Curt Doolittle

Theme: Incentives

  • Response To Judith Curry On Scientific Storytelling

    Copied here from http://judithcurry.com/2011/03/06/climate-story-telling-angst. On Climate ETC: Judith Curry writes:

    If climate scientists were to use their past accomplishments to bolster their current claims, there would be less controversy, as it’s more difficult to undermine the credibility of established achievements.

    Which is a distracting straw man argument that posits the climate issue as one of communication rather than credibility. I responded with:

    [callout]Why do I know that what I say here will not make a difference? Because researchers in the physical sciences have perverse incentives because of the economic structure of labor in academic research. Therefore, scientists will not change their behavior because it would cause them to pay the cost of that change, and that cost is too high in relation to ALL THEIR OTHER COSTS AND BENEFITS. …. In other words: People in glass houses shouldn’t throw stones.[/callout]

    I’m an economist. (A political economist. I’m not an econometrician – the kind of people who in economics make the same mistakes as physical scientists – forecasting.) Whether economists are scientists is still open for debate, but we have a similar problem of credibility in our field, even though economics and politics are more naturally interdependent than are the physical sciences and politics. Regarding Past Achievements. If we study both the history of science, the history of political activism, and the history of marketing we end up with a very different conclusion than you state above, and storytelling wont’ cure it: 1) Science is riddled with as many faulty conclusions as successful achievements – in fact, of necessity, far more faulty conclusions than successful achievements. (Everything from the notorious Phlogiston theory, to the Mathusian error, to the 70’s fascination with ‘global cooling’ and the upcoming ice age. Furthermore, Apocalyptic pronouncements are almost universally false if we look at the history of ideas across all fields. The universe is far more equilibrial than we are. Christendom in particular, is anti-apocalyptic because the apocalyptic vision is attached to ancient sentiments.) 2) Far more than 90% of research papers that achieve public attention contain errors in reasoning that invalidate the premise. (Depends upon whose study you look at — but, it’s bad no matter how you look at it.) A random selection of papers from PhD’s and candidates from any number of fields from any university’s library will contain amateurish exaggerated conclusions from insufficient data, and erroneous interpretation. (Reasons? First, because graduate ‘training’ work is publicized, and second, because the short form peer reviewed process for scientific achievement appears to be far less valuable than the long form book process for scientific achievement.) 3) Nearly all research work that reaches the public contains overreaching editorial content that invalidates the research. This is a combination of the desire for attention by researchers and editorial license that seeks attention on the part of publishers. 4) Good science is meticulous. Bad science is not. (I lost a quarter of a million dollars of my own money backing climate science, and the November 09 scandal was the reason for it. The field must take responsibility for the shoddy science.) 5) It certainly seems that economics as a profession is more skeptical of it’s calculations than are the physical sciences, partly because economic variables are so complex that we are afraid to make pronouncements. We realize we can be descriptive of the past but we cannot be PREDICTIVE of the future in economics. The same applies for highly complex systems of all kinds, even the environment – the heuristics of which is not terribly different in intertemporal terms than are social constructs. And, as an economist I can observe that the physical sciences are reversing the accumulated prestige of the field for a single reason: the perverse incentives of the graduate training process in research universities. 6) Movements need to be skeptical of their acolytes. For example, certain musicians who employ the compositional structure of hymns to rock music, must sometimes specifically eschew association with Christian groups because they know it will impact their credibility with the broader audience. The fact that the international communist movement has effectively co-opted the green movement means that the entire research program is now effectively discounted as a political movement. The global warming movement must associate itself with commerce if it is to succeed. And it is not impossible to do so. Moral arguments are UNIVERSALLY masks for wealth transfers. Without exception. Scientists are notoriously ignorant of economics and politics. Where science succeeds, is where it unifies with the pragmatism of commerce. Not where it aligns with religion and politics. In economic terms, science as a profession is discounted in the marketplace because of a record of exaggerated claims and faulty advertising. It isn’t that scientists need to tell better stories. It’s that science needs to produce better work, and be extremely cautious with public pronouncements. Scientism is a religion if it believes it has a lock on forecasting the future, even of simple physical events. So, it’s about credibility. The degree to which the academic scientific community in the west, since the 1970’s has undermined scientific credibility is not understood in the incestuous circle of academia. To counter this effect: Write books that fully articulate an idea, not micro-papers. Falsify your own work. Seek to justify opposing views. Ruthlessly attack others who undermine scientific credibility in the public debate. Reduce the number of graduate students and hide their work unless it is extremely well argued. (this is a contrary incentive) It’s not about achievements. Because the achievements are currently dwarfed by a ocean of contrary-indicators. In fact, if we look at the data, it is not in academia that the great inventions are coming from. In fact, it’s not from the large commercial capital bureaucracies either – they only refine discoveries. Innovation appears to be coming almost entirely from the efforts of individuals. It’s not about storytelling. It’s about doing good science. And right now, climate science is insufficiently articulated for human beings to justify paying the huge cost associated with the apocalyptic visions. Human beings are rational. They just need a rational argument and to understand the costs and benefits in relation to ALL THEIR OTHER COSTS AND BENEFITS. Why do I know that what I say here will not make a difference? Because researchers in the physical sciences have pervers incentives due to the economic structure of labor in academic research, and the failure to separate research from teaching lines of business and faculty in large universities. Therefore, scientists will not change their behavior because it would cause them to pay the cost of that change, and that cost is too high in relation to ALL THEIR OTHER COSTS AND BENEFITS FOR THEM. In other words: People in glass houses shouldn’t throw stones.

