I Break For Inefficiency

HIYA, GUYS AND GALS. I'm at work.

It's 3:21 in the afternoon, and I am, for all intents and porpoises, still on my lunch break. I closed a few tickets this morning, and checked out some old printers (notably, one in Central Processing, entrance to which is predicated on the wearing of gown and hairnet)--but since going on lunch at noon, I've had nothing to do. It irks me 'cause I'm bored stupid, and it's a lovely day (but not very much, because those who know me know I know I could just leave if I really wanted to and face the consequences), but more than that I'm frustrated with the immorality of waste, and I'd like to write about that immorality here. (But not, I might add, without the appropriate sense of irony.)



A capitalist system of resource allocation is only possibly morally tenable if wealth follows the creation of happiness. In an ideal system a carpenter, selling a beautiful desk, is recompensed at market prices (which are understood, in aggregating automatically the preferences of all buyers and sellers, to be fair rates) for his efforts and time--precisely in proportion to the total contribution to societal happiness his desk represents. If the buyer was perfectly informed about how happy the desk would make him (as he is assumed to be), and the market price of the desk included the cost to the environment and to future generations of lumber harvesting, then this system would channel all wealth to the producers of value who make life, on balance, better. Only by creating happiness could you gain the entitlement to consume resources and enjoy (material) happiness of your own. As long as you don't believe in any hippie nonsense like inalienable rights, this works great.



If our carpenter claims his desk will last for 20 years with normal use, but in reality his workmanship is shoddy and it falls apart sooner than that, it will be sold at a price that represents the value to the buyer (assume he is a butcher) of the desk described, not the one actually sold. This has two effects: first, it enables the carpenter to steal value (happiness) from the butcher, because the (say) $100 premium the carpenter was willing to pay for alleged quality is produced by his butchering but creates happiness for the crooked carpenter and not himself; but by the same token the carpenter earns $100 of consuming power without creating any value, which means whatever he spends the $100 on (say, a stripper), the initial transaction will have contributed less to total social welfare than it could have. A better carpenter could have used the same resources to make a better desk, which would have given him the same $100 of happiness that the poorer one receives, but it also would have given the butcher $100 of value in the form of a good desk. The cheating carpenter deprives society of the chance to enjoy that extra value forever. Resources, in other words, can be wasted; all it takes is a little imperfect information.

That's me, now, sitting at my (shoddy, laminate pressboard) desk. My time is the wood, and the value it's supposed to create doesn't actually exist, because there's no work for me to do. (Many summer positions in non-regional industries, I'm given to understand, have this problem; since the full-time staff can handle the workload during the winter, when there's actually more to do, my job doesn't actually need to exist. And the bureaucracy is afraid to reclaim the budget for it, because no one outside of IT has any idea how it works or how much it costs.) I'm being paid to waste time--and in doing so I am not only poaching value from the public and the hospital's donors; what's more, the time I'm wasting is losing forever the chance to ever be of any value to anyone, one second at a time. It's both stupid and wrong.

Also I'm flippin' bored.

If I Only Had a Heart

The following is at least possibly an unabashedly Conservative version of an intellectual history I have very little right to tell!

CHURCHILL, DISRAELI, OR TWAIN famously might have quipped that anyone who is not a liberal at the age of 20 has no heart and anyone still a liberal by 40 has no brain. I've always wondered why this should be the case, since it seems to me that a person ought to be as likely to become disenchanted with the crassness of individualism as with the insidiousness of the nanny-state as he gets older. It's my intention with this post to clarify the histories and essences of both Left and Right, because I want to remind everyone that if your "Left-Right" spectrum isn't more than a few decades old, you're missing part of the picture. And it's cool.

The Left-Right division in politics traces back to the French Revolution, when members of the French Legislative Assembly sat on the right if "reactionaries" and on the left if "radicals". (Even then, the criteria for Rightness and Leftness were extremely fluid. Those who supported a very limited monarchy in the British style were considered Left before 1791 and unconscionably Right--reactionary--afterwards.) From the beginning, then, Left has always meant progressive reform and Right has meant gradualism and respect for tradition; that much, at least, remains true today. So when Democrats are for change and Republicans aren't, you can't blame either one of them. It's built into the ideology.

