The actually-existing system of institutions at any given moment is the result of a wickedly complex interaction of forces. In particular, the character of heavily government-regulated market institutions, like ours, is the outcome of set of bargains between public opinion-sensitive legislators in the democratic body, between competing ideological constituencies within regulatory agencies, between possible targets of regulation and legislators, and on and on and on.
This is in fact the system Weisberg seems to demands. He’s at least OK with it. His problem with the status quo apparently has nothing to do with the deeper structure, or the chronically unstable strategic character, of this system. His problem is simply that the wrong bargains sometimes get struck. Weisberg correctly notes, in the vacuous manner characteristic to this immensely popular but truly sophmoric conception of political economy, that the last disastrously bad set of bargains wouldn’t have been struck had the contents of the minds of key players been different in certain ways. Indeed. So… what? So when the bargaining outcome leads to instability and massive structural failure, the correct response is simply to attempt to ensure that, in the future, people who believe certain things are not key players. This is preferably accomplished by ensuring that, in the future, no one of significance believes those things at all.
Is there any reason to believe this is not Jacob Weisberg’s way of thinking? Is there any reason not to think it is monumentally stupid?
The most obvious objection goes to the “hack” charge. There are an indefinite number of beliefs without which the actual bargain would not have been struck. Some of them are more causally fundamental than others. For example, remove the idea that the government ought to encourage and subsidize homeownership, and what do we have left of the main forces behind the financial crisis? I’d say we have nothing left. So there’s our culprit, right? And so in terms of Weisbergian political economy, we ought to shore up our system by discrediting that idea, which we can do in part by pointing out its crucial role in the crisis. “Down with the American Dream!” Is this what Weisberg does? It is not. Why not? Cough.
The deeper objection is that it’s just retarded to implicitly affirm a system so easily destabilized by ideological diversity. If a smattering of libertarian ideas can bring it all down, then the problem isn’t really libertarian ideas, is it? If the integrity of the economy in your preferred model requires a high level of ideological conformity, you might think to reconsider the wisdom of harnessing it so thoroughly to democratic political institutions meant to accomodate pluralism.
Weisberg’s implicit model seems to involve witty magazine writers ensuring the stability of our economic institutions by declaring some ideas out of fashion. We libertarians can only covet this level of intellectually maturity.
I think a more brief way of saying this is: “Weisberg's beliefs have two ways to fail. If governments are by nature incapable of regulating an economy well, then Weisberg's system will fail. But even if they are capable of regulating well, then they will still fail when “the bad guys” (GOP) take power (which they do about 50% of the time).” In contrast, lassez-fairre capitalism will generally fail only if markets are incapable of regulating an economy well.
I believe Brian Doherty has term for journalists like Weisberg. He calls them Horatio Hack. This term could be felicitous for any true believer in Naomi Wolf-style causality:
Read a book that had the word shrugged in it—> the nytimes says regulators at SEC shrugged—> Therefore, Atlas Shrugged caused the current financial downturn.
http://www.reason.com/blog/show/128704.html
“For example, remove the idea that the government ought to encourage and subsidize homeownership, and what do we have left of the main forces behind the financial crisis? I’d say we have nothing left. So there’s our culprit, right?”
No. There are other ways to encourage and subsidize homeownership for a certain class of borrowers; there are no other ways to have no regulation on a class of derivatives.
Anyway, if the fact that an anti-regulatory ethos enabled effective over-leveraging that turned what would have been a bad housing bubble into a global financial near-meltdown doesn't at least tend to falsify libertarianism, it would be interesting to know what would.
Michael, What would tend to falsify libertarianism is evidence that systems with governments less limited and markets less free than the kinds libertarians tend to recommend leave people better off than more libertarian alternatives.
The worst we have learned in the present case is that sometimes the hesitancy to further regulate markets that have grown out of a set of dangerously ill-conceived policies can make things worse.
The argument that, as long as we're going to continue making dogs rabid by injection, the practice of not shooting dogs endangers us all, is certainly funny. But, obviously, it wouldn't debunk the ASPCA.