  • Topic Warning: The decline in scientific credibility in politics is due to perve

    http://www.capitalismv3.com/?p=2404Controversial Topic Warning: The decline in scientific credibility in politics is due to perverse economic incentives in research universities, and the shoddy work that results from it.

    Source date (UTC): 2011-03-06 14:37:00 UTC

  • The Luddism Of Marxism And Anarcho Capitalism

    All human beings seek to game the market. The market system depends upon it. Without the desire to game the market and prices, we would have no innovation, no production increases, and no price decreases. In our market, innovation is the only ‘fair’ means by which we tolerate winning. Because winning in this market, means consumers reap the rewards of competition. Credit innovation is perhaps the most powerful advantage that the west has possessed. But all human beings seek to game the market. The market is a construct of man. As a construct it needs to be maintained. Not just from external forces, not jjust from governemnts, not just from cooperative organizations, but from individuals as well. Marxism is an effort to game the market. Anarchic libertarianism is an effort to game the market. Both seek to obtain the rewards of market activity at a discount. Both are luddite strategies. Both seek trade rather than market. Both are regressive strategies. The market, it’s incentives, it’s rules, and it’s communication system of prices are a construct of man. And like any other machine, it needs maintenance. It does not need direction – no human can provide the knowlege to guide it. Instead, It needs to protect against rust: the human propensity for corruption. The very propensity for curruption that guarantes that ihumans innovate to drive the market itself. And silly philosophies whether they be the marxist suppostion that people will not ‘cheat’ or the libertarian suppostiion that people will not act with corruption, are both no more than wishing that gravity did not exist, or that iron did not oxidize. Or, that there is a divine god who gives us scritpture and determines the course of our lives.

  • Answers To Questions On Libertarian Criticism

    I. Curt, what does “Exchange under trade is different from exchange under market.” mean?

      [callout:]All social philosophies, whether marxist or libertarian, which claim universal application of their philosophy to all social classes, are luddite, regressive, anti-market philosophies whose underlying premise is to obtain the benefits of the market economy at a discount by getting the other sects to subsidize their economic advantage.[/callout]

      As such, a market is administered, managed and “governed”. Trade is not, since portable several property does not require institutions other than self defense. ie: libertarianism (at least the jewish wing of libertarianism, not the christian wing of libertarianism) is a luddite philosophy – it is regressive. Protestant upper Middle Class Classical Liberalism which split into two sects, the ‘liberal secular humanist’ or liberal and collective vs the ‘libertarian’ or conservative and individual, does not make the error inserted by the lower class Catholics (social democracy and Jews (marxism and socialism). All social philosophies, whether marxist or libertarian, which claim universal application of their philosophy to all social classes, are luddite, regressive, anti-market philosophies whose underlying premise is to obtain the benefits of the market economy at a discount by getting the other sects to subsidize their economic advantage. I should note that economic democracy, is a class cooperative philosophy rather than a universalist philosophy — as long as national credit is only released by the consent of the house of commons (since all borrowing is at the expense of the citizenry as a whole). II. RE: >> I’ve understood that , rather than three coercive technologies, there are two: force (the tribal chief) & fraud (the witch doctor). I’ve yet to understand your three.

