Tuesday, December 28, 2010

Scepticism about our knowledge of causation

David Hume’s sceptical argument about our knowledge of causation is the most important piece of reasoning in modern philosophy. Modern philosophy may be said to have started with Descartes trying to find a certain basis for reasoning – his cogito ergo sum – but his method turned out to be fruitless. It is Hume’s sceptical empiricism from which modern philosophy descends, with differing lines of philosophy deriving from different responses to it.

Accepting Hume’s sceptical conclusion about inference from experience led Kant to create his philosophical system of phenomena (what we humans perceive and can reason about) and noumena (things-in-themselves, not accessible to human knowledge or reason). From Kant comes Hegel and (eventually) post-modernism. Cultural anthropologists talking of “other ways of knowing” and science as a “patriarchal Western discourse” are ultimately, whether they know it or not, disciples of a dead white Scottish male (via various dead white German, Austrian and French males).

Scepticism about our knowledge of causation is not good for the status of science. This was demonstrated centuries before Hume was born. Compare Hume’s claim, first published in 1737:
When we look about us towards external objects, and consider the operation of causes, we are never able, in a single instance, to discover any power or necessary connexion; any quality, which binds the effect to the cause, and renders the one an infallible consequence of the other. There is required a medium, which may enable the mind to draw such an inference, if indeed it be drawn by reasoning and argument. What that medium is, I must confess, passes my comprehension; and it is incumbent on those to produce it, who assert that it really exists, and is the origin of all our conclusions concerning matter of fact. This question I propose as much for the sake of information, as with an intention of raising difficulties. I cannot find, I cannot imagine any such reasoning. But I keep my mind still open to instruction, if any one will vouchsafe to bestow it upon me.
With this passage from Muslim thinker al-Ghazali, in his C11th The Incoherence of the Philosophers:
our opponent claims that the agent of the burning is the fire exclusively; this is a natural, not a voluntary agent, and cannot abstain from what is in its nature when it is brought into contact with a receptive substratum. This we deny, saying: The agent of the burning is God, through His creating the black in the cotton and the disconnexion of its parts, and it is God who made the cotton burn and made it ashes either through the intermediation of angels or without intermediation. For fire is a dead body which has no action, and what is the proof that it is the agent? Indeed, the philosophers have no other proof than the observation of the occurrence of the burning, when there is contact with fire, but observation proves only a simultaneity, not a causation, and, in reality, there is no other cause but God.
Both thinkers are deeply skeptical about the capacity of human cognition to perceive the inner workings of reality. Of the two, al-Ghazali at least has some way of explaining causation – it is the will of God. In Hume’s case, causation is just a mystery we cannot ultimately know anything of. Hence Kant’s phenomena and noumena, the former being the realm of human reasoning (and theory), the latter being the unknowable reality of things. But a reality that we cannot truly know is no restraint on human reasoning. Which leads us to human reasoning as a playground of human theories and thus to the triumph of Theory: to all the pathologies of post-modernism with science just one “discourse” since all human discourses are equally impotent to discern reality and so none is privileged over any other.

In al-Ghazali’s case, it leads the only path to truth about the universe being knowledge of the will of God, via the revelations of the Prophet. The triumph of his view in Islam also undermined any hope for science in that civilisation, as any structures or patterns we perceive are just manifestations of the will of God, while encouraging a deeply fatalistic approach to human agency (as outlined in the work of Danish psychologist Nicolai Sennels) since we are not Aristotelian agents acting in an ordered universe but creatures of God utterly in His power. The further consequence of this is being deeply inclined to the conspiratorial mindset, since reality is, in a sense, one Great Conspiracy operating according to the will of the ultimate Hidden Power. If that is your ultimate and pervasive model of how the universe works, and you do not believe in the authoritative efficacy of ordinary (and individual) human action, of course it is going to be natural to explain the world in terms of hidden conspiracies.

But belief in powerful hidden agencies, the impotence of individual action and a tendency to postulation of conspiracies we can equally see in all the lines of thought which descend from Kant and (especially) Hegel. Marx may have been influenced by British empiricism, but he is ultimately too much of a Hegelian, and his disciples even more so, even more in the thrall of theory (and, eventually, Theory). Moving from Marxism (or post-modernism) to Islamism is much less of a shift in one’s mode of thinking that one might expect.

Both al-Ghazali and Hume were arguing against Aristotelianism, though al-Ghazali was doing so more directly. (Even so, there are some medieval precursors to Hume’s thought.) The difference, apart from al-Ghazali having God as his ultimate backstop, is that al-Ghazali’s skepticism about human epistemic capacity was operating a civilisation which had not undergone the Scientific Revolution – indeed, his intellectual triumph within Islam probably did much to forestall any chance of Islam experiencing such a sustained breakthrough – while Hume, Kant, Hegel and co were operating in a civilisation which not only had made the various breakthroughs which we know call the Scientific Revolution but which was, in many ways, increasingly defined (or, at least, profoundly transformed) by those breakthroughs in theoretical and practical knowledge and capacity.
Still, even if Hume’s scepticism about our knowledge of causation did not the civilisation-defining effects that al-Ghazali’s did, it has still been profoundly influential. And not in a good way.

