Knowledge is local in the economic system, meaning that the centre of that system can never actually access all of the required information — most certainly not in anything like a reasonable timescale — to be able to plan effectively.
Unsaid but implied is the idea that, given the tossers who get elected to do the planning, a central planning system wouldn’t work even if the planners themselves worked as hard as they could. But the real killer point is that we simply don’t know what it is that we’re trying to plan.
What actually is the algorithm? What is it that we’re trying to optimise with our plan for the economy? Tractor production has rather gone out of favour as a measure of human happiness, so what actually is it that we’re going to try and maximise the output of?
The standard answer is that we want to maximise human utility, which can descend into a form of madness where economists try to measure utility, although the concept is sound enough. But what the buggery is that? What blend of shiny-shiny, bling, housing, hip-hop concerts and smoked salmon actually maximises human utility as a whole?
As befits one honoured to write for El Reg, my desire for shiny-shiny is reasonable while my demand for bling, zero. I live and work in two separate countries, so my housing consumption is higher than many; smoked salmon is merely an interesting treat; and hip hop (in concerts or otherwise) provides me with negative utility. That mixture will be different for each and every one of us: I’m sure we could find several hip-hop fans among the commentards who enjoy jiggin’ wiv da beat.
In fact there are 65 million different mixtures of what contributes to human utility, in a country of 65 million humans. Don’t forget that as prices change, then so does each and every one of those utility functions. They also change as technology changes: what rational planner would have predicted the success of the iPhone back in 2007?
So, in theory, we don’t and cannot know what the hell we’re trying to plan.
Tim Worstall, “Gov’t control? Hah! It’s IMPOSSIBLE to have a successful command economy”, The Register, 2014-08-13.
August 3, 2015
March 11, 2015
January 13, 2015
In the New York Post, Kyle Smith has a go at de-smugging one of the smuggest countries in the world … no, it’s not Canada (but we’re pretty damned smug ourselves):
Want proof that the liberal social-democratic society works?
Look to Denmark, the country that routinely leads the world in happiness surveys. It’s also notable for having the highest taxes on Earth, plus a comfy social-safety net: Child care is mostly free, as is public school and even private school, and you can stay on unemployment benefits for a long time. Everyone is on an equal footing, both income-wise and socially: Go to a party and you wouldn’t be surprised to see a TV star talking to a roofer.
The combination of massive taxes and benefits for the unsuccessful means top and bottom get shaved off: Pretty much everyone is proudly middle class. Danes belong to more civic associations and clubs than anyone else; they love performing in large groups. At Christmas they do wacky things like hold hands and run around the house together, singing festive songs. They’re a real-life Whoville.
In the American liberal compass, the needle is always pointing to places like Denmark. Everything they most fervently hope for here has already happened there.
So: Why does no one seem particularly interested in visiting Denmark? (“Honey, on our European trip, I want to see Tuscany, Paris, Berlin and … Jutland!”) Visitors say Danes are joyless to be around. Denmark suffers from high rates of alcoholism. In its use of antidepressants it ranks fourth in the world. (Its fellow Nordics the Icelanders are in front by a wide margin.) Some 5% of Danish men have had sex with an animal. Denmark’s productivity is in decline, its workers put in only 28 hours a week, and everybody you meet seems to have a government job. Oh, and as The Telegraph put it, it’s “the cancer capital of the world.”
So how happy can these drunk, depressed, lazy, tumor-ridden, pig-bonking bureaucrats really be?
