Thursday, July 27, 2017

The Relationship Between Importance And Validity

Here's my reply to Adam Gurri's comment on my previous entry.

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Thanks for taking the time to read the entry and comment on it.

For me the originality (or lack thereof) of Rothbard's work isn't the main issue.  The impression that you gave was that all of his work was merely "rights" arguments.  I wanted to help you appreciate that this is really not the case.  

From my perspective, the value of Rothbard's results arguments is that he correctly diagnosed the fundamental problem with government.  He understood and argued that the government is no more capable of getting the supply of defense right than it is capable of getting the supply of food right.  The same really can't be said for any minimal government libertarian (ie Milton Friedman, Hayek, Mises).

For Rothbard the "therefore" was anarcho-capitalism. I disagree with his remedy but agree with his diagnosis.  From my perspective, Buchanan's "therefore" was much better: taxpayers are given the option to earmark their taxes.  The supply of defense would more accurately reflect the true demand for defense.

You don't believe that the supply of defense should be determined by demand.  Instead, you believe that it should be determined by "defending the best *reasons* for and against doing so".  You make it sound like the debate over defense and the demand for defense are mutually exclusive. But they really aren't.

We can imagine that Samantha is a hard-core vegetarian.  Everyone else in her family loves to eat meat.  Quite frequently they have fierce debates over vegetarianism.  When they do so they exchange copious amounts of information on the topic.  For example, Samantha endeavors to introduce them to progressively better meat substitutes.  The copious amounts of information exchanged among the members results in both sides being far more informed on the topic.  At the end of the day it's still entirely up to each family member to decide for themselves how much meat to purchase.  The spending decisions are made by, rather than for, the family members.

The same thing would occur if...

1. Unlike her family, Samantha was a hard-core pacifist
2. People could earmark their tax dollars

The defense spending decisions would be made by them.  Right now the defense spending decisions are made for them.

The passages that I shared by Rothbard, Buchanan and Ostrom all made the case, more or less, that people should make their own defense spending decisions.  These thinkers were all against, more or less, defense spending decisions being made for the people.

Unlike these thinkers, you haven't made your position on the issue exactly clear.  It's not like there's a lot of options.  Spending decisions are either made by the people, or for the people.

"do you *really* think the validity of an argument is dependent upon how much other people are willing to pay to read it?"

Lots of people were willing to pay to read Thomas Piketty's book. Does this make the arguments in his book more valid/correct/true?  No.  It makes them more important (worthy of attention).  But it's necessary to appreciate that not everybody who purchased his book agreed with his arguments.  The same can certainly be said for MacLean's book.

So let's remove the "purchase" aspect.  People simply and solely use their money to help determine and reveal the importance of Piketty's book.  Well... it doesn't work so well when there's only one book involved.  Let's include the Wealth of Nations.  People can decide how they divide their dollars between the two books.  They aren't buying the two books, they are grading/judging the relevance/importance of the books with their own money.  How would you divide your dollars between the two books?  Does it matter?  Would it be equally or more effective if you could just vote for one of the books instead?

Let's consider the issue of voting by looking at another example.   I regularly go to plant shows.  They are usually judged by a small group of experts.  I strongly disagree with this system. It would be far better if everyone could divide their donations among all the entries.

Let's say that plant shows and dog shows were both judged using my preferred system.  Would I spend more money at plant shows or at dog shows?  I wouldn't even attend the dog shows.  So I wouldn't spend any money at them.  This is because I'm far more informed about plants.  How I divided my dollars between dog shows and plant shows would reflect how my information was divided between dogs and plants.

What if Samantha manages to rope me into going to a dog show?  Like I said, I certainly wouldn't spend any of my money to judge the dogs.  But would I vote for the best dog?  Sure.  Why not?  It wouldn't cost me anything to do so.  Most of the people at the show would be in the same boat as me.  The majority is always less informed than the minority on every conceivable topic.  So with voting/surveys it's tyranny of the ignorant.  With spending it's tyranny of the informed. With traditional judging it's tyranny of a small handful of experts without any skin in the game.

A while back I started a small informal plant society.  In September we're planning to have a small show at a member's home.  Each participant will bring one of their favorite plants.  Then we'll each use our dollars to judge the relevance/importance of each other's plants.  The money that everybody earmarks to their favorite plants will be used to promote a webpage that displays the entries sorted by their importance (as determined by spending).