        III. RE: Politics market = city. city = polis. politics = the technology organizing people who are cooperating in markets.

      • Every philosophy is a little bit right and a whole lot wrong

        The left is wrong on it’s face, because of the problems of incentives and economic calculation. The left is wrong on it’s perceptions: the pie isn’t fixed and people are not even closely equal in ability. The left is wrong on it’s sentiments: they are universalist and familial rather than group and political. They are wrong in their anti-sentiments: Care and Fair are only possible if first there is Order, and Group Persistence. The left is wrong on it’s logic: value is subjective, value is marginal, value is not determined by labor in, but by value out – and factor prices are determined by market prices of the end good. THe left is wrong on very purpose of society: it is a market first, and a society second. A society is it’s market and it’s market principles – everything else is an artifact of that market. THe left is wrong on diversity: people are demonstrably more charitable in the absence of diversity. The left is wrong in everything but it’s ambition – individual happiness in the absence of stress for the purpose of a happy family, rather than individual success for the purpose of group competition. The left is right that people at the bottom most likely have a claim on some amount of the profits of the market in which they participate, and that declining prices and increasing standard of living, and public services, and freedom from consumption taxes are to some degree justifiable.

        [callout:More Right Than Wrong]Everyone is a little bit right.Everyone is a whole lot wrong. But libertarians are more right and less wrong than everyone else — assuming that is, that we seek prosperity, safety, health and choice for the maximum number of people at the minimum cost, at the lowest risk.[/callout]

        But the right is wrong on rhetorical debate – the republican model breaks at scale – instead we would need economic democracy. It is wrong on monetary policy. The right is right on all of those things that the left is wrong on. Most importantly it’s right on group persistence, obligatory group identity. They are right on military dominance of the seas and trade, and the trade system, and of the expansion of a monetary empire. They are right on intolerance of extra-market orders. They are right on meritocratic rotation of the elites through market or military acts. The libertarians (the middle) are wrong on many of their principles. They are wrong on immigration. Immigration of an underclass that speaks a different language, and observes a different cult is demonstrably detrimental to a civilization. THey are wrong on free trade. They are wrong on intellectual property. They are wrong on the origins of society and market. They are wrong on forgone opportunity costs. They are wrong on equality – libertarianism is as beneficial to the intelligent, and totalitarianism is to the strong, and communism is to the weak. They are wrong on redistribution – precisely because they are wrong on the origin of markets. THey are wrong on empire and military. They are wrong on private courts. THey are wrong on private police. But the libertarians are right on monetary policy, on economic calculation and incentives, on rule of law, on small government, on privatization, on economic democracy. Everyone is a little bit right. Everyone is a whole lot wrong. But libertarians are more right and less wrong than everyone else — assuming that is, that we seek prosperity, safety, health and choice for the maximum number of people at the minimum cost, at the lowest risk.

      • The Productivity of “Face” : Status Systems And Innovation

        [P]areto, in his study of society, and Haight in his study of emotions, and perhaps Axelrod as well in his study of human cooperation, do not attribute to Status Signaling the importance which it deserves. Haight is far too interested in the egalitarian assumption. Pareto, in his analysis of Sentiments, misses status signals almost entirely.

        Humans attempt to acquire and maintain status at all costs. We are acquisitive — in stimulation, experience and knowledge, in security and relationships, in opportunity, in mates and in Status. Because status increases the opportunity for mates, opportunities, security and relationships, stimulation, experience and knowledge.

        SOCIAL STATUS

        As acquisitive creatures, humans, like most animals with memories, sense ‘more’. More calories, more opportunities, more information: more anything. The human concept of Beauty is almost synonymous with “plenty bounded by symmetry”. Beauty is “more”. Symmetrical perhaps. But more none the less.

        Status is the human accounting system. We many need a vast number of conceptual and physical tools to delve into the sciences, and we need to evolve complex institutions in order to cooperate in large numbers. But every human being regardless of his intelligence is master accountant of the currency of status signals and their measurement. Without that talent we could not survive in society. People may differ in their ability to act on abstract knowledge in real time. however, they differ very little in their ability to detect and measure status signals.