True complexities
We can also see Hume’s epistemic scepticism as a manifestation of the retreat from Plato leading to the retreat of confidence in the notion of truth. To some extent at least, the notion of truth is inherent in language, since if words do not have specific meanings, we cannot have language. If we say ‘dog’ means dog but not cat, we are committed to some notion of truth. (I.e. that it is true that ‘dog’ means dog and false that ‘dog’ means cat.)

There is also little point to language unless it has some connection to reality. Why bother having language unless it is to communicate about the world around us? (Ask any parent: both babies and parents find the lack of language skills of small children frustrating.) There are a lot of situations where accuracy about the world is important: hence lying is broadly disapproved of and a reputation for dishonesty is a handicap. (Though whether it shows respect or disrespect for others makes a difference: lies to spare people’s feelings are often regarded as acceptable.) Perjury is a necessary crime for the functioning of law.

It is regarding general explanatory claims about the universe where we start to run into problems. With Plato, where ideas are more “real” than the reality that is a flawed reflection of them, truth is not a particularly problematic notion. The most “real” things are ideas and so the human grasp of such ideas is the deepest form of truth. Truth is almost equally unproblematic in Aristotle: even if Aristotelian Forms are immanent in reality, they are directly apprehensible by the human mind. Plenty of scope for argument about what is true, but the notion of truth is not problematic.

If, however, we can only get knowledge about the world from experience (empiricism), and we cannot make general inferences from experience (Humean scepticism), then the notion of truth – particularly general, explanatory truth about the world – becomes much more problematic.

That all observed swans are white makes it likely that the next observed swan will be white but, as the discovery of black swans in Australia demonstrated, certainly does not prove the next observed swan will be white. (In fact, of course, humans have been observing black swans for thousands of years. It is just that no European knew about this before the European discovery of Australia.) Hence confidence in the whiteness of swans suddenly turned out to be misplaced. Humean scepticism takes that lack of certainty and turns it into a disabling barrier.

One that looks particularly plausible when confronted with the collapse of confidence in previously taken-for-granted conceptions of the universe. Newtonian physics looked pretty good, until Relativity came along. We thought Newtonian physics was true: it turned out to be merely approximately true. (In effect, true except for very, very small and very, very large phenomena.) But the propositions of Newtonian physics do not much look like E=mc2. So how can they be (approximately) true and Relativity be true? Leaving aside this somewhat ambiguous example, the history of science is full of the debris of now rejected, but previously believed, theories.

It is hardly likely to be some coincidence that Hume’s scepticism, which arose in the wake of the collapse of Aristotelian physics, acquired a new wave of admirers (most famously Karl Popper) in the wake of the fall of the Newtonian empire in physics.

The concept of truth looks seriously shaky in such circumstances.

Not helped by the fact that Platonic and Aristotelian Forms both encourage a view of truth as a binary ‘yes/no’ matter. You either apprehend the Form or you don’t. The notion of partially true, or approximately true, does not recommend itself in such circumstances. If, however, one accepts the complex reality where nature abhors a category, approximately true, or partially true, looks just fine. But that also requires a more complex understanding of how propositions connect to reality, so what one means by ‘truth’.

If medieval philosophy was the period of metaphysics par excellence, modern philosophy is the period where epistemology is a central concern. But just as medieval metaphysics was abandoned when its claims about what we know turned out to be way overblown, so modern philosophy has failed to solve the problems of epistemology it attempted to wrestle after the failure of medieval metaphysics.

The detritus of post-modernism is, as Stephen Hicks demonstrated, a massive indictment of the failure of epistemology. If we can see that Hume’s (and al-Ghazali’s) scepticism about our knowledge of causation does not lead to good intellectual places – and does not remotely accord with our every day experience and confidence about our causal efficacy – then it is reasonable to ask what is wrong with their arguments. Something I will discuss in a later post.

Friday, December 24, 2010

Caster Semenya and the falsity of Forms

The international athletics community was recently forced to grapple with the reality that biologist Joan Roughgarden captured in her dictum that nature abhors a category when the gender status of Caster Semenya came under question in 2009 and 2010. Far from being clear cut, gender in humans is quite complex, with some people being intersex – that is, having features typical of both sexes – and others being transgender. That is without even considering human sexual diversity.

Or getting into how conceptions of gender differ across time within cultures and (even more) between cultures. The reality is that living things are made of complex structures that recur in varied ways. If structures are what give things specific form and patterns are recurring structures, then each of us is a complex mix of structures and patterns, mixes that vary from person to person and within people over time.

