February 29, 2012
Timmy doesn’t like wind turbines, or, indeed, anything of the other solutions to climate change which are subsidised. This is fair enough; it’s entirely coherent for any classical liberal to dislike any prospect of rent-seeking that appears to impose costs on the rest of society. In a post on Forbes yesterday, he endorsed a letter from an engineering professor to the Telegraph which criticises ‘premature’ technology deployment – i.e. the deployment of technology before it reaches a level at which it can compete successfully with established tech.
Solar panels, he points out, are frequently described by their advocates as likely to be cost-competitive with coal plant in at most ten years’ time. If this is the case, he argues, then why do we need to spend money subsidising their production? Surely we could just wait ten years and reap all the benefits of clean energy without having to shell out millions of pounds of bill-payers’ money? In fact:
“Another way of making the same point is that instead of deploying subsidy requiring energy production systems now we should be, assuming we are going to do anything about climate change, be putting those resources into the R&D of renewable systems so as to get them to economic efficiency that much the faster.”
On the same day as this post went up, Timmy put the following up on a post about the NHS:
“For there’s something we learned in the short 20 th century, that period betweem 1917 and 1991. Market based systems improve total factor productivity better than centrally planned systems.”
Put simply, markets are the best tool we have for procuring something that we want more cheaply. If we want good quality healthcare that’s free at the point of use, then the cheapest way of ensuring that is by permitting competition within the NHS. If we want cheaper wind turbines and solar panels, we need a market. We need a bunch of people who want to buy these things, and people who compete to sell them to them.
I feel confident enough in this to make the following prediction: solar panels will be cheaper in ten years’ time if we fund a market in them than if we spend the same money throwing boffins at the problem. This is because the market will pay people to spend money on boffins too, boffins with stronger incentives to make the solar panels better.
Now, you can argue whether the current market we have in green energy is the correct shape to properly incentivise increasing productivity. What you can’t do is say that we should have a thing and then say that the best way to get that thing is to fund experts to think really hard about the problem, and then say the exact opposite about another thing. I’m quite frankly shocked that Timmy has decided to eschew his own economic knowledge for that of engineer on this point.
February 23, 2012
I had meant to follow up my earlier post in this series with an analysis of the praxeological approach taken by the Austrian school, but have yet to have the time to properly read Mises. While On Human Action is on my bookshelf awaiting attention, it seems unfair to criticise praxeology without full familiarity with it.
However, Crooked Timber ran a series of posts on David Graeber’s Debt yesterday, and there is much there to consider – and much to leave to one side, such as Graeber’s bizarre insistence the entire international monetary system only exists thanks to the backing of state force. What I’d like to pick up on is, again, his illustration of different models of economic interaction and how they relate to contemporary debate.
Graeber distinguishes between diffuse reciprocity (or as he calls it, ‘communism’), hierarchy, and market exchange. The latter we know and love to a greater or lesser extent, the middle is simply being told what to do with your resources, and the latter is a ‘fuzzier’ version of exchange, in which you don’t exchange anything with anyone for a particular value, but rather distribute your resources to society in expectation that you may, at some point, have your needs looked after in a manner which does not necessarily equate to the value you gave up.
At this point Graeber normally points to primitive tribes to illustrate this model, but I’d like to use an example of something much closer to home with which most people will be familiar. On Wednesday, I brought a box of chocolates into the office for my colleagues, because it had been my birthday two days before. It’s a tradition in the office that the person whose birthday it is supplies the chocolate or cake, which works in reverse to the standard tradition of presents for the birthday-haver.
Now, my action would be seen as irrational from a market-exchange point of view. I do not receive anything directly in exchange for my submission of chocolates to the office society, nor do I guarantee that the chocolates that others purchase for their birthdays will be of the same quantity or quality as the chocolates I buy. I do not even guarantee that others will buy chocolates; I do not have access to information about my colleagues’ birthdays, and so do not know who is shirking their chocolate-buying responsibilities. However, I am content to enter into this fuzzy exchange, which is not with any one of my colleagues, but rather with all of them. On the Austrian view, this is irrational.