        Status signals help us select mates. But, almost as importantly, without status signals we would not know whose behaviors to imitate. For learning creatures, status symbols are an necessary property of knowledge transfer within and across generations.

        If the human animal has any innate mastery whatsoever, it is in sensitivity to status signals.

        RULES

        “If the rule you followed brought you to this, of what use was the rule?”
        – Cormac McCarthy, “No Country For Old Men”.

        Of course, the answer is, that the rule has one or more uses, and one or more unintended consequences. In the west, the unintended consequences have been rapid change, an unhappy proletariat and class warfare that has led to the abandonment of our society by it’s upper classes, who, if unrewarded with status for their success, can find no reason to engage or acknowledge anyone in society. Therefore they have adopted the strategy that the purpose of attaining wealth is to exit participation in society and it’s market. Having elites abandon society is extremely detrimental for the propagation of knowledge and values. Elites, especially families that persist wealth over generations, are the most important people for the population to learn from in any society.

        DIFFERENT INNOVATION INCENTIVES

        Each culture uses slightly different techniques of social management. The novelty of the west is that the fraternal model, and jealousy of one’s status and influence, led to the solution to the problem of politics: competition between opposing forces. Politics was not solved in other societies. I suspect that the Asian and Mystical model of hierarchy is the self-limiting barrier that those societies erected when they became large and centralized. And conversely, that the advantage of the western political system which at different times consists of debates, competing manors, feudal alliances, and the competition with the church, and the need to keep the east at bay, allowed the civilization that was actually youngest, to compete more effectively at producing and USING technical innovation to compete with other civilizations.

        The West: “Draw Them Up” (Minority, Fraternal, Technical)
        Organizing Principle: As a minority we need advanced technology to compete. Advanced technology is expensive. We need to enfranchise the best men and their money in order to compete.
        Minority: Westerners are a minority. They combat both eastern decadence and local barbarism.
        Fraternal: Men join together to form a fraternity who elects a general, president, king, or leader.
        Technical: It is an action-oriented, real world, and technocratic system of utilitarian thought.
        Value: It’s predicate is to ‘leave the world better for having altered it for the purpose of man’

        The East: “Keep Society Stable” (Majority, Paternal, Equilibrial)
        Organizing Principle:
        Majority:
        Paternal:
        Equilibrial:
        Value: It’s predicate is ‘stability and conflict avoidance’

        The Middle : “Keep Them Down” (Majority, Maternal, Magical)
        Majority:
        Maternal:
        Magical:
        It’s predicate is ‘

        In the middle east, Magian (mystical) society, what we currently call Islam, one of the precepts is that all men must be treated with dignity. They do not need to learn dignity. THey do not need to demonstrate achievement. They are simply due it. This is a social strategy for downward distribution of, and dtermination of the TERMS by which status is determined and transferred.

        CORRUPTION

        For any society to create prosperity, the human tendency toward corruption (privatization) must be suppressed and re-channeled into some other behavior. THe division of labor, division of knowledge, and the flucity of knowlege and capital that allow nations to compete on the world stage against other natinos, cannot function without supresssion of corruption.

        Property rights train societies in the habits and skills of anti-corruption. Property rights allow the brightest to make best use of resources for the purpose of increasing prodution, and decreasing prices. Property rights allow for the greatest fludity and adaptation. But the abuses of property rights which we call corrption, the abuse of oportunity costs which we also call corruption, and the abuse of foregone opportunity costs, which we faili to call corruption, and even certain social and moral principles which reallocate status without action, are a form of corruption.

        KEEPING THE DEMONS IN THE PIT
        A Romanian friend of mine tells a parable. In hell, there are demons guarding the pits. In each pit is a nation of people. They demons are standing around the jewish pit. A new demon walks over and says “why aren’t any of you guarding the Romanian pit?” To which the elder demon replies “If one jew gets out, he’ll help another, until very quickly they all escape the pit. If one Romanian tries to get out of the pit, all the others will drag him back down.”

        Urban Black culture, and to some degree Hispanic culture, has an aspect of “keeping others in the pit”.