Leaving aside the inherently subjective nature of what “leaving better off” means, I'd agree with the above comment. But I'd like to turn it around: what would tend to prove libertarianism is the existence of more limited governments and freer markets than the U.S. example, which also leave people better off. I confess to ignorance on this point – are there frequently cited examples of such systems?
This is, in a word, bullshit. In your little analogy, MBS's and CDS's should be the injecting of dogs with rabies, AAA ratings of MBS shitpiles should be the failure to shoot dogs, and government encouragement of home ownership should be some guy on the corner holding a “don't shoot dogs” sign. Leveraging an unregulated $60+trillion on top of a $1.5 trillion market is a bad idea regardless of the fundamentals of the market in question.
Your pointing out of inconsistencies and silliness on the left a la Weisberg is well taken, but your credibility falls at least as far or further when you claim that there is nothing but government encouragement of home ownership behind the current meltdown.
Will did not make this claim. Read closer. Hint: Will's claim is an example of an INUS condition:
Hong Kong.
Where would I find more detail on the system in Hong Kong?
I also wonder if a small, geographically tiny and culturally uniform society like Hong Kong is a particularly good test? i.e, perhaps the “cultural contract” in HK substitutes for the “governmental contract” of the U.S.?
Scott B, fortunately for us (and unfortunately for the long suffering people of Eastern Europe, Russia and Asia) we have ample empirical evidence that market based economies (a.k.a capitalism)–when compared to economies based on political allocation (a.k.a socialism) produce substantially greater material standards of living AND the institutionalization of individual liberties. This is the moral argument for capitalism. These ideas HAVE been tried in a variety of forms and the numbers are there–the market will always beat the State. BUT the Weisberg article seems to confuse a philosophy with an economic system and goes on to claim that a philosophy has now been “disproved.” Is that possible? I didn't think you could empirically test a philosophy, but maybe if wasn't always drinking during Bloggingheads I'd be clearer on this.
Given that Will said this:
…remove the idea that the government ought to encourage and subsidize homeownership, and what do we have left of the main forces behind the financial crisis? I’d say we have nothing left. So there’s our culprit, right?
…and this:
The worst we have learned in the present case is that sometimes the hesitancy to further regulate markets that have grown out of a set of dangerously ill-conceived policies can make things worse.
…and did not say anything to the effect that govt. encouragement of home ownership is “an insufficient but non-redundant part of an unnecessary but sufficient condition” for the financial collapse, I'm disinclined to believe that my understanding of Will's position is an example of failure to “read closely”. Your helpful hint amounts to an encouragement to reach conclusions that are completely unsupported by the evidence in front of me. Don't take it personally…I'm equally unwilling to assume Will is a member of the Flat Earth Society on the basis of what he's written here.
I'm pretty sure you're misreading the first passage. Will's not stating that's what he actually believes. Rather, Will's arguing that it is true if you accept Weisberg's logic.
Has anyone here besides me actually ever been to Hong Kong? It is pleasant to visit: largely modern, great food, elegant tai-tais, much visible wealth. However, since it has become part of China, you can see some problems. For example, corruption may be growing. Hong Kong never used to have a corruption problem. But this may be coming from the mainland.
And freedom of the press isn't stellar, it suffers setbacks, mostly perhaps in the form of self-censorship rather than open repression. Also note the immigration rate: just 0.5%, mostly mainlanders re-uniting with their families. The deal with Hong Kong is that you can be rich, but not free. We just don't see hordes of people from around the world banging to get into Hong Kong.
I would still rather be here in the USA, where the immigration rate is 10%, and despite all our obvious issues, people from around the world are still lining up to get in. This is telling, yes?
Well, certainly there are plenty of well-known examples of overly centrally planned economies that don't work. What I'm interested in, from a purely pragmatic point of view, is whether there is good empirical data, in the form of complete functioning systems, that suggest that the optimum level of government intervention is less than what we have in the U.S.