November 5, 2014
Tim Worstall explains that the so-called Easterlin Paradox — that economic growth did not make people happy — is clearly not supported by the evidence:
As background here: the basic paradox that Easterlin pointed to is that, past a certain level (roughly when we’ve become rich enough to solve the supply of basic creature comforts like food, shelter, clothing etc, something like a GDP per capita of $15,000 say), a country getting richer doesn’t seem to make the population any happier. While we’ve now got rather better data than he could work with, and thus we know that people do keep getting happier but at a much lower rate, that basic idea has proven very popular. Of course it has: for it’s allowed all sorts of people to argue that we don’t have to chase that Great God, GDP, and we can thus do things that make people happier and not richer. It’s a lovely argument to use when someone objects that taxing the heck out of the rich will reduce growth for example. For one can just riposte that more growth wouldn’t make people happier while taxing the heck out of the rich would. It’s used as the opening argument in The Spirit Level in this manner: as higher GDP doesn’t make people happier we can therefore concentrate upon inequality instead. And there’s many other such uses around and about.
I’ve never thought that was quite right and I said so. My argument being that it’s not the level of economic wealth that makes people happy or unhappy (above that basics level that is). Rather, it’s the direction of change of it. If a country is gradually getting richer then people will be happier than if the economy is stagnant or shrinking. And the association of greater happiness with the richer countries is not really because they are richer, but because in becoming rich those countries have obviously had decades, if not centuries, of gradually rising incomes: that very thing that makes people happy.
October 17, 2014
…to oppose the notion of equality of opportunity these days is to be thought some kind of monstrous ultramontane reactionary, a Metternich or Nicholas I, who wants by means of repression to preserve the status quo in amber. Members of young audiences to which I have spoken have almost fainted with shock when I have said that I not only did not believe in equality of opportunity, but to the contrary found the very idea sinister in the extreme, and much worse than mere egalitarianism of outcome. To say to a young audience today that equality of opportunity is a thoroughly vicious idea is like shouting “God does not exist and Mohammed was not his prophet” at the top of one’s voice in Mecca.
Those who believe in equality of opportunity must want, if they take the idea seriously, to make the world not only just but fair. Genetic and family influences on the fate of people have to be eliminated, because they undoubtedly affect opportunities and make them unequal. Ugly people cannot be models; the deformed cannot be professional footballers; the retarded cannot be astrophysicists; the small of stature cannot be heavyweight boxers; I don’t think I have to prolong this list, as everyone can think of a thousand examples for himself.
Of course, it might be possible to level the field a little by legislating for equality of outcome: by, for example, insisting that ugly people are employed as models in proportion to their prevalence in the population. English novelist L.P. Hartley, author of The Go-Between, satirized such envious suppression of beauty (and, by implication, all egalitarianism other than that of equality under the law) in a novel called Facial Justice. It’s not a very good novel, as it happens, but the idea is very good; Hartley envisages a state in which everyone aspires to an “average” face, brought about by plastic surgery both for the abnormally ugly and the abnormally good-looking. Only in this way can the supposed injustice (actually it’s unfairness) of the genetic lottery be righted.
Hartley’s novel is a reductio ad absurdum of a pernicious idea. By contrast, Roosevelt’s “measurable quality of opportunity” is roughly achievable by human design: only roughly, of course, because some (though few) will still be excluded biologically, and there are (again few) upbringings so terrible that they preclude opportunity for the person to become anything much. But the aspiration to deny no one a “measurable quality of opportunity” is not intrinsically nasty, as is the insistence on equality of opportunity. On the contrary; our problem is, however, that the political arrangements needed to bring this about already exist in most Western countries, and still we are unhappy or discontented. Thus we — many of us, that is — attribute our unhappiness to inequality of opportunity for fear of looking elsewhere, including inward.
Theodore Dalrymple, “A More Sinister Equality”, Taki’s Magazine, 2014-04-06
May 11, 2014
It is not, naturally and generally, the happy who are most anxious either for prolongation of the present life or for a life hereafter; it is those who never have been happy. Those who have had their happiness can bear to part with existence, but it is hard to die without ever having lived.
John Stuart Mill, Three Essays on Religion, 1874
November 19, 2013
Every time a liberal sees someone behaving badly they sigh and say, “They just need education,” but the solution to America’s problems is less education, not more. If we got over this myth that everyone needs infinite academia, we would have less unemployment, more manufacturing, a stronger economy, less student debt, and less school tax. The economy would be stronger and we would all be happier. Ironically, in an effort not to hurt anyone’s feelings, we developed a system where everyone has to go to college, even the stupid people, until we all feel like shit.
