This is Stevenclarkesblog.wordpress.com's Typepad Profile.
Join Typepad and start following Stevenclarkesblog.wordpress.com's activity
Stevenclarkesblog.wordpress.com
Recent Activity
The benefits of greater freedom are latent and diffuse. They exist as opportunities that each of us will discern and value differently. It is hard for people to come together to defend this freedom.
But when we want to restrict freedom, there is some specific problem or offense that is very blatant and hurts a very specific set of people. These can easily organise to restrict the offending freedom.
Freedom's supporters
"Why do liberals find it so hard to persuade Muslims about free speech?" asks Sunny. And he gives a good answer - that so many of those who are proclaiming their support for freedom are inconsistent or, as David North puts it, dishonest and hypocritical. As Jacob Levy points out, it is hypocriti...
@An Alien Visitor
I agree with you. I don't mean to demean things like the frequency of bin collections. In fact, competently doing "little" things like this day in day out affect our welfare more than more headline-grabbing events and initiatives.
And I agree that it is a happy day when the nation's greatest worry is bin collections. "Unhappy the land that is in need of heroes" etc.
And you seem to agree with me - "but in a sober manner". This was may real criticism of the piece. Not the substance, but the emotional language. What hope is there of a sober debate over emotive issues like immigration and terrorism if we can't talk soberly of more prosaic issues like bin collections.
Hyperbole in politics
The start of the election campaign has already produced silly hyperbole, with the The Tories claiming that Labour's spending plans would be "disastrous" and lead to "chaos" and "real poverty." The problem with this isn't just the obvious one, that we actually need more public spending and a loo...
It's the narcissism of small differences.
As political parties and politicians become ever closer together in terms of policy, background and mindset, all differences need to be exaggerated.
In a world where the average person gives little thought to politics, big, striking messages are needed to get through to get attention (at the expense of truth and sense of proportion). No wonder the press and politicians supply them.
I remember a Daily Mail front page a few months ago: "Bin Collections: The Great Betrayal!". If Judas Iscariot's worst crime was decreasing the frequency of bin collections, I doubt Dante would have placed him in the centre of Hell, having his head chewed by Satan.
Hyperbole in politics
The start of the election campaign has already produced silly hyperbole, with the The Tories claiming that Labour's spending plans would be "disastrous" and lead to "chaos" and "real poverty." The problem with this isn't just the obvious one, that we actually need more public spending and a loo...
What about Bob Shiller's ideas for livelihood insurance and macro markets?
If the welfare state is where goverments own shares of our human capital, can you foresee a world where such shares can be bought, sold and diversified by private entities?
Who bears risk?
There's one aspect of the collapse of City Link that deserves more attention than it gets - that it undermines the conventional idea that firms' owners are risk-takers. Better Capital's stake in the firm took the firm of a secured loan, which means they'll get first dibs on its residual value. T...
Regarding that last sentence, hasn't this happened to the political system as a whole.
Lacking any broad consensus about what politics is about or what it can or should achieve, we live in a hyperreal polity.
We are waiting for a strong leader to control the deficit and immigration without wondering whether they could do these things or understanding the consequences even if they could.
Despite whatever sense these leaders may have, they have to go along with the pretence.
The cycle of a disappointed public, and foolish leaders goes ever on...
Miliband's illusion of control
One of the oldest and best-attested cognitive biases is the illusion of control - our tendency to over-estimate our ability to control events.Ed Miliband's speech on the deficit was an example of this bias. He omitted to state what should be obvious, that the government is not in control of the ...
For those interested in issues around land and the economy, and LVT, I've been involved in a group called the Labour Land Campaign which aims to understand these issues and raise them among parties of the Left and unions:
http://www.labourland.org/
For worker control
Neal Lawson is absolutely right. Social democracy is "hopelessly prepared for the 21st century." This is because it is yet another example of an idea that has outlived its usefulness. Social democrats used to think that they did not need to challenge the fundamental power structures of capitali...
I'm a big fan of LVT in theory, but I doubt it's practical politics.
I quite like Tim Leunig's idea of Community Land Auctions, which uses the uplift in land values once planning permission is granted to give to local authorities (who can dangle enough incentives in front of voters to buy-off NIMBYism) - which might be one good way of increasing housing supply:
http://www.centreforum.org/assets/pubs/community-land-auctions.pdf
A couple of points on topic:
* Workers already have their human capital invested in their firm, won't this just invest their financial capital in the same firm, thus forgoing diversification?