In addition to Matthew's point that Will is arguing hypothetically according to Weisberg's logic, consider the following causal claims:
Remove the presence of a lit match, and what do we have left of the main forces behind the forest fire? I’d say we have nothing left. So there’s our culprit, right?
Remove the dry underbrush, and what do we have left of the main forces behind the forest fire? I’d say we have nothing left. So there’s our culprit, right?
Remove the absence of firefighters, and what do we have left of the main forces behind the forest fire? I’d say we have nothing left. So there’s our culprit, right?
Each of these factors is an insufficient but non-redundant part of an unnecessary but sufficient condition for the forest fire. Similarly, there are a large number of potential INUS conditions related to the subprime mortgage crisis. The absence of any one of these conditions may have prevented the entire crisis, leaving us with no crisis and a number of insufficient partial conditions.
Will, I agree with you that that argument is funny, though also with DMonteith that it's really not the right argument.
But we could convert your dog example into a viable analogy if we consider the veterinary care of dogs generally, which consists in various human-engineered interventions into highly complex, natural, autocatalytic, self-organizing canine systems.
Call “Canesians” the faction that believes there are occasions where such interventions are indicated. Call “Canitarians” the faction that believes such interventions on balance are deleterious to the health of dogs and therefore should be avoided per se.
Suppose the Canesians mount a program of booster shots for dogs with weakened immune systems. Unhappily, some veterinarians fail properly to sterilize their needles (even though it is well known such laxity imposes severe risks). This causes rabies to be spread from infected to noninfected dogs. Absent the Canesian scruple that veterinarians ought to encourage and enhance immunity, then, the instant multiplication of rabies infections would not have occurred.
It turns out, however, that the incidence of rabies itself would have been far lower had a more robust program of rabies vaccination been implemented. But as a matter of course, the Canitarians had lobbied against such vaccinations, on the usual grounds; in this they had the sympathy of the head of the AMVA, so their lobbying efforts met with success in this particular case. So: No rabies vaccination program. As a result, (1) the initial multiplication of infections due to the lack of sterilization was much more widespread than would otherwise have been the case, and (2) there remains an elevated risk of subsequent infections (since there are more dogs that aren't vaccinated than there otherwise would have been).
End analogy.
Caveats:
1. Our confidence in medical interventions is higher than our confidence in economic interventions. (But query whether this confidence differential is all that justified, in terms of both possible underconfidence regarding economic intervention and overconfidence regarding medical intervention)
2. Our ex ante knowledge of the efficacy of rabies injections is higher than our ex ante knowledge of derivatives regulation.
3. The analogy imperfectly maps the mechanisms of spread.
4. The analogy fails to map the relationship between mortgages and secondary financial instruments.
5. ?
Nonetheless, even when you modify the background assumptions of the analogy with those caveats in mind, I'd still say the analogy shows the Canitarian position is to some degree discredited. Giving aid to dogs with weakened immune systems (or borrowers with weaker credit) is a desirable and arguably achievable policy goal. We have some confidence that certain prophylactic measures (rabies vaccination, derivatives regulation) can minimize the risk that local failures in planning and implementation will infect the broader population (other dogs, other market sectors and global markets). Thus, while the errors attributable to the Canesians here seem contingent, the errors attributable to the Canitarians seem essential.
What's interesting about this objection (which I agree with, by the way) is that it is precisely the same objection libertarians often give to the relative benefits of the Scandinavian social democratic/corporatist model over the U.S. model. For example, from P.J. O'Rourke's Eat the Rich:
Moral of the story: cross-country comparisons are difficult.
Depending on what you mean by “government intervention” you might be thinking of oh, Bermuda? That's a low-financial-regulation, high-liberty location with lowish taxes.