In 1791, though, the leftists tended to support laissez-faire capitalism (since it meant less control by the nobility and crown and more freedom for the common man), and the Right preferred to keep allocative control with the crown; from the political side, the Left stood for equality in the form of inalienable rights while the Right defended clerical and aristocratic privilege. Since Enlightenment philosophers like Locke and Montesquieu--along with early ("Classical") economists like Smith, Ricardo, and Say--also advanced theories of individual liberty, they called themselves Liberals. And standing against privilege, Divine Right, protectionism, and arbitrary oppression by government, these liberals fell squarely among the eighteenth-century Left. But in the 1800s, thinkers like Marx and Engels developed a radical interpretation of the notions of equality advanced by the liberal Left that was characterized by total equal distribution of wealth, equal sharing of allocation decisions--the abolition not only of feudal privilege but all property rights. Suddenly the followers of the old Left, who did support the individual's freedom to do business and pursue his own happiness, became the Right. This is why I've been using "Left" instead of "liberal", in spite of the quotation I started with: liberalism started Left, then it became Right, and in many cases it's now Left again. Libertarianism and anarcho-capitalism are the ideal types for this new economic Right--just as perfect communism is the ideal type for the economic Left. Much of modern Leftism has embraced anti-Globalization or anti-free-trade views, on the grounds that trade facilitates the exploitation of the world's poor, in spite of the fact that the Classical liberal economic theories of Smith and especially Ricardo held that trade holds mutual benefit for all parties. Thus we can talk about liberal markets that are representative of the economics and philosophies of the Classical Left but are now more directly associated with the modern Right--small government, high levels of individual freedom and control of one's own economic decisions, and as little regulation on business as is feasible. The modern Left, meanwhile, stands for progressive tax-and-transfer policy, more class-specific legislative attempts for create “fairness”, and more regulation on business interests and government intervention in markets. In other words, the economic goals associated with Left and Right have made a complete one-eighty since 1791.

To make matters worse, the social implications and goals of the Left and Right have flipped since then too: the Right has reconnected with its traditionalism and clericalism, which means that it still occasionally objects to (new Left-) liberal ideas like gay marriage that probably fall within the boundaries of the older-Right-original-Left ideals of individual liberty (eschewing them for the "community liberty" side that represents, in this case, religious freedoms). Meanwhile, the Left's post-Marx, post-Keynes orientation calls for more and more government control not just over capital but also over individuals' positive liberties in order to secure negative liberties for the community. This is the source of gun control, for example. I doubt very much that Robespierre would have thought very highly of government gun control--but I think Burke might have appreciated it!

Let's review: the new Left is the old Right, although it is also the old Left (though not the aspects which became the old new Right), and the new Right is the old Left, except where it is the old Right. Clear as mud. For now, Left is for progressive tax (where tax rates vary with ability-to-pay), Keynesian economic principles (government consumption is a major component of income, because spending is high), and higher levels of market interventions (subsidies, rent ceilings, regulations); in other words, it tends to sympathize with the consumer and the employee, where Right tends to sympathize with the producer and the employer.

So it seems to me that young people, who tend not to own businesses or pay very much tax, can more easily get excited about redistribution of wealth, punishment of the big corporation, and so on--and as people get older, they get more and more likely to rub up against Leftist regulation in their business lives, paying more taxes, supporting social programs they don't agree with.

Thus the quip should be revised: anyone not a liberal at 20 owns a business and anyone not a conservative at 40 is probably in a union!

Preliminary Expectoration: On the Bull Market

I WANT TO SHARE a bit of science dropped by my man Gideon Rachman last week, because it's a great idea.

We hear occasionally about a "marketplace of ideas," which is a tired term that means that in an open society, anyone can produce ideas and only the good ones will be purchased. This is sometimes problematic, insofar as it gives us a reason to tolerate things like Holocaust denial, on the grounds that no sensible people will "buy" it--but it also provides a flexibility for creative output that no heavily censored society could provide. This "market" has a mechanism to communicate the relative value of certain kinds of ideas (and thus help to allocate intellectual resources) that works just like a price system in any other market: when people pay attention to, implement, and especially agree with a certain kind of ideas, minds flock to try to produce comparable ideas. (It may seem like an idea is unlike a product in the sense that an idea must be original to be sold, but that isn't the case. In fact, just like products, a slew of factors like marketing make it possible to get rich selling an idea you did not invent. But just like the Model T or the iPod, a really good idea still changes everything. Sometimes something hits the idea market that is so obviously successful that everyone reorients themselves around the new paradigm.)

Rachman's insight is that this market, like any other, is subject to wild swings, bubbles and busts. Actors in the market perceive trends and jump on the bandwagon, trying to strike it rich. They can do this as consumers, by repeating ideas they think will be valuable at cocktail parties (analogous to buying shares in a company because you expect it to pay dividends), or as producers, by thinking and then talking and writing about fashionable issues or, more dangerously, in fashionable ways. Just like in a stock market bubble, when too people are moved by the share price of an idea instead of its fundamental profitability, sooner or later there's a bust and whole idea industries can deflate. Just like in 2000 it became suddently unpopular to be involved in the dot-com industry, so too are we now finding it unpopular to believe in the kind of Reagan-Thatcherite market capitalism whose 30-year bubble has just burst.

The United States Federal Reserve has made it its policy to clean up after bubbles post facto rather than try to anticipate and deflate them--again, roughly analogous to our declining to use government thought control to prevent people from getting too excited about any one set of ideas, for who can say whether an idea is priced too high until after the fact? It's absurd, as well as dystopian science fiction, to consider regulating the marketplace of ideas. But neither is there a central bank which can control the currency people use to buy ideas.

We have yet to find a way to calm the positive feedback loops that form in asset markets. I wonder if there's a way to make people more skeptical about the ideas they buy?

(I'd write more but there's work to be done. If anyone shows interest in this kind of discussion in comments, I'll be happy to write the rest.)