Put like that, it is not surprising that nature abhors a category – that is, abstract summaries of particular patterns. The process of summarising, of abstracting from, will be too simple to fully encapsulate complex realities.

Hence cases such as Caster Semenya. Who is no less a full person for not conforming simply to particular categorisations. The problem lies not with Caster Semenya, but the human tendency to put too much weight on our categorisations. To not see how much they are simplifications of, and abstractions from, a more complex reality.

The epitome of putting too much weight on our categorisations is Plato, who gives his categories more existential weight – that is, deems them more “real” – than the complex reality they are simplifications from. As I have noted before, from the work of Etienne Gilson, this results in Plato’s noxious politics flowing directly from his metaphysics. For actual humans are discounted in favour of more “real” concepts they are to be forced to conform to.

And the problem with Aristotle is that he has too much Plato in him. His Forms are immanent in reality, but are still based on putting far too much weight on the reliability and scope of the human ability to categorise.

An excellent example of this failing is found in Edward Feser’s use of the concept of a triangle to justify the notion of the good being immanent in nature. A triangle is itself an abstraction. It is really, really, not like a person, or any living thing. People do not come in ideal Forms, there is no ideal Form of the human. To think that there is leads directly to profoundly noxious politics, for it makes a conception of the human count more than actual people.
It follows from Forms not existing in the way Aristotle suggests that neither do things in nature have defining ends flowing from defining forms. They have patterns and structures which can be used in different ways and whose uses can change over time. Indeed, due to mutation and natural selection, use can affect form (i.e. those patterns and structures). Thus, fins can become feet can become hands while bonobo females have more prominent clitorises, apparently to facilitate the female-female bonding which is part of their patterns of living.

Conversely, believing one can identify defining ends in things puts way too much faith in the human capacity to categorise. It overlooks how much our inferences can be products of a limited knowledge base. So St Paul can deem long hair natural in a woman but unnatural in a man, or St Gerard of Aurillac that a woman working in the field is unnatural due to taking particular cultural patterns as definitive. Aristotle (and his later followers such as Aquinas) can deem charging interest unnatural by inferring from coin-as-money and without the commercial experience to understand risk across time. The Athenian can claim in Plato’s The Laws that animals do not engage in same-sex activity based on inadequate observation of nature. (Turning this false biological claim into a metaphysical principle so that all contrary evidence is declared perversity – ‘natural’ thereby being given a “precise”, but misleading, philosophical meaning – may be useful for tendentious support of religious doctrine, but is not remotely acceptable reasoning.)

Misled by metaphysics
As we can by these examples from thinkers of the quality of Aristotle and Aquinas downwards, the pattern of error involved in the above examples is built into the notion of defining forms with directly accessible defining ends. In reality, knowledge of the world progresses by careful observation, by not making a burden of our preconceptions due to a false confidence in human categorisation. The experience of one biologist speaks well to this:
I still cringe at the memory of old D-ram mount S-ram repeatedly…True to form, and incapable of absorbing this realization at one, I called these actions of the rams aggrosexual behaviour, for to state that the males had evolved a homosexual society was beyond me. To conceive of these magnificent beasts as "queers"—Oh God! I argued for two years that in [wild mountain] sheep, aggressive and sexual behaviour could not be separated…I never published that drivel and I am glad of it…Eventually, I called a spade a spade and admitted that rams lived in an essentially homosexual society
This is why Aristotelian physics failed: it was way over-confident in everyday human categorisation. But this over-confidence flowed directly from Aristotelian metaphysics – the notion of defining forms and ends – and Aristotelian metaphysical epistemology – the notion that those defining forms were directly apprehended by the human mind.

So, there is good reason why Descartes rejected the Scholastic frameworks built on Aristotelian thought and sought some certain base for knowledge, leading to his famous cogito ergo sum. The failure of Aristotelian physics was a product of flaws in Aristotelian metaphysics and Descartes wanted to get “back to basics” to determine how to avoid being misled by metaphysics in such a way again. Descartes' approach was mistaken and his method failed: in large part because he was still in thrall to this notion of powerful direct human apprehension of reality. There was still too much Plato in him.

Hence, there is also a reason that Hume sought to eliminate metaphysical reasoning about reality. He went too far – ironically (as I will discuss in a later post) by not taking experience seriously enough. But he was not wrong in thinking that Aristotelian metaphysics, and metaphysical epistemology, “got in the way” of understanding.

The structures and patterns of reality, particularly of living things, take hard work to identify and unravel. Our observation and experience give us enough to get by in everyday terms, but not nearly enough to achieve the depth of understanding that modern science has achieved. The Scientific Revolution was the achievement of a specific time and place, not a “natural” product of direct human apprehension of reality. The Aristotelian notion that reality had structures that were accessible to human cognition was a vital element in those breakthroughs. But those breakthroughs also required rejection of Aristotelian over-confidence in our direct apprehension of reality, in our immediate categorisations, in our everyday understanding and inferences.