* Why isn't their more worker control in the economy as it is? Are their barriers specifically preventing it? Or is it just one of those path-dependent things - hierarchical firms are historically dominant, so many people aren't aware of such alternatives in order to give it a go?
For worker control
Neal Lawson is absolutely right. Social democracy is "hopelessly prepared for the 21st century." This is because it is yet another example of an idea that has outlived its usefulness. Social democrats used to think that they did not need to challenge the fundamental power structures of capitali...
To what degree do pre-existing firms adapt to a changed environment, or do new firms emerge in a new environment they are better fitted to?
(i.e. to stretch the evolution analogy a little too far- is there a lot of Lamarckian evolution, with firms changing drastically to fit a changed environment, as giraffes were supposed to have stretched their necks the more they reached high leaves?!)
Against competition
"How Darwinian should an economy be?" asks Gilles Saint-Paul. Econ 101 says: maximally so. If competition is fierce only efficient firms will survive and so we'll achieve an optimum allocation of resources. That's the first theorem of welfare economics. However, there's an assumption here - tha...
@Guano
The world economy is not such a simple thing that if X was known about it in 2007, then it could confidently be predicted that Y would happen in such a way in such a timeframe.
One may very well know of certain risks, but you can't say with any certainty that they will occur and have these effects.
It is one thing to know that speeding cars pose a risk, another to predict that on the 20th November a blue Ford will collide with a red Honda on the M5 leading to a delay from 15:23 to 17:27.
Gordon Brown: an assessment
Gordon Brown's resignation as an MP has prompted many retrospectives. I suspect, though, that they are mostly misdiagnosing his strengths and weaknesses. First, his strengths. I agree with Jonathan that he deserves credit for keeping us out of the euro and for his response to the 2008 crisis. He...
Here's an interesting article by Noah Smith on what it means to have "predicted the crisis":
noahpinionblog.blogspot.co.uk/2013/05/what-does-it-mean-to-have-predicted.html
Gordon Brown: an assessment
Gordon Brown's resignation as an MP has prompted many retrospectives. I suspect, though, that they are mostly misdiagnosing his strengths and weaknesses. First, his strengths. I agree with Jonathan that he deserves credit for keeping us out of the euro and for his response to the 2008 crisis. He...
I wonder how much of the negative assessment of Brown stems from personal animus?
He was a dour, intellectual, socially awkward outsider who didn't follow the usual channels to power. The products of England's private schools and Oxbridge, with their breezy confidence and sense of entitlement, who populate the press (and other parts of the Establishment) never saw him as being 'one of us'.
Of course, this comment is just an excuse to wheel out P.G. Wodehouse's immortal line, "It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine."
Gordon Brown: an assessment
Gordon Brown's resignation as an MP has prompted many retrospectives. I suspect, though, that they are mostly misdiagnosing his strengths and weaknesses. First, his strengths. I agree with Jonathan that he deserves credit for keeping us out of the euro and for his response to the 2008 crisis. He...
@Luis
There is much in what I said there that is wrong, imprecise and incomplete.
I was just trying to recast Chris's distinction in view of what I'm reading about.
I think there is a mindset that aims to control the world, to conform it to some pattern it has in mind.
Another mindset is more ambivalent about particular outcomes and patterns, but is interested in what emerges from the free interplay of constituent parts.
I believe economics is predisposed to this second mindset - I certainly shouldn't have claimed more than that.
Immigration & spontaneous order
David Cameron said something interesting about immigration yesterday: People have understandably become frustrated. It boils down to one word: control. People want Government to have control over the numbers of people coming here. Let's leave aside the fact that Cameron himself has added to th...
I'm reading Nozick's 'Anarchy, State, and Utopia'.
He distinguishes between end-state principles and process principles.
I think many of the public judge politics on end-state principles. Does the world conform to some pattern I approve of? It may be an economic pattern (distributions of income and wealth) or it may be a social pattern (certain ethnic groups and values).
Economics is more concerned with process principles. As long as there are voluntary transfers in free markets with defined and enforced property rights, whatever outcome emerges is just and efficient. If regions and industries decline - well it was the result of a just process. If foreigners settle here in large numbers - it was the result of a just process.
I think end-state principles are more natural to human psychology - we judge the world as we see it.
To look behind at the processes creating the world requires a level of abstraction, and a certain level of a certain kind of education.