You could go down the Polanyi route and say this is because I’m embedded in social networks, but this is tantamount to saying that social networks make one into a non-rational exchanger. You could talk about game theory, but that rather presumes that there’s a hell of a lot of processing going on inside my head that I don’t have access to, which is something you’d have to prove. Instead, I want to outline why this is a problem for the Austrians, one based on the understanding that Man is rational, and that so is a person, but a human is not.
It is irrational for me to buy chocolates for my colleagues, but it is not irrational for a species to share resources; in doing so it avoids substantial risk. However, describing a species as rational seems odd. Or does it? Is there some process whereby individuals can be selected for the contribution they make to the survival of the species, rather than just the propagation of their own particular genes? We could perhaps call this process ‘evolution’. Such a process would need to include some way to ensure that any one individual was not being short-changed by this sharing of burdens, which we could call a sense of unfairness. You could certainly apply game theory to it, which would perhaps allow us to describe it as ‘rational’ for a very narrow definition of the word.
Therefore, our genes and their expressions in emotion and instinct can be seen as rational if one assumes their goals are the continuation of the species, rather than a particular individual, although one should of course be careful to avoid teleology when talking about such things. However, this presents a problem: the goals of our genes which relate to the survival of the broader species may not relate to our particular goals as an individual. They are expressed to our consciousness as emotion and instinct, and our rational pursuit of our individual goals may come into conflict with the evolutionary goals to which they point. So while we can be rational about our own goals, and our genes as expressed in instincts like reciprocity could be construed as rational from the perspective of the species or society, the package that is our mind and our emotions together – i.e. our entire self – is not.
This is a problem for Austrians, because they assume that man as a rational being will always have a single prioritised goal. But we are not simply individuals, but expressions of a species too, meaning that we are incapable of having that single goal. This is not a conflict of instinct and reason, but of competing rationalities, bound together in a single form. And so, I buy chocolates on my birthday, having been assured by my instincts and similar instincts in my colleagues that this is a good thing to do.
February 13, 2012
Chris is in the process of taking umbrage, albeit very politely, about morality and the role some on the Left believe it plays in politics. He is objecting to the use of ‘thick’ moral judgements in political discourse; judgements which do not relate to broadly held principles with an intuitive appeal, but rather focus on the mores of a situation or solution to a given problem, and which only achieve traction within a particular cultural or social context. He claims that this leads to a debased political discourse in which accuracy plays second fiddle to winning a hurrah from one’s own group (or political ‘side’). This is contrasted with the use of ‘thin’ judgements (like ‘Inequality is wrong’) to bring people over to your side from another; their universal appeal ostensibly makes this more likely. To Chris, if morality is to have a place in politics, it is in the sphere of ‘thin’ judgements, where a common context makes debate genuinely possible.
There are a number of problems with this analysis, not least the direction of the distinction between ‘thin’ and ‘thick’ judgements. The originator of this distinction, Michael Walzer, sees ‘thin’ judgements as arising from the ‘thick’; particular moral choices made in a particular social context give rise to broader principles, in much the same way as a particular agreement between a king and his rebellious barons, the Magna Carta, gave rise to broader principles around political liberty, while itself being mostly repealed.
Unfortunately for Chris’s argument, these ‘thick’ judgements are the very stuff of political discourse, dealing as they do with the allocation of resources and rights in a particular time and setting. Chris appears to want ‘thick’ judgements to be informed by ‘thin’ agreements between contesting groups, when it is agreements in the thick of it, so to speak, that give rise to the scope for ‘thin’ judgements.
Politics is never timeless, but particular; ‘thin’ judgements are the stuff of philosophy, not of policy debates. A commitment to accuracy in ‘thick’ judgements is separate from the pronouncement of particular judgements in particular contexts and is a ‘thin’ judgement itself. If accuracy is not required to participate in our politics, then this will eventually form a broader principle – but the continued commitment of British commentators to at least the appearance of accuracy indicates that in this ‘thick’ context accuracy is a ‘thin’ principle to which we can all adhere.