or write in Kim Jong Un, you are excluded from the discussion of how these leaders control you.

But damn, if that is such a limited perspective. It’s like the voting booth has blinders that conceal what is truly meaningful. I’m not going to throw the traditional counter-arguments to ‘vote or die’ at you, though my favorites are Arrow’s Impossibility Theorem and South Park’s Douche and Turd episode. Instead, I just want to say, compared to how you conduct your life, shouting into the political winds is simply not that important.

The wisdom of the stoics resonates greatly with me on this. Seneca, a Roman philosopher, tutor, and businessman, had the following to say on actions, on knowledge, on trust, on fear, and on self-improvement:

  • Lay hold of today’s task, and you will not need to depend so much upon tomorrow’s. While we are postponing, life speeds by. Nothing is ours, except time. On Time
  • Each day acquire something that will fortify you against poverty, against death, indeed against other misfortunes as well; and after you have run over many thoughts, select one to be thoroughly digested that day. This is my own custom; from the many things which I have read, I claim some one part for myself. On Reading
  • If you consider any man a friend whom you do not trust as you trust yourself, you are mightily mistaken and you do not sufficiently understand what true friendship means. On Friendship
  • Reflect that any criminal or stranger may cut your throat; and, though he is not your master, every lowlife wields the power of life and death over you… What matter, therefore, how powerful he be whom you fear, when every one possesses the power which inspires your fear? On Death
  • I commend you and rejoice in the fact that you are persistent in your studies, and that, putting all else aside, you make it each day your endeavour to become a better man. I do not merely exhort you to keep at it; I actually beg you to do so. On the Philosopher’s Lifestyle

Seneca goes on, in this fifth letter, to repeat the stoic refrain of ‘change what you can, accept what you cannot.’ But he expands, reflecting that your mind is “disturbed by looking forward to the future. But the chief cause of [this disease] is that we do not adapt ourselves to the present, but send our thoughts a long way ahead. And so foresight, the noblest blessing of the human race, becomes perverted.”

Good leadership requires good foresight, but panic over futures out of our control pervert this foresight into madness. So, whether you think that Biden’s green promises will destroy the economy or Trump’s tweets will incite racial violence, your actions should be defined by what you can do to improve the world–and this is the only scale against which you should be judged.

So, set aside voting as a concern. Your voice will be drowned out, and then forgotten. But your actions could push humanity forward, in your own way, and if you fail in that endeavor, then no vote will save you from the self-knowledge of a wasted life. If you succeed, then you did the only thing that matters.

Offensive advantage and the vanity of ethics

I have recently shifted my “person I am obsessed with listening to”: my new guy is George Hotz, who is an eccentric innovator who built a cell phone that can drive your car. His best conversations come from Lex Fridman’s podcasts (in 2019 and 2020).

Hotz’s ideas bring into question the efficacy of any ethical strategy to address ‘scary’ innovations. For instance, based on his experience playing “Capture the Flag” in hacking challenges, he noted that he never plays defense: a defender must cover all vulnerabilities, and loses if he fails once. An attacker only needs to find one vulnerability to win. Basically, in CTF, attacking is anti-fragile, and defense is fragile.

Hotz’s work centers around reinforcement learning systems, which learn from AI errors in automated driving to iterate toward a model that mimics ‘good’ drivers. Along the way, he has been bombarded with questions about ethics and safety, and I was startled by the frankness of his answer: there is no way to guarantee safety, and Comma.ai still depends on human drivers to intervene to protect themselves. Hotz basically dismisses any system that claims to take an approach to “Level 5 automation” that is not learning-based and iterative, as driving in any condition, on any road, is an ‘infinite’ problem. Infinite problems have natural vulnerabilities to errors and are usually closer to impossible where finite problems often have effective and world-changing solutions. Here are some of his ideas, and some of mine that spawned from his:

The Seldon fallacy: In short, 1) It is possible to model complex, chaotic systems with simplified, non-chaotic models; 2) Combining chaotic elements makes the whole more predictable. See my other post for more details!

Finite solutions to infinite problems: In Hotz’s words regarding how autonomous vehicles take in their environments, “If your perception system can be written as a spec, you have a problem”. When faced with any potential obstacle in the world, a set of plans–no matter how extensive–will never be exhaustive.