Historically, the general Aristotelian confidence that the world has knowable patterns and structures was an essential element in the development of science. Nevertheless, the specific approach of Aristotelian metaphysics and metaphysical epistemology was a too-Platonic barrier that had to be overcome. Just as it has to be in moral reasoning too: we have to take the reality of the human more seriously, and “easy” categorisation less seriously, than Aristotelian ethics (particularly the Thomist synthesis) leads us to.

The case of Caster Semenya is a rather nice warning against taking our categorisations more seriously than actual people.

Wednesday, December 22, 2010

Thinking rationally about unemployment

This (greatly) extends a comment I made here.

One of the dispiriting things about observing the US's economic problems from afar (specifically, a country that managed to avoid both the Global Financial Crisis and the Great Recession) is watching old and tired debates about unemployment getting another whirl. This piece from Salon provides examples of people blaming the unemployed for unemployment.

This all so "old" for me. My first job was in the (since abolished) Commonwealth Employment Service dealing with unemployed people in the 1982-3 recession. (I had never had a job before, so naturally the Australian Public Service thought the best use of my talents was advising folk on their job prospects.) I later worked in various labour market economics/stats areas. I am so familiar with all these arguments, and I find the “blaming unemployment on the unemployed” approach utterly tedious.

The basic three operating principles are:

(1) Unemployment shifts dramatically because of changes in economic conditions.

(2) Long-term trends in unemployment occur because of institutional (particularly regulatory) factors.

(3) There are sorting processes about who gets and stays unemployed, but this does not change (1) and (2).

Really, it is not so hard.

Unemployment in Australia is much lower than in the US or UK. (In my local suburb, most of the fast food places and cafes have "help wanted" ads in the window.) This is not because suddenly Australians are harder working than Yanks or Poms. It is because:

(1) our central bank, the Reserve Bank, handled monetary policy better than the Bank of England and (especially) the US Federal Reserve;

(2) our prudential regulation of our financial sector worked a lot better (and did not have to deal with a collapsing housing price bubble); and

(3) the Australian public debt position is much stronger [which improved both confidence generally and policy flexibility in particular].

This, added to a much more flexible economy due to almost three decades of economic liberalisation meant that we even manage to weather a dramatic drop in commodity prices.

Just as Europe needs to face the fact that its entrenched unemployment is largely due to the way it regulates its labour markets, the US needs to face the fact that bad decisions by the Federal Reserve is the most important reason for its massive levels of unemployment. Not any change in behaviour by the unemployed.

For if wage contracts are set according to certain expected trends in the value of money (e.g. around the 2% inflation the US has had for a couple of decades) and there is a sudden, unexpected increase in the value of money (i.e. the scarcity of money increases because the Fed suddenly adopts a tight monetary policy to get even lower, possibly zero, inflation) then there are suddenly a whole of labour contracts where the real cost of labour increases unexpectedly. Hiring plummets, firings surge, economic activity drops and you have a dramatic economic downturn and a massive increase in unemployment. (Now think what a sudden increase in the scarcity of money would do to highly leveraged financial institutions: Irving Fisher described this scenario back in 1933 [pdf] in his debt-deflation theory of the Great Depression of the 1930s.)

Which is not remotely the fault of the unemployed. Yes, of course interventions (such as extending unemployment insurance) affect trend levels of unemployment. Yes, of course there is a sorting process about who gets and stays unemployed. But that sorting process does not affect the level of unemployment: it occurs within a given level of unemployment. Which is a product of economic conditions (including public policy, especially monetary policy) and institutional structures (particularly labour market regulation and other interventions). Moralistic nonsense blaming the unemployed is precisely that.

Blame the Fed, they did it. Again:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.
Spoke too soon. But really, really the consequence of greatly increased unemployment is not the fault of the unemployed.

ADDENDA: On the US unemployment situation, this graph is deeply depressing. It comes from this highly informative post on the diabolical state of much of the US housing and housing finance market. Though this is not a good sign regarding Australian housing finance.

Saturday, December 18, 2010

Losing governments run on "leadership"

Someone who is both politically and policy savvy recently observed to me that losing Governments run on leadership. The Keating Government in 1996, the Howard Government in 2007, the Brumby Government in 2010 are all examples of this.

What running on “leadership” says is that you are an exhausted government with nothing more to say which connects to the concerns of voters and so have become self-referential – it is all about you. Voters generally feel that it should be about them and theirs, so you have a problem.