        The purpose of islam is to keep everyone on earth in the pit.

        That is the unintended consequence of Islam’s concept of dignity.

      • natural to attempt to benefit from a market economy while avoiding any participa

        http://www.capitalismv3.com/index.php/2010/11/the-nature-of-man/It’s natural to attempt to benefit from a market economy while avoiding any participation in it.

        Source date (UTC): 2010-12-05 17:40:00 UTC

      • Myths That Are Realities: Donald Trump vs CATO and Don Boudreaux

        On Cafe Hayek, Don Boudreaux references a CATO posting which in turn references a Wall Street Journal article, that criticizes Donald Trump for stating that we need more manufacturing jobs. The libertarian sentiments held by my friends at CATO and Cafe Hayek, inform them that productivity gains show that we produce just plenty of manufacturing – thank you very much. Wherein Don supports the Cato position that we do not need more manufacturing, and that any perception that we do, is a myth. (Articles are linked below.) But they are mistaken. A polity desires not productivity, but employment, and not simply employment, but competitive, status-enriching employment — and the lower classes in particular find their social enfranchisement in producing these ‘collective goods’ we call competitive production. They cannot achieve status through individualism, so they seek to find it in collective membership: They want to ‘do good.’ For example, a friend of mine in the advertising business, says that all agency guys want to produce ads that lots of people see, so that if they go into a bar or club or social gathering that they can talk about it and ‘get laid’. They use the term doing “Get Laid Ads”.  To some degree, this is kind of ‘fame’ or social status. The mechanic who produces a fine vehicle, or trendy bit of electronics feels the same. The janitorial staff at an elegant landmark feels the same way as long as they are invested in that cultural value system. Human beings flock to opportunities. Economics does not measure opportunities. It measures results. If we could measure opportunities, we would solve the problem of induction in economic theory instead of having to rely upon equilibria for our calculations. But we cannot read men’s minds. So we cannot measure opportunities. Yes, we can measure imbalances.  We can measure asymmetry. But not innovation. Not creativity. That said, whether we can measure it or not, human beings flock behind opportunities until they are exhausted. This is the reason for the boom and bust cycle: People flock to opportunities, and the flocks accumulate people in vast complex networks in order to exploit those opportunities.  The problem with fiat money and current monetary policy is that our attempts at keeping interests rates low block the information system that interest rates provide us with, and allow people to ‘flock’ well past when others who know better see the opportunity as having exhausted itself. This is the problem with monetary policy, rather that simple lending.  We should not provide unbridled liquidity tot he market. We should provide loans with terms, including terms of use. But, back to the topic of status-enhancing work, these cooperative bits of social membership through work are the processes that create social bonds in the post-religious world. They are more effective than services, redistribution and transfer payments at creating a polity .  And in case I haven’t made it clear, we need a cohesive polity in order for people to trust government, and to enable government to act on their behalf. So:

          IE: TRUMP IS RIGHT. Productivity gains explain the data, but they do not solve the problem of unemployment and underemployment. It is perfectly possible for us to compete with Chinese skilled labor in manufacturing high quality electronics, because they are relying upon labor not mechanization. It may require tax incentives. It may require loans. And it will most definitely require design and development of machines that are faster and better than human hands at manufacturing.  But that task as well, will create manufacturing jobs. Personally, I’m in the business solving for something else: maintaining the wealth created by the US ownership of the system of international trade, and maintaining western technological leadership.  Because,as a minority, only technology can maintain our institutions, our system of defense, and relative economic status. That’s the lesson of western civilization – rate of adoption of technology. Western civilization is a minority strategy for competitiveness: invest in skill, knowledge and technology and you will keep the east at bay despite our inferior numbers. DEFINITIONS:

          1. Productivity: the increase in sales revenue per hour worked.
          2. Employment/Unemployment: The percentage of the population employed.
          3. Unrealized Employment Productivity : The potential productivity gains that could be realized by allocating capital to unemployed resources. The error of mixing short-term return on capital versus long-term return on capital that is achievable through the competitive advantage obtained by accumulated built capital, accumulated knowledge (tacit knowledge), and accumulated skills (explicit knowledge).