Trolling the trolley problem: Every ethicist looks at autonomous vehicles and almost immediately sees a rarity–a chance for an actual direct application of a philosophical riddle! What if a car has to choose between running into several people or alter path to hit only one? I love Hotz’s answer: we give the driver the choice. It is hard to solve the trolley problem, but not hard to notice it, so the software alerts the driver whenever one may occur–just like any other disengagement. To me, this takes the hot air out of the question, since it shows that, as with many ethical worries about robots, the problem is not unique to autonomous AIs, but inherent in driving–and if you really are concerned, you can choose yourself which people to run over.

Vehicle-to-vehicle insanity: While some autonomous vehicle innovators promise “V2V” connections, through which all cars ‘tell’ each other where they are and where they are going and thus gain tremendously from shared information. Hotz cautions (OK, he straight up said ‘this is insane’) that any V2V system depends, for the safety of each vehicle and rider, on 1) no communication errors and 2) no liars. V2V is just a gigantic target waiting for a black hat, and by connecting the vehicles, the potential damage inflicted is magnified thousands-fold. That is not to say the cars should not connect to the internet (e.g. having Google Maps to inform on static obstacles is useful), just that safety of passengers should never depend on a single system evading any errors or malfeasance.

Permissioned innovation is a contradiction in terms: As Hotz says, the only way forward in autonomous driving is incremental innovation. Trial and error. Now, there are less ethically worrisome ways to err–such as requiring a human driver who can correct the system. However, there is no future for innovations that must emerge fully formed before they are tried out. And, unfortunately, ethicists–whose only skin in the game is getting their voice heard over the other loud protesters–have an incentive to promote the precautionary principle, loudly chastise any innovator who causes any harm (like Uber’s first-pedestrian-killed), and demand that ethical frameworks precede new ideas. I would argue back that ‘permissionless innovation‘ leads to more inventions and long-term benefits, but others have done so quite persuasively. So I will just say, even the idea of ethics-before-inventions contradicts itself. If the ethicist could make such a framework effectively, the framework would include the invention itself–making the ethicist the inventor! Since instead, what we get is ethicists hypothesizing as to what the invention will be, and then restricting those hypotheses, we end up with two potential outcomes: one, the ethicist hypothesizes correctly, bringing the invention within the realm of regulatory control, and thus kills it. Two, the ethicist has a blind spot, and someone invents something in it.

“The Attention”: I shamelessly stole this one from video games. Gamers are very focused on optimal strategies, and rather than just focusing on cost-benefit analysis, gamers have another axis of consideration: “the attention.” Whoever forces their opponent to focus on responding to their own actions ‘has the attention,’ which is the gamer equivalent of the weather gauge. The lesson? Advantage is not just about outscoring your opponent, it is about occupying his mind. While he is occupied with lower-level micromanaging, you can build winning macro-strategies. How does this apply to innovation? See “permissioned innovation” above–and imagine if all ethicists were busy fighting internally, or reacting to a topic that was not related to your invention…

The Maginot ideology: All military historians shake their heads in disappointment at the Maginot Line, which Hitler easily circumvented. To me, the Maginot planners suffered from two fallacies: one, they prepared for the war of the past, solving a problem that was no longer extant. Second, they defended all known paths, and thus forgot that, on defense, you fail if you fail once, and that attackers tend to exploit vulnerabilities, not prepared positions. As Hotz puts it, it is far easier to invent a new weapon–say, a new ICBM that splits into 100 tiny AI-controlled warheads–than to defend against it, such as by inventing a tracking-and-elimination “Star Wars” defense system that can shoot down all 100 warheads. If you are the defender, don’t even try to shoot down nukes.