In the recent Victorian election, this self-referential problem unconnected with the concerns of voters also showed up in the ALP’s way overdone negative advertising against Liberal Leader (and now Premier) Ted Baillieu. For some years, I have been saying that Ted Baillieu’s problem was that, if we woke up tomorrow and he was Premier, people would not be worried, but they would not be excited either. The other side of that is that he has something of a “nice” public persona. The frenetic negative advertising against him that the ALP engaged in, in the last stages of the Victorian election campaign, therefore seriously misfired and just reinforced the “you have nothing to say that is about us and ours” message of their own Leadership focus.

Particularly, as the same politically savvy observer noted, the negative advertising was not connected to any underlying narrative or theme: not one, at least, that was in any way grounded in the concerns of voters. To work, negative advertising generally has to reach beyond the “bubble” of politics.
Someone else commented in a discussion looking back on the election campaign that, if one has a Leader “in a bubble” that the media supports and feeds into, the only lever people have left is their vote. One of the features of the campaign was the overwhelming newspaper endorsement of Brumby. A journalist present put this down to media responding to the bullying from Brumby’s office and being afraid of being “punished” by exclusion, despite the polling suggesting a change of Government was possible.

An inner city Liberal candidate observed that the inner city local newspapers were beyond bias and were clearly Labor/Green partisan. The aforementioned journalist pointed out that local newspapers are dependant on local and other government advertising that creates a media-machine politics nexus. The large number of taxpayer-funded PR flacks/media staff increases this effect.

The candidate also observed that it was hard to get election posters in windows; traders were clearly intimidated. One restaurant that did run the Liberal candidate’s photo was rung up by someone who claimed they were going to make a booking but wouldn’t because of the poster: the restaurant owner responded that this was not China and if they kept talking like that, he would put up a second poster.

This did not seem to be a problem in my area (the electorate of Footscray, a very safe Labor seat) since posters for the Liberal candidate (along with the Green and an Independent candidate) were in lots of shops and businesses. Indeed, this is the first time in almost 10 years of residence that I knew the name of the local Liberal candidate. But the resumption of properties in Footscray for the railway and tunnel extensions has caused some local angst, which may have assisted.

The return of patronage politics
From the later C18th to the middle of the C19th, the main legislative activity of the British Parliament was removing statutes and otherwise abolishing special privileges, exemptions and official discretions generally. The result was a massive decrease in the level of corruption in British politics, since corruption is the market for official discretions and the less official discretions there are, the smaller the potential market in corruption is.

A feature of more recent decades – despite economic liberalisation – has been an increase in official discretions, particularly in land use. The result has been, even though levels of personal financial probity of officials remains high (Australia rates as one of the least corrupt countries in the world), a great expansion in patronage politics. Whether in the form of career opportunities, control or receipt of publicly provided goods or services or (most dramatically) development deals. The candidate noted that Brumby Government’s patronage/development politics, with a series of inappropriate local development proposals, offended a lot of people, and generated considerable local community activism that he was able to tap into.

This division within the local Left between those tied into the patronage/development politics and those who resisted developments threatening local amenity reflects a larger division in the Left between environmentalism and more traditional concerns for working class prosperity. As a long-time observer of such issues pointed out in the aforementioned discussion, environmentalists have come to pervade the bureaucracy and consultative structures to do with land use and infrastructure development. This allows them to push what he described as their “command and control” approach to the city, where people were to live “as the Greens decree”.

It also raises a potential problem for the incoming Liberal-National Government of dealing with a profoundly unsympathetic bureaucracy. Particularly given that putting the Greens last on Liberal preferences not only destroyed the Greens' chance of winning any lower House seats but also seems to have led to a more positive general view of Baillieu (since it meant a center-right Party would not be preferencing for a left Party against a centre-left Party, so showed some "believe in something" consistency rather than going for crass political advantage, as was widely presumed they would: a prominent ALP figure even praised the Libs for choosing ideological consistency instead).

It was fairly obvious from the pattern of swings that land use (high rise development, public housing) and infrastructure issues (railways, water, roads) mattered for the election result. In some ways, this was the third rejection of the Cain-Kirner Government (thrown out in 1992, clearly rejected again in 1996) since it was the freezing of infrastructure development during its tenure (a process that started under the Hamer Government), along with its mismanagement of the State finances, that has meant that infrastructure provision has failed to keep up with population increase. The Brumby Government’s “catch up” policies failed to catch on.

Modern State government in Australia is all about land use and services. Lose sight of that and you lose Government.

ADDENDA This post has been added to, to clarify some points.

Thursday, December 16, 2010

I broadly understand the current economic circumstances, I read Scott Sumner

My favourite economic blogger is monetary economist Scott Sumner, who blogs at The MoneyIllusion.

Monetary economics is a difficult area, for money is both ubiquitous – it is a feature of all transactions that use money – and has roles across time. By the frequency and clarity of his posts, and his willingness to engage with his commenters, Scott Sumner provides, in effect, an ongoing public seminar in monetary policy.

Particularly as one can ask a question and have a very informative answer from some of the excellent other commenters on the blog.