Immigration & spontaneous order
David Cameron said something interesting about immigration yesterday: People have understandably become frustrated. It boils down to one word: control. People want Government to have control over the numbers of people coming here. Let's leave aside the fact that Cameron himself has added to th...
I think there is often also a dichotomy between good economic policy and what feels emotionally right for most people.
On tax, many economists would think property and inheritance taxes are less of a disincentive to work than income taxes. But emotionally, people hate paying them (PAYE is less intrusive).
Immigration is good economically, but threatens people's sense of cultural continuity.
I'm sure you could pick many other examples, but economic reasoning and human psychology often conflict.
Economists vs politicians
Yesterday, I questioned George Osborne's economic competence. In one sense, though, it is a little unfair to single him out. Back in the summer, Ed Miliband wibbled that "we won’t have the money" and pledged to "balancing the books in the next government" - a promise which means excessively tigh...
@Chris
I have 'The New Financial Order' on my 'To Read' pile. I believe it will cover some of the material in 'Macro Markets', but should I read that first?
When you talk about social benefits diverging from private ones, we are in the realm of positive externalities - which introductory economics talks about and suggests as a legitimate role of government.
I've recently been reading Mancur Olson. In 'The Logic of Collective Action' he shows how hard it is for groups to provide public goods without some selective incentives or State compulsion of some kind.
In 'The Rise and Decline of Nations' he shows that groups can more easily form distributional coalitions which distribute resources their way at social cost. Perhaps the financial services sector is one of these coalitions - ripping off others at a huge cost to others (i.e. recessions.)
In that book though, he does suggest that some instability is good for weeding out these coalitions. In exposing the bad behaviour of banks, and perhaps in spurring corrective responses, some good may have come out of the crisis.
Encouraging financial innovation
Reading Luis Garicano and Lucrezia Reichlin's argument for the creation of a synthetic safe eurobond through which the ECB can conduct QE, an old question arose: why do we see so much bad financial innovation and so little good? I say this is an old question because it is now over 20 years since...
A good post, but I think you really need to discuss the counter-factual (impossible, I know).
How would a bright, working class boy who didn't rise as you did feel?
Your options would be far narrower than the ones you've had (although you may have been ignorant of them).
Your relative poverty may have made you more materially ambitious.
And would you still probably be a bit of an outsider amongst your peers.
I suspect you may have felt frustrated that you never reached your potential.
The scars of class
Inspired by John Goldthorpe's claim that downward social mobility is increasing, the Times (£) and Guardian have reported on individuals' experiences of social mobility. In this context, I am a pin-up boy for upward mobility. I was the first person in my family to get any educational qualificati...
It's perfectly reasonable to talk about the many problems of contemporary Capitalism, but isn't this a little tenuous?
If I were to use one of your hobby horses against you, I'd say availability bias is causing you to put to much prominence on a recent dramatic event, and motivated reasoning is leading you to conclusions that don't necessarily follow.
The capitalism question
Last night, I saw a good example of how the non-Marxist left and the right can both miss something important. Zoe Williams complains that Richard Branson is trying to monetize the mega-rich's desire for the consumer experience of space travel. Ryan Bourne replies that this is an "age-old critiqu...
@Chris I don't disagree, but again you grant the average MP too much latitude to talk sensibly.
All it takes is one anecdotal story of some mistake, and on certain issues, the Press is crying blood and demanding Something Be Done.
I'd love a political culture that is more reflective and deliberative. That is more humble and discriminating in what it can achieve.
There are a few MPs who talk like this, but it would require a push on far more fronts (from the media, voters themselves, political institutions etc) to achieve this change.
On a slightly different front, politicians abuse the existence of trade-offs. We've all heard of the triangulation strategy, where a politician puts up a Straw Man on his Left, and a Straw Man on his Right, and declares he alone has found the golden mean between the extremes.
"A culture of mistakes"
The Sunderland Echo has a useful phrase - a "culture of mistakes". In fact, such a culture extends far beyond the Mackems. In a world of complexity, bounded rationality and limited knowledge, mistakes are inevitable and ubiquitous. The question, therefore, is not merely how to avoid them but rat...
To some extent, this should be mitigated by a competitive party system.
For example, Labour would favour a more egalitarian tax system, the Tories one that rewards innovation more. Or, the Lib Dems should err on the side of civil liberties, the others on security.