When everybody’s special, nobody is. Getting everyone into college means you have to dumb down the curriculum until it is nothing but meaningless drivel that has no application in the real world. Colleges aren’t going to complain when you stick them with more customers. They just take the check, lower the bar, and say, “Come on in.” But getting a gold star on your math test does not a computer programmer make.
When my dad was a kid in Scotland, Britain was practicing a very successful exam system called 11-plus. Dad came from a huge working-class family and as is often the case, one of them had an IQ much higher than the others. They all took their 11-plus test at age 11. His brothers did fairly poorly and he did incredibly well. The brothers were then diverted from academia and put into trade schools, whereas my father got scholarships for private school and eventually got a degree in physics from Glasgow University. The brothers did very well working at a printing press and now lead fulfilled lives as proud tradesmen. My father went on to develop sonar equipment that called the Russians’ nuclear-submarine bluff and helped lead to the fall of communism. This was all thanks to the 11-plus system and it worked beautifully for over 30 years until 1976 when the egalitarians decided it was cruel to admit that some kids are simply not as smart as others.
Not only is this kind of thinking the stupidest. It’s stupidist. What’s the matter with not being smart? As Hemingway put it, “Happiness in intelligent people is the rarest thing I know.” Have you ever seen a genius at a water park? He’s miserable. The only time people with an IQ over 120 are really happy is when they’re at work. They’re basically our slaves. Dumb people ride ATVs with their sons, go bungee jumping, and laugh their heads off when somebody farts. Many of them are also rich.
Gavin McInnes, “A Nation of Working-Class Dropouts”, Taki’s Magazine, 2013-08-23.
December 30, 2012
Remember the brief flicker of media interest in replacing the Gross National Product measurement with something called Gross National Happiness? It didn’t seem to catch on, which is fortunate, because the poster child for GNH is Bhutan:
Mainstream economists and almost all national bureaucracies around the world use measures such as Gross Domestic Product (GDP) or Gross National Product (GNP) to measure and track economic activity. These measurements are evidence-based. Hard data is aggregated and analyzed to come up with a picture of a national economy that is accurate and reliable. Based on such data, sound economic and development policies can be formulated. Not so for the Kingdom of Bhutan — a country ruled with an iron fist by its northern-based Buddhist Drukpa monarchy and elite with a transparent façade of democracy designed to obscure the true state of affairs in that country.
Having engaged in a massive ethnic cleansing campaign against its Lhotsampa minority of Nepalese origin from the mid 1980’s to the early 1990’s, Bhutan’s leadership prefers to use the amorphous and malleable measure of Gross National Happiness (GNH) to claim that their citizens — at least the ones that were not forcibly evicted from the country — are among the “happiest” in the world. Being a wholly subjective measure that utilizes no quantifiable data, GNH has been creatively utilized as a propaganda tool by the Drukpa leadership to project an image of Bhutan as a country of smiling Buddha’s. Little do most outside observers know the dark underbelly of this seemingly innocuous portrayal. It willfully ignores the history of ethnic cleansing and institutionalized racial intolerance against Lhotsampas inside Bhutan that continue unabated to this day.
[. . .]
With its record of ethnic cleansing and intolerance, it is morbidly amusing to hear propaganda that Bhutan is some sort of mythic “last Shangri-La,” a land of harmony and peace. Nothing could be more removed from the truth. The charade of ushering in a constitutional monarchy in the last few years and the ascension of the charismatic 31-year-old Oxford-educated King Jigme Khesar Namgyal Wangchuk has led to a fresh burst of official Bhutanese propaganda expounding the unique nature of their happy people and of Gross National Happiness in general.