The Pharsalus counter: What, then, can a defender do? Hotz says he never plays defense in CTF–but what if that is your job? The answer is never easy, but should include some level of shifting the vulnerability to uncertainty onto the attacker (as with “the Attention”). As I outlined in my previous overview of Paradoxical genius, one way to do so is to intentionally limit your own options, but double down on the one strategy that remains. Thomas Schelling won the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” for outlining this idea in The Strategy of Conflict, but more importantly, Julius Caesar himself pioneered it by deliberately backing his troops into a corner. As remembered in HBO’s Rome, at the seminal engagement of Pharsalus, Caesar said: “Our men must fight or die. Pompey’s men have other options.” However, he also made another underappreciated innovation, the idea of ‘floating’ reserves. He held back several cohorts of his best men to be deployed wherever vulnerabilities cropped up–thus enabling him to be reactive, and forcing his opponent to react to his counter. Lastly, Caesar knew that Pompey’s ace-in-the-hole, his cavalry, was made up of vain higher-class nobles, so he told his troops, instead of inflicting maximum damage indiscriminately, to focus on stabbing their faces and thus disfigure them. Indeed, Pompey’s cavalry did not flee from death, but did from facial scars. To summarize, the Pharsalus counter is: 1) create a commitment asymmetry, 2) keep reserves to fill vulnerabilities, and 3) deface your opponents.

Offensive privacy and the leprechaun flag: Another way to shift the vulnerability is to give false signals meant to deceive black hats. In Hotz’s parable, imagine that you capture a leprechaun. You know his gold is buried in a field, and you force the leprechaun to plant a flag where he buried it. However, when you show up to the field, you find it planted with thousands of flags over its whole surface. The leprechaun gave you a nugget of information–but it became meaningless in the storm of falsehood. This is a way that privacy may need to evolve in the realm of security; we will never stop all quests for information, but planting false (leprechaun) flags could deter black hats regardless of their information retrieval abilities.

The best ethics is innovation: When asked what his goal in life is, Hotz says ‘winning.’ What does winning mean? It means constantly improving one’s skills and information, while also seeking to find a purpose that changes the world in a way you are willing to dedicate yourself to. I think the important part of this that Hotz does not say “create a good ethical framework, then innovate.” Instead, he is effectively saying do the opposite–learn and innovate to build abilities, and figure out how to apply them later. The insight underlying this is that the ethics are irrelevant until the innovation is there, and once the innovation is there, the ethics are actually easier to nail down. Rather than discussing ‘will AIs drive cars morally,’ he is building the AIs and anticipating that new tech will mean new solutions to the ethical questions, not just the practical considerations. So, in summary, if you care about innovation, focus on building skills and knowledge bases. If you care about ethics, innovate.

The Seldon Fallacy

Like some of my role models, I am inspired by Isaac Asimov’s vision. However, for years, the central ability at the heart of the Foundation series–‘psychohistory,’ which enables Hari Seldon, the protagonist, to predict broad social trends across thousands of galaxies over thousands of years–has bothered me. Not so much because of its impact in the fictional universe of Foundation, but for how closely it matches the real-life ideas of predictive modeling. I truly fear that the Seldon Fallacy is spreading, building up society’s exposure to negative, unpredictable shocks.

The Seldon Fallacy: 1) It is possible to model complex, chaotic systems with simplified, non-chaotic models; 2) Combining chaotic elements makes the whole more predictable.

The first part of the Seldon Fallacy is the mistake of assuming reducibility, or more poetically, of NNT’s Procustean Bed. As F.A. Hayek asserted, no predictive model can be less complex than the model it predicts, because of second-order effects and accumulation of errors of approximation. Isaac Asimov’s central character, Hari Seldon, fictionally ‘proves’ the ludicrous fallacy that chaotic systems can be reduced to ‘psychohistorical’ mathematics. I hope you, reader, don’t believe that…so you don’t blow up the economy by betting a fortune on an economic prediction. Two famous thought experiments disprove this: the three-body problem and the damped, driven oscillator. If we can’t even model a system with three ‘movers’, because of second-order effects, how can we model interactions between millions of people? Basically, with no way to know which reductions in complexity are meaningful, Seldon cannot know whether, in laying his living system into a Procustean bed, he has accidentally decapitated it. Using this special ability, while unable to predict individuals’ actions precisely, Seldon can map out social forces with such clarity that he correctly predicts the fall of a 10,000-year empire. Now, to turn to the ‘we can predict social, though not individual futures’ portion of the fallacy: that big things are predictable even if their consituent elements are not.