If Samantha ropes you into attending this show, how much money would you spend on your favorite plants?  I'm guessing that you wouldn't spend much, which would reflect your low level of plant information/interest.  And because you wouldn't spend much, your low level of plant information wouldn't have much influence on the results/rankings.  But let’s pretend that you’re super rich.  Then, despite having low information, you could easily exert considerable influence on the results/rankings.  This is why smaller markets are always worse judges of importance than larger markets.

Is my thinking original?  That's not the right question.  The right question is... am I barking up the right tree?  Rothbard barked up a few different trees.  Some trees were really wrong ("rights" arguments, anarcho-capitalism)... but one tree was really right (the fundamental problem with government). I have to recognize and commend him for barking up a very right tree.  Of course it's possible that I'm wrong about the rightness of the tree.  But it's not like Piketty or MacLean have come even close to disproving that it's the right tree.  They don't even seem to be aware of Rothbard's best arguments, which are the same as the best arguments of Buchanan and the Ostroms.  You certainly weren't aware of Rothbard's best arguments.  But now you are. However, you really haven't clarified/defended your position on whether tax spending decisions should be made by, or for, the people. Well... you don't seem to think they should be made by the people.  But you really haven't fleshed out a case that they should be made for the people.  You should do so, if you want to avoid barking up the wrong tree.

I should probably spell out the relationship between importance and validity.  Right now we don’t know just how important Rothbard’s two papers are to society.  We don’t know the social importance of his two papers.  I know how important they are to me, but I don’t know how important they are to Peter Boettke, Alex Tabarrok or anybody else.  It’s certainly possible to see how many times Rothbard’s two papers have been cited.  But if citations/votes were a good measure of social importance, then spending/shopping/markets would be a waste of immense amounts of time, energy and brainpower.

Because Rothbard’s two papers are important to me, I have taken the time and made the effort to bring them to your attention.  So you now know that they are important to me, but you don’t know how important they are to me compared to Buchanan’s papers or the Ostrom’s papers.  So you can't easily discern how I would want you to divide your limited time and attention between all their papers.

By bringing Rothbard’s two papers to your attention, I’ve given you the opportunity to scrutinize them.  In computer lingo, you have the chance to try and debug them.  Given enough eyeballs, all bugs are shallow (Linus’s Law).  The more important Rothbard’s two papers are to society, the more attention that they should receive, the more rigorous, relentless and ruthless the inspection of their validity.

This is the relationship between importance and validity.  Because we don’t currently know the true social importance of Rothbard’s two papers, their validity isn’t being optimally checked.  The same is true of national defense.  Because we don’t know the true social importance of national defense, its validity isn’t being optimally checked.

In all cases society’s attention/brainpower has to be divided somehow among a gazillion different things.  How do we divide society’s limited resources?  By voting?  By spending?  Or do we allow the division to be determined by a small handful of experts who don’t have any skin in the game?

4 comments:

  1. You didn't address the biggest nugget, which is that I reject these Pareto-utilitarian frameworks entirely. And no, I don't think a system that let taxpayers choose how their tax dollars were spent would work. What if everyone chose to fund something different, so that _no_ public service had enough funds? To name but one problem that comes to mind.

    Your framework is so univocal. You say, for example "But if citations/votes were a good measure of social importance, then spending/shopping/markets would be a waste of immense amounts of time, energy and brainpower."

    Why? How about this alternative: citations, votes, surveys, and markets are all useful gauges within limits. What they actually tell you is something you have to work out with your judgment; it's not something self-evident. Elinor Ostrom was the _master_ of this kind of methodology. She'd use regressions, but also qualitative case studies, and toy models, and straightforward unmathematical arguments. She drew on many different types of evidence and made a case. That's really all you can do.

    And you lump Rothbard waaaay too close together with Ostrom, at minimum, and probably Buchanan too. That there's some overlap does not do justice to their deep differences. Ostom was much more empirical, while Rothbard (regardless of which tree he happened to be barking up on at the time) was highly rationalist in how he proceeded in his analysis. In Ostrom, as in Coase, there was room for specific examples that blew up the models. In his joint study of China, Coase for example argued that there were some hybrid state-owned enterprises that were more efficient than the family farms that replaced them, even though the latter on the whole were much more efficient across China. That is because he emphasized the role of local experimentation even within terrible incentive constraints, and focused on particulars, such as variations in how those constraints were enforced.