But it is the quality of his posts that is the real value. Sumner has, for some years, been writing a book on the Great Depression of the 1930s. His approach has to been to immerse himself in the data, including the issues of the New York Times of the period. (He has posted an introduction to his analysis of the 1930s here and excerpts from some chapters of his book here, here, here, here; here, here, here, here; here, here, here, here and here with a clarification post here and a useful summary of his views here. He has a lovely takedown of Woodrow Wilson here.) This gives his application of the lessons of the 1930s an empirical depth that is invaluable.

As long as it is applied to an appropriate analytical structure: it is not merely that Sumner is steeped in the empirical data, it is that he applies economic analysis in an open-minded way to the data that gives his posts their value.

He recently published a piece in National Review arguing for his preferred approach to monetary policy – targeting the level of nominal GDP (NGDP: GDP in money terms). NGDP is the money value of the total number of productive (in the sense of incorporated-in-GDP) transactions in a given time period.

On the way through, he provides a very clear analysis of recent economic travails. We suffer from a re-run of Irving Fisher’s analysis (pdf) of the 1930s Great Depression – a combination of the “debt disease” with the “dollar disease”.

Yes, there had been a vast expansion in use of credit/debt and the role of the financial sector in the global (and particularly American) economy. But the crucial problem was a dramatic drop in nominal GDP as the result of the US Federal Reserve’s shift to a “tight money” policy, for:
Since most debts are nominal (i.e. not indexed to inflation), nominal income is the best measure of a person’s ability to repay their debts. In 2009, the U.S. saw the biggest fall in nominal GDP (NGDP) since 1938. It is thus no surprise that we had a debt crisis: Borrowers almost always have trouble repaying debts when nominal income comes in much lower than was expected when the debts were contracted.
There was a general expectation about growth in total transactions/economic activity – and so money incomes – which were collectively frustrated. The result was both a dramatic economic contraction AND a dramatic increase in “bad” debts.
Pausing here, this is why I am deeply sceptical about the Austrian economics concept of malinvestment, particular as an explanation of business cycles: a investment which is fine at one level of economic activity is not at a lower one. A business that may well be a perfectly reasonable investment in inner city New York may be a deeply silly one in Port-au-Prince. So, that a drop in the general level of economic activity results in increased bankruptcies is not a sign of “malinvestment”. On the contrary, a business that fails in boom times is much more a sign of malinvestment.

What Sumner wants of a central bank is:
I am asking the Fed to provide a stable policy environment for the negotiation of wage and debt contracts.
Something the Federal Reserve in the US failed to do, but the Reserve Bank of Australia has continued to successfully do.

Such widespread frustration of money income expectations due to a drop in nominal income has all sorts of knock-on effects:
Government workers in 2009 were being paid salaries negotiated under the expectation that NGDP would rise at about 5 percent, as it had (on average) for several decades. When actual NGDP fell 8 percent below trend, those wage contracts boosted the share of national income going to the employees still working, at a cost of much higher unemployment for the rest of us.
If government employees are systematically shielded from economic circumstances, this may both encourage talent into the government sector and discourage public policy from being sensitive to such things as high or persistent unemployment. Europe is currently providing some object lessons in why that might be a long-term problem.

On the way through, Sumner provides in his National Review piece a very lucid discussion of precisely why the gold standard is not a solution, again based on his understanding of the historical data.

But this informative lucidity is not some unusual aspect of Sumner’s blogging. This post, for example, provides an excellent “in” to the current, parlous, state of macroeconomics. From reading Sumner, and particularly his comparisons of current circumstances with those of the 1930s, one can see how mad concerns about some looming outbreak of inflation are (and how these are yet another re-run of the 1930s, of which he can identify a depressingly large number of parallels).

Do read his entire article, and then start reading his blog.

Monday, December 13, 2010

Sexual harassment and abuse of relationships

This extends a comment I made here.

The comment was made that:
I do think it’s different for guys as well. Think of those cases where a female teacher seduces a male student. Courts tend to want to treat this situation exactly like those situations where a male teacher seduces a female student. But…it’s somehow different, although it shouldn’t be. You often hear that the guy was discovered by boasting about his exploits, whereas for girls, it’s not something to boast about so much. I’m not sure why. Perhaps it’s the good old sexual double standard.
The risks of sex are not symmetrical: women run inherently greater risks (pregnancy, disease, comparative physical vulnerability). Moreover, women tend to construe the emotional context of sex differently from men—in part, precisely because of the different levels of risk.

This difference in the emotional context of sex is obvious in the queer community. A joke expresses it nicely:
What does a lesbian bring to the second date? A removal van.
What does a queen bring to the second date? What second date?
Obviously, these are general tendencies (and there is evidence of convergence as a result of technological and social changes changing the risk profiles). Still, there are good reasons to think a male teacher having sex with a female student is not identical with a female teacher having sex with a male student however much both are abuses of the teacher-student relationship.