The second part of the Seldon Fallacy is the mistake of ‘the marble jar.’ Not all randomnesses are equal: drawing white and black marbles from a jar (with replacement) is fundamentally predictable, and the more marbles drawn, the more predictable the mix of marbles in the jar. Many models depend on this assumption or similar ones–that random events distribute normally (in the Gaussian sense) in a way that increases the certainty of the model as the number of samples increases. But what if we are not observing independent events? What if they are not Gaussian? What if someone tricked you, and tied some marbles together so you can’t take out only one? What if one of them is attached to the jar, and by picking it up, you inadvertently break the jar, spilling the marbles? Effectively, what if you are not working with a finite, reducible, Gaussian random system, but an infinite, Mandelbrotian, real-world random system? What if the jar contains not marbles, but living things?

I apologize if I lean too heavily on fiction to make my points, but another amazing author answers this question much more poetically than I could. Just in the ‘quotes’ from wise leaders in the introductions to his historical-fantasy series, Jim Butcher tells stories of the rise and fall of civilizations. First, on cumulative meaning:

“If the beginning of wisdom is in realizing that one knows nothing, then the beginning of understanding is in realizing that all things exist in accord with a single truth: Large things are made of smaller things.

Drops of ink are shaped into letters, letters form words, words form sentences, and sentences combine to express thought. So it is with the growth of plants that spring from seeds, as well as with walls built from many stones. So it is with mankind, as the customs and traditions of our progenitors blend together to form the foundation for our own cities, history, and way of life.

Be they dead stone, living flesh, or rolling sea; be they idle times or events of world-shattering proportion, market days or desperate battles, to this law, all things hold: Large things are made from small things. Significance is cumulative–but not always obvious.”

–Gaius Secundus, Academ’s Fury

Second, on the importance of individuals as causes:

“The course of history is determined not by battles, by sieges, or usurpations, but by the actions of the individual. The strongest city, the largest army is, at its most basic level, a collection of individuals. Their decisions, their passions, their foolishness, and their dreams shape the years to come. If there is any lesson to be learned from history, it is that all too often the fate of armies, of cities, of entire realms rests upon the actions of one person. In that dire moment of uncertainty, that person’s decision, good or bad, right or wrong, big or small, can unwittingly change the world.

But history can be quite the slattern. One never knows who that person is, where he might be, or what decision he might make.

It is almost enough to make me believe in Destiny.”

–Gaius Primus, Furies of Calderon

If you are not convinced by the wisdom of fiction, put down your marble jar, and do a real-world experiment. Take 100 people from your community, and measure their heights. Then, predict the mean and distribution of height. While doing so, ask each of the 100 people for their net worth. Predict a mean and distribution from that as well. Then, take a gun, and shoot the tallest person and the richest person. Run your model again. Before you look at the results, tell me: which one do you expect shifted more?

I seriously hope you bet on the wealth model. Height, like marble-jar samples, is normally distributed. Wealth follows a power law, meaning that individual datapoints at the extremes have outsized impact. If you happen to live in Seattle and shot a tech CEO, you may have lowered the mean income in the group by more than the average income of the other 99 people!

So, unlike the Procustean Bed (part 1 of the Seldon Fallacy), the Marble Jar (part 2 of the Seldon Fallacy) is not always a fallacy. There are systems that follow the Gaussian distribution, and thus the Marble Jar is not a fallacy. However, many consequential systems–including earnings, wars, governmental spending, economic crashes, bacterial resistance, inventions’ impacts, species survival, and climate shocks–are non-Gaussian, and thus the impact of a single individual action could blow up the model.

The crazy thing is, Asimov himself contradicts his own protagonist in his magnum opus (in my opinion). While the Foundation Series keeps alive the myth of the predictive simulation, my favorite of his books–The End of Eternity (spoilers)–is a magnificent destruction of the concept of a ‘controlled’ world. For large systems, this book is also a death knell even of predictability itself. The Seldon Fallacy–that a simplified, non-chaotic model can predict a complex, chaotic reality, and that size enhances predictability–is shown, through the adventures of Andrew Harlan, to be riddled with hubris and catastrophic risk. I cannot reduce his complex ideas into a simple summary, for I may decapitate his central model. Please read the book yourself. I will say, I hope that as part of your reading, I hope you take to heart the larger lesson of Asimov on predictability: it is not only impossible, but undesirable. And please, let’s avoid staking any of our futures on today’s false prophets of predictable randomness.