The paragraph in the original post from which I quote begins, “The most obvious objection goes to the “hack” charge.” I'm not sure how I'm to construe what follows as Weisberg's POV unless you and Will are both claiming that he objects to himself because he thinks he's a hack. Two sentences later, Will goes on to posit that govt. encouragement of home ownership is “more causally fundamental than other [ideas]” as a hypothetical point of agreement between Weisberg and himself that sets the stage for Weisberg's hackish contrast to Will's virtue. Again, no room that I can see for confusing Will's actual position here, but maybe I'm just slow or Will's just writing badly.
I'm not really interested in fighting straw men, so if you can clearly demonstrate that that's what I'm doing I'd appreciate it.
So far, I have Hong Kong and Bermuda as possible examples of successful libertarianism in practice. Are there more?
I note that neither of the above examples would qualify as a large, diverse, industrial economy. Supposing that no successful examples of a modern, diverse, libertarian economy and society exist, the explanation would seem to lie on a continuum of two poles. Either 1) successful modern economies almost inevitably create large, interventionist governments because of evolutionary traits of humans and human society, or 2) there is a certain level of interventionist government required to support the long-term functioning of such societies. Which is the chicken, and which the egg?
Of course, these cannot be original thoughts. There must be fairly extensive literature in the libertarian canon discussing these exact issues, and I'm hoping you all can point me in the direction of the most concise examples.
Thanks, but I'm not having trouble following your argument. I just don't think that it's what Will's arguing. His rabid dog analogy is pretty far from the causal claim you make above.
As for the other stuff, it's really not that complicated. 40 to 1 leverage is a bad idea. Especially when the 1 stands for 1.5 trillion dollars. It's also a really bad idea to allow such highly leveraged “assets” to mingle in an opaque fashion throughout the entire financial system in what amounts to an enormous game of three card monte. Sylvester McMonkey McBean, of star-bellied sneetches fame, was an amateur by comparison.
Your argument seems to be that if only tip of this huge inverted pyramid had been built better then it would be obvious that building pyramids upside down makes sense. Unfortunately, systemic risk doesn't work like that.
Oh ScottB, Bermuda is hardly libertarian in the sense you mean. It is still a British dependency. Its people hail from Britain, Africa, the Azores, North America and the West Indies, so it's mixed race, no doubt, and also rather religious, plenty of well-attended churches.
Hong Kong, as a “special region” of Communist China, certainly couldn't be called libertarian. It is also a former British dependency.
You say:
“So when the bargaining outcome leads to instability and massive structural failure, the correct response is simply to attempt to ensure that, in the future, people who believe certain things are not key players. This is preferably accomplished by ensuring that, in the future, no one of significance believes those things at all…Is there any reason to believe this is not Jacob Weisberg’s way of thinking? Is there any reason not to think it is monumentally stupid?”
Of course it isn't monumentally stupid, if the ideas he is discussing he believes to be bad ideas. Naturally, the world would work better if those in control didn't adopt bad ideas. Having no Marxists is a good thing. Having fewer is better than more. Same, in Weisberg's mind, with libertarians.
Secondly, it is commonplace to consider some groups to be useful foils. Republicans and Democrats frequently will acknowledge some benefit to the other party continuing to exist, although in a minority status, to prevent corruption or to guard against their worst excesses.
Whether this is particularly applicable to the subject matter is another question. But as a matter of logic, it isn't stupid in the least.
I have a more basic objection to Jacob's argument: its completely vacuous.
Basically what Jacob is saying is that if we had regulated certain derivatives than this crisis would never have happened. The main problem with his argument is that he does not give any kind of explanation as to why this is so. He doesn't even give an example of a regulation that would have prevented the crisis. I am completely at a loss to understand his argument.
Nobody on this blog has given a single argument as to how regulation could have prevented this crisis. Let me explain what this type of argument would look like. You would have to give some narrative as to why this crisis occurred and then present some alternative narrative with some specific regulation X and explain how regulation X would have prevented this problem. Even better would be to give a real world example. Allow me to give a prototype argument.
I think that the whole crisis is due to government encouraging very risk mortgage lending practices like zero LTV and regulations that prevent prepayment penalties and encourage non