          THE MYTHS

          1. The first myth is that capital is, or should be, fluid, and that more fluid capital will seek the greatest returns, rather than the maximum shortest returns. It takes a lot of money to create factories, and machinery and returns take longer than profits on consumer speculation.
          2. The second myth is that human incentives are monetary, rather than status driven. They are status driven first, and monetary second.
          3. The third myth is that economies can ENTIRELY specialize in agrarian, transportation, industrial, service, or research sectors, given the distribution of ability (IQ) in their populations. When instead, they must simply keep as many people employed as productively as possible. While we can attempt to keep the majority of the population living a middle class lifestyle (ie: consuming) we must understand that social classes are largely a function of ability, and that we must not fool ourselves that we must create status enhancing job opportunities for everyone in the spectrum if we want our political enfranchisement to mean anything at all.

          References:

          From CATO http://www.cato-at-liberty.org/a-wall-street-journal-column-understates-the-size-of-u-s-manufacturing/ A Wall Street Journal Column Understates the Size of U.S. Manufacturing by Alan Reynolds “…the manufacturing share of GDP declined markedly over this period as measured in current dollar value of output.” “In 1950, the manufacturing share of the U.S. economy amounted to 27% of nominal GDP, but by 2007 it had fallen to 12.1%. How did a sector that experienced growth at a faster pace than the overall economy become a smaller part of the overall economy? The answer again is productivity growth.” “Those who imagine “we don’t make anything anymore,” as Donald Trump claims, don’t grasp the magnitude of America’s industrial productivity gains.”

          FROM Cafe Hayek Trumped-Up Fiction by DON BOUDREAUX on DECEMBER 2, 2010

          Trumped-Up Fiction
          “If myths could be buried, this item would be yet another nail in the coffin of the data-less myth that Americans “don’t make things any more.” Alas, one can neither reason nor empirically demonstrate people out of positions that they reached without reason or empirical support.”

        • The Nature Of Man?

          The nature of man is to reap the rewards of a market economy, while spending his efforts on avoiding any and all PARTICIPATION in the economy. In other words, the vast majority of people would prefer to live in countries with advanced market economies, largely because of the quality of life that can be obtained due to the lower price of goods and services. On the other hand, they also want bureaucratic jobs, government jobs, union jobs, and any other kind of employment that insulates them from the unique and necessary property of the market economy: taking risks with one’s resources in an effort to fill the needs of others.

        • Two Founder Quotes Translated Into Forgone Opportunity Costs

          “To suppose that any form of government will secure liberty or happiness without any virtue in the people is a chimerical idea.” — James Madison Becomes: “Liberty represents the ability of each individual to achieve his greatest happiness, but only by servicing the wants and needs of others, and to do so by participating in the market. By doing so he reduces prices and increases choices, and creates value through exchange and decreasing prices through a division of knowledge and labor. It is an impossible supposition, that any form of government that we create, and any system of incentives and punishments we invent, will secure us our desired prosperity without the willing contributions of citizens, who daily pay for that prosperity by their expenditure of effort in production and exchange, but also by their forgoing of opportunity for gain by means of legal plunder, or by fraud, or by theft, and therefore avoiding paying the high cost of maintaining that prosperity.” “To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.” — Thomas Jefferson Becomes: “A man pays for his government first, in forgone opportunity costs, and second, by the expenditure of his time and labor in production and trade, and third, by the taxes he directly pays to the government. He pays with all three: since all three are avoidable, he pays with all three methods. Manners, Ethics, Morals, and most importantly, his avoidance of corruption: to live off the productive results of others without voluntary exchange – provide his easiest means of cheating – of obtaining the benefits of such a society at a discount. A man who does not pay the cost of manners, ethics, morals, AND observation of the cultural system of obligatory payments we call culture, is a thief. Therefore when the government ‘tolerates’ counter-cultural behavior it condones theft. When it supports people who do not make such payments, it pays one group to steal from another. Therefore, no man who makes payments to the state either in taxes or in forgone opportunity costs, should ever tolerate redistribution of his efforts to brigands, and thieves. The purpose of a government is to disallow people to obtain extra-market discounts while obtaining the benefits of participating in the market. A barbarian is someone who does not participate in the market, and in particular, someone who steals from the payments of citizens by avoiding the forgone opportunity costs we call ‘culture’.