November 29, 2012
If you read newspapers or magazines, you’ll have noticed a spike in the economics of happiness over the last few years. Everyone seems to be reporting results of happiness surveys from all over … few of whom seem to agree on how to measure it or in some cases even what it is that they’re trying to measure. Claude Fischer talks about this recent boom market:
Bhutan’s Gross National Happiness Commission uses citizens’ reports of their happiness to assess national progress, and former French President Nicholas Sarkozy appointed a Nobel-encrusted commission to study a similar idea; the United Nations places “happiness indicators” on its war-burdened agenda; American science institutions pour money into fine-tuning measurements of “subjective well-being”; and Amazon’s list of happiness books by moonlighting professors runs from The Happiness Hypothesis to Stumbling on Happiness, Authentic Happiness, Engineering Happiness, and beyond.
Since at least the 1950s, academics have analyzed surveys asking people how happy or satisfied they feel. We’ve used fuzzy questions such as, “Taken all together, how would you say things are these days — would you say that you are very happy, pretty happy, or not too happy?” to assess respondents’ morale. We’ve compared, say, women to men and the poor to the rich. Dutch sociologist Ruut Veenhoven started compiling the findings into his World Database of Happiness back in the 1980s.
So what set off the current frenzy? Economists found happiness.
In the decade after 2000, the number of articles on happiness in major economics journals roughly tripled. One economist told me a couple of years ago that his colleagues’ pursuit of happiness was depressing him. Nonetheless, established leaders and bright new scholars turned to the topic and brought with them the funding, media prestige, and political clout of the profession. That a guild which prides itself on scientific rigor and hardheadedness would embrace such a sappy concept measured in such mushy ways is, well, bemusing. Even Federal Reserve Chief Ben Bernanke drew on the new economics of happiness to find the moral for his 2010 commencement address to University of South Carolina graduates: “I urge you to take this research to heart by making time for friends and family and by being part of and contributing to a larger community.”
November 14, 2010
I can’t improve at all on Chris Myrick’s comment on this article:
Harvard psychologists have determined that we are happiest when: having sex, exercising, in intense conversations with friends, listening to music or playing. Aside from their use of an iPhone app to determine this, (http://www.trackyourhappiness.org/), I’m missing the news value.
However, I see potential for a follow-up study where researchers can determine whether receiving phone messages during sex, sport or engaging conversation puts a damper on someone’s mood.
June 21, 2010
If you enjoy reading with your children, wonderful. But if you skip the nightly book, you’re not stunting their intelligence, ruining their chances for college or dooming them to a dead-end job. The same goes for the other dilemmas that weigh on parents’ consciences. Watching television, playing sports, eating vegetables, living in the right neighborhood: Your choices have little effect on your kids’ development, so it’s OK to relax. In fact, relaxing is better for the whole family. Riding your kids “for their own good” rarely pays off, and it may hurt how your children feel about you.
Once parents stop overcharging themselves for every child, the next logical step is straight out of Econ 101: Buy more. When you raise your children the easy way, another child is more likely to pass the cost-benefit test. This doesn’t mean you should copy the Duggars with their 19 children; when prices fall, Econ 101 says “Buy more,” not “Buy dozens.” But whatever your priorities, the science of nature and nurture tilts the scales in favor of fertility.
As you weigh your options, don’t forget that the costs of kids are front-loaded, and the benefits are back-loaded. Babies are a lot of work even if you’re easy on yourself. But the older kids get, the more independent they become; eventually, you’ll want them to find time for you. So when weighing whether to have another child, you shouldn’t base your decision on how you feel after a few days — or months — of sleepless nights with a new baby. Focus on the big picture, consider the ideal number of children to have when you’re 30, 40, 60 and 80, and strike a happy medium. Remember: The more kids you have, the more grandkids you can expect. As an old saying goes, “If I had known grandchildren were this much fun I would have had them first.”
Bryan Caplan, “The Breeders’ Cup: Social science may suggest that kids drain their parents’ happiness, but there’s evidence that good parenting is less work and more fun than people think”, The Wall Street Journal, 2010-06-19