Efficient markets as normative systems

Recently, I came across this outstanding interview with Eugene Fama published by The Market / NZZ. Besides the main subject discussed -the inability of central banks to control inflation-, the interview is intertwined with gripping assertions about the limits of knowledge, such as the following ones:

Bubbles are things people see in hindsight. They don’t identify them in advance. Sure, you can look at the behavior of prices, and you may be able to identify cases where they are too high. But if you only look back and say: «Oh, stocks went down a lot, so that was a bubble», then that’s 20/20 hindsight. At the time, there was no evidence that there was a bubble.

I don’t say markets are completely efficient, but they’re efficient for most questions that I address. Models are never a 100 % true. If they were, we would call them reality, not models. But for almost all purposes, market efficiency is a very good approximation.

The real question is: How do you pick Warren Buffett? The way you pick him is after the fact, since he has done very well. Now, suppose I take 100,000 investors and say: Let’s let them run for 30 years and pick out the winner. Because you roll the dice so many times, even if none of them is a good or bad investor, many investors will do well and many will do poorly purely by chance. Statistically there is also going to be a big winner, but solely due to chance. In other words: There will be extremely good outcomes and extremely bad outcomes, but you just can’t tell who is successful because of luck and who because of skill.

This quotations resemble the distinction made by Friedrich Hayek between relative and absolute limits to explanation (The Sensory Order, 1952):

8.67. Apart from these practical limits to explanation, which we may hope continuously to push further back, there also exists, however, an absolute limit to what the human brain can ever accomplish by way of explanation -a limit which is determined by the nature of the instrument of explanation itself, and which is particularly relevant to any attempt  to explain particular mental processes.

8.68. If our account of the process of explanation is correct, it would appear that any apparatus or organism which is to perform such operations must possess certain properties determined by the properties of the events which it is to explain. If explanation involves that kind of joint classification of many elements which we have described as “model-building”, the relation between the explaining agent and the explained object must satisfy such formal relations as must exist between any apparatus of classification and the individual objects which it classifies (Cf. 5.77-5.91).

5.90. The model building by such an apparatus of classification simplifies the task and extends the scope of successful adaptation in two ways: it selects some elements from a complex environment as relevant for the prediction of events which are important for the persistence of the structure, and it treats them as instances of classes of events. But while in this way a model building apparatus  (and particularly one that can be constantly improved by learning) is of much greater efficiency than could be any more mechanical apparatus which contained, as it were, a few fixed models of typical situations, there will clearly still exist definite limits to the extent to which such a microcosm can contain an adequate reproduction of the significant factors of the macrocosm.

8.69. The proposition which we shall attempt to establish is that any apparatus of classification must possess a structure of a higher degree of complexity than is possessed by the objects which it classifies; and that, therefore, the capacity of any explaining agent must be limited to objects with a structure possessing a degree of complexity lower than its own. […]

Being confronted with an absolute limit to explanation does not mean that chaos lies outside those limits. Indeed, what we have beyond the scope of our models is a complex order -in this case, efficient markets. A kind of order whose “[…] existence need not manifest itself to our senses but may be based on purely abstract relations which we can only mentally reconstruct” (F. A. Hayek, “Law, Legislation, and Liberty”, Chapter II; 1973), and because of that its explanation finds not practical limits but absolute ones. For example, in this field, “passive investing” would be homologous to a law-abiding behaviour or to the moral saying “being honest is the best policy”. Of course, for such systems -economic, legal or moral- to evolve there have to be some “prices”, i.e.: people who trade in the short term or who perform innovative behaviours which establish a new legal precedent or a new habit.

But for this innovation to happen it is indispensable for the agents to count on a framework of stable regularities -usually called abstract or spontaneous orders- upon which they could draw their own “maps”, create new expectations, and coordinate their plans with other agents. That indicates that we have already spent enough ink writing about the economic way of looking at the law, and perhaps it is time to start pondering markets as complex normative systems.