    Coase and Ostrom lived in the world, while Rothbard was always seeking a model to distill it all down. And *that*, more than his specific rights-driven arguments, is why he could embrace absurd and horrible conclusions like the one that led me to dismiss him as a thinker.

    I'd suggest trying to read some hermeneutics to broaden your horizon. There's Don Lavoie's edited collection, Economics and Hermeneutics https://www.dropbox.com/s/idvxnun1vylxa4e/Economics%20and%20Hermeneutics.pdf?dl=0

    And there's Charles Taylor's (unfortunately badly scanned) "Interpretation and the Sciences of Man" https://is.muni.cz/el/1423/jaro2017/SAN103/um/Taylor_Interpretation_and_Sciences_of_Man.pdf

    I found the former very hard to wrap my head around when I first read and, but had read a lot of hermeneutics by the time I got to the latter. If you read any of them and they didn't make sense, I'd be happy to discuss them. Not that I think you owe it to me to read them! Just a suggestion.

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    1. You reject the Pareto-utilitarian frameworks entirely? But what does this mean practically? Say that you're in charge of a plant show. It's entirely up to you to decide...

      1. Whether the plants are judged
      2. How they are judged

      What decisions do you make? And why? What's your goal?

      You can tell me that hermeneutics is the best but I need to see and know and touch and feel uses of it that are tangible and real and concrete. How, exactly, will it make a plant show better?

      My life is way too short. I really want to avoid spending too much of it learning about things that have no practical uses. Knowledge should be practical. It should be applicable. It should be testable. It should be falsifiable.

      I've started to read "Economics and Hermeneutics" but so far there's nothing that is relevant to improving a plant show.

      "What if everyone chose to fund something different, so that _no_ public service had enough funds?"

      I'm not sure what you mean. Let's imagine a dog show that allows everyone to use their money to judge the dogs. What happens if nobody earmarks any money to the chihuahuas? Then evidently they aren't important to the people at the show. Evidently everyone at the show agrees that the chihuahuas don't deserve any attention.

      If you were at the show then obviously you didn't earmark any of your own dollars to the chihuahuas. So it would be rather hypocritical to accuse others of not spending for the chihuahuas. If you weren't at the show, then I suppose you could reasonably criticize the rock-bottom ranking of the chihuahuas. But this is why larger markets are always more trustworthy than smaller markets.

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    2. Do you really think that Pareto-utilitarianism has ever helped anyone in a situation like running the plant show? I promise you that it has not, and never will.

      As Frank Night, Israel Kirzner, or Daniel Klein would tell you, *whether* the plans should be judged is an entrepreneurial decision, made under conditions of great uncertainty, and by ends determined by a framework/stance towards the world, not just profit necessarily.

      As for how plants are to be judged, we ought to look to Aristotle rather than Pareto or (worse) Rothbard. Experts on plants, just like experts on dog breeds for a dog show, know what characteristics a good specimen has. Whether it's the brightness of the color, or (in the dog case) the thickness of the fur coat, or what have you. There are *qualitative features* that experts know to look for. That is why in general you have judges who know what they're doing, rather than soliciting feedback (in vote, rating, or...dollar terms) from the audience.

      Hermeneutics won't tell you how to do that, any more than economics will tell you how to be a good entrepreneur. What hermeneutics *will* do is help you to understand that process. What the judge is doing is an act of *interpretation* in a social setting. Hermeneutics is theory of interpretation just like epistemology is theory of knowledge. Epistemology does not actually teach you how to know things, either, just as hermeutics doesn't teach you how to interpret. This is all highbrow, abstract theoretical stuff. If you wanted practical guidance, you should not have been reading Rothbard, Buchanan, and the Ostroms to begin with.

      As for what I meant by my comment, and it is this: if public goods require certain thresholds of spending in order to be provided at all (never mind provided in the right amount), what if a system in which people could choose where their tax dollars went had people spreading those tax dollars so thinly across so many individual programs, that NONE of those programs could actually get enough funds to be provided?

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