The trade-offs come in the jostling for power between parties (and to some extent the coalitions within them).
"A culture of mistakes"
The Sunderland Echo has a useful phrase - a "culture of mistakes". In fact, such a culture extends far beyond the Mackems. In a world of complexity, bounded rationality and limited knowledge, mistakes are inevitable and ubiquitous. The question, therefore, is not merely how to avoid them but rat...
@Chris A characteristically humble comment.
What is your response to such criticism? Is the best that the cognitive bias project can do before the fact is to identify some propensities and their possible consequences in some circumstances? Could it only after the fact give a multitude of plausible explanations? Why then is it worth studying?
Is its greatest use be to convince us of our poor decision making ability, and so instill a healthy scepticism about our ability to understand, much less control, a deeply complex and uncertain social world? If so, it would be hugely worthwhile, inoculating us against the strongly held, useless gumpf that passes for most opinions. But I fear there will be an inverse relationship between those who are likely to study it and those who would most benefit by studying it.
On false consensus
Last night, we saw a great example of how cognitive biases can have catastrophic effects when Corrie's Rob confessed to the World's Most Perfect Woman that he had killed Tina. I suspect he did so because of the false consensus effect - our tendency to over-estimate the extent to which other peop...
The response to this post is depressing.
The very fact that a post about a celeb writer gets about 5 times the typical replies than other posts lends credence to Chris's statement that we live in a celebocracy.
Facts, & the Establishment
Jeremy Duns accuses Owen Jones of some factual errors. Insofar as he's right, this actually strengthen the substance of Owen's big contention - that the Establishment is a self-regarding clique. Owen's errors are not decisive ones; the claims he has got wrong are not load-bearing ones. Nobody is...
Let's assume that the parties increase the diversity of their candidates - and there's a much bigger ideological spread (skeptics, libertarians and Marxists), and greater representation of jobs and class backgrounds.
You've only fixed one part of the system.
The Overton window which so limits political possibilities is not all down to the politicians.
You'll still face a press that is obsessed with immigrants/Europe/public sector cuts and takes no interest in automation, secular stagnation or any other big issues that we face.
You'll still face a public that gives little serious thought to politics.
You'll still face powerful vested interests who would threaten bad consequences if certain policies were pursued.
I would strongly suspect that politics would return to being as unsatisfactory as it is already, despite the parties' efforts, because it is emergent from the entire political-media system, rather than from the failings of politicians (real though they are.)
Diversity trumps ability
Jon Lansman wants Labour MPs to be "ordinary people who have held normal jobs" rather than career politicians. There's a powerful piece of thinking on his side - the diversity trumps ability theorem. This is an extension of James Surowiecki's wisdom of crowds theory, but it has been mathematical...
@FATE I wouldn't advocate it for the Commons, but I wouldn't mind an element of sortocracy in the Lords (20%, say, of the Lords, for a term of 1 Parliament).
Diversity trumps ability
Jon Lansman wants Labour MPs to be "ordinary people who have held normal jobs" rather than career politicians. There's a powerful piece of thinking on his side - the diversity trumps ability theorem. This is an extension of James Surowiecki's wisdom of crowds theory, but it has been mathematical...
Caution is needed in what type of diversity the Labour Party seeks.
There is a huge drive to achieve gender equality in representation (no bad thing) and ethnic representation.
There is the risk that this just selects more career politicians of the right sex and skin tones, and pushes out those whose background and personality type would add real cognitive diversity.
Diversity trumps ability
Jon Lansman wants Labour MPs to be "ordinary people who have held normal jobs" rather than career politicians. There's a powerful piece of thinking on his side - the diversity trumps ability theorem. This is an extension of James Surowiecki's wisdom of crowds theory, but it has been mathematical...
I fear you are being as uncharitable to Mr Hunt as he is being to teachers.
He is as constrained by systematic forces that prevent good policy making as teachers are constrained by forces out of their control.
Politician's failings are more often systematic than individual. (Let's except the Rt. Hon. Mr. Newmark from that last sentence.)
Cargo cult thinking about virtue
Tristram Hunt, inspired perhaps by ResPublica's call for a bankers' oath, wants teachers to take a public oath committing them to professional standards. This contains a speck of sense, but ignores some big questions. The speck of sense is people have an urge to behave consistently. Once we hav...
More...
Subscribe to Stevenclarkesblog.wordpress.com’s Recent Activity