I am reminded of a story about use of guns in self-defence in Texas I heard in a talk by Tobi Beck, the author of The Armored Rose. Apparently, Texan courts allow women to get away with unloading a full clip into a home invader when men aren't, on the grounds of different responses to stress. Men tend to go for warning shot, followed by straight at shot (adrenalin kicks in quickly). Women tend to end up in a corner with the kids behind them and nowhere left to go and then unload the full clip (adrenalin has to get through the serotonin barrier: hormonally, the same reason why women generally take longer to get fully sexually aroused).

I see no reason why equality has to presume identity. In particular, a lot of the problem with sexual harassment is not getting that, really, it is different for women and that's OK.

Thursday, December 9, 2010

A simple model of American politics

My cynical take on American Party politics is that American politics is divided into two sides of politics who each accuse the other of betraying the principles of the American Revolution – and they are both correct.

If one looks at the polls, Americans divide into liberal, moderates and conservatives or Democrats, independent voters and Republicans, depending on how you want to divide according to ideology or Party.

In terms of the general liberal-conservative divide in US politics, amongst non-Latino whites, most groups are mildly trending to identify more as conservatives, apart from the intellectual/academic/cultural elite, who are wildly diverging from other social groups. (Which is not a socially healthy development.) But what counts as conservative in 1968 is not the same as in 2008. Nor, and this may matter for social identification, is what counts as liberal: if the intellectual/academic/cultural elite are the archetypal 'liberals' and they are moving further away from the mainstream, more folk may be inclined to identify as 'conservative' on the grounds of distance from the 'liberals'.

Broadly speaking, independent voters tend to agree more with the Republicans on tax, spending, size of government and national security issues. They tend to agree more with the Democrats on social issues. That is, they tend lean to being (in American terms) fiscally conservative and to being socially liberal.

The difficulty is with the activist base on each side. The activist base of the modern Republican Party is culturally conservative: they are where the Republican Party gets much of its political energy from. But their strongly social conservative politics do not appeal to independent voters.

The activist base of the modern Democratic party is fiscally liberal: they are big government, tax-and-spend types, they are where the Democratic Party gets much of its political energy from (as this cartoon express with a certain vivid vulgarity: federal public servants have done very well out of the Obama Presidency and Democrat Congress). They also do not appeal much to independent voters.

So the trick in American politics is to emphasize your broader appeal while energising your base without seeming to be captured by them.

Social conservatism is considerably more popular in the US than fiscal liberalism: 42% are social conservatives, 16% are fiscally liberal. So it looks like the Republicans have an inherent advantage. But this can be misleading: indeed, precisely because your activist base represents a sizeable segment of opinion (30% are both fiscally and socially conservative, while only 11% are fiscally and socially liberal) it can “miss out” how much its core opinions are not, in fact, majority opinions. With 29% being socially liberal and 29% socially moderate, conservative “culture war” politics are not a majority-winning path: particularly as the trend in public opinion on particular issues is clearly in the “wrong” direction. (This is even more so in other parts of the Anglosphere.)

Fiscal conservatism, on the other hand, is much more of a winner: 47% are fiscally conservative, only 16% are fiscally liberal. So a massive outbreak of fiscal liberalism is best countered by emphasizing your fiscal conservatism while toning down your social conservatism. Which would seem to describe what just happened in US politics fairly well.

Wednesday, December 1, 2010

What the Pentagon Papers have wrought

The blogosphere has been fairly active over the latest Wikileaks document dump. Active, but hardly hyperactive. First, it is not the first such release by them. Secondly, an email from US Secretary of Defense Gates to a prominent blogger-war journalist (Michael Yon) has picked up something very important:
First of all, I would say unlike the Pentagon Papers, one of the things that is important, I think, in all of these releases, whether it's Afghanistan, Iraq or the releases this week, is the lack of any significant difference between what the U.S. government says publicly and what these things show privately, whereas the Pentagon Papers showed that many in the government were not only lying to the American people, they were lying to themselves.

The US has not been exposed as conducting some secret foreign policy. It certainly has not been exposed as exaggerating dangers. If anything the other way. The release has led to quite a lot of the more hawkish commentators to argue it supports their concerns and provides a base for criticising the Obama Administration for being far too passive and sanguine about the problem of Iran. Michael Ledeen's response seems indicative of this sort of response: likes the information (since it supports what he has been saying), but the release itself is shameful.

Another version of this is Heather Macdonald's response: the release is damaging, but the diplomatic traffic's evidence of the rationality of Arab governments is comforting.

Then there is the ruminative, "yes but where do we strike the balance?" response. Timothy Garton Ash provides a good example of such. He sees the document dump as a treasure trove that makes the US State Department look better:
There is a public interest in understanding how the world works and what is done in our name. There is a public interest in the confidential conduct of foreign policy. The two public interests conflict.
Though not so much with their security measures:
One thing I'd bet on, though: the US government must surely be ruing, and urgently reviewing, its weird decision to place a whole library of recent diplomatic correspondence on to a computer system so brilliantly secure that a 22-year-old could download it on to a Lady Gaga CD. Gaga, or what?
Thinking along such lines even leads to Jonathan Powell wondering whose interests are served:
On the whole it is surprising how few real surprises seem to be contained in quite such a huge amount of material. To that extent we can feel reassured that the US is not in fact conducting a secret policy around the world that we knew nothing about before. …
While I accept there are good public interest reasons for individual leaks – even though I used to hate them when they made my life more difficult in government – I find it hard to see what public interest there is in a leak on this industrial scale. Even if individual cables reveal individual duplicity, the great mass do not. Their release simply makes the job of government harder and potentially puts the lives and careers of innocent individuals in countries other than the US at risk for no very good reason other than political voyeurism.
It is a reasonable question, being asked by a range of commentators.
There has inevitably been a fair amount of focus on Julien Assange himself. My favourite is Michael Totten doing the wicked thing of simply quoting him. Michael Totten also points out that there is not a lot of embarrassment for the US in all of this, but potentially quite a lot for others.

Which seems to me to capture the striking thing. There is a real sense in which we are in the world the Pentagon Papers have wrought. Not in the sense of what the latest Wikileaks doco dump suggests about the digital online revolution and the operation of politics. Though that is certainly a worthy topic for thought and discussion. But in the sense of a modern democratic polity of the openness of the US simply cannot conduct a seriously and continuously duplicitous foreign policy. Actors at all levels are aware that "secret for now" does not mean "secret forever" and may in fact not even mean secret for very long at all.

The Wikileaks document dump did allow the putting together of a very funny, and very biting, critique of the Obama Administration's Middle East policy. It allows us to see that, really, Israel and the "Jewish lobby" do not, in fact, run US Middle East policy. It provides good information on, for example, awareness of just how fraudulent the last Iranian Presidential election was. But there has been nothing which is all that much of a surprise to anyone who has been paying attention.

Indeed, if anything, we get an insight into sanity and rationality in operation. I loved this story in Jonathan Powell's piece, for example:
Following 9/11, Tony Blair had regular fortnightly video conferences with President George Bush. On one occasion, after a series of leaks of letters from the British side recording previous sensitive discussions, Bush stopped in mid-sentence, looked down the camera at the young official taking notes at the No 10 end and said: "Write that down carefully. I want to read it right when it is leaked."
This is the President of the US understanding the world in which he is operating. As do, it appears from the cables, lots of folk who are in the business of diplomacy.

But for sustained, clear-eyed sanity, it is hard to go past the email to Michael Yon from the US Secretary of Defense:
When we went to real congressional oversight of intelligence in the mid-'70s, there was a broad view that no other foreign intelligence service would ever share information with us again if we were going to share it all with the Congress. Those fears all proved unfounded.
Now, I've heard the impact of these releases on our foreign policy described as a meltdown, as a game-changer, and so on. I think -- I think those descriptions are fairly significantly overwrought. The fact is, governments deal with the United States because it's in their interest, not because they like us, not because they trust us, and not because they believe we can keep secrets. Many governments -- some governments deal with us because they fear us, some because they respect us, most because they need us. We are still essentially, as has been said before, the indispensable nation.
So other nations will continue to deal with us. They will continue to work with us. We will continue to share sensitive information with one another.
Is this embarrassing? Yes. Is it awkward? Yes. Consequences for U.S. foreign policy? I think fairly modest.
These are the words of the man who is second in command of all US armed forces. Does it give you comfort that he comes across as a very empirically-minded, very rational (these things tend to go together) guy?

It does me.

The Iranian regime is a menace: lots of highly informed, and powerful, folk in the Middle East think so. We might conclude that the Obama Administration is being too sanguine about it. But we are not confronted with either a deeply duplicitous, or a hyper-aggressive, SuperPower. Just one which has a lot of good information available to it that may be erring on the side of passivity.

The Wikileaks document dump may well pose dangers for particular individuals. Which is shameful, and an implication of the nastiness of much Middle Eastern politics. But, regardless of what one might think of Julian Assange and his actions, what he has actually revealed is a fairly sane, and fairly well informed, diplomatic world. Far more so than what the Pentagon Papers revealed. And, we may well consider, it is like that, to a significant degree, because of the Pentagon Papers being revealed. If there is a hero in any of this, perhaps his name is Daniel Ellsberg.

ADDENDA Further sensible comments on the Wikileaks revelations here (on the US policy being the same in public and private), here (on the debunking of conspiracy theories) and especially here (on being informative, but not all that surprising and not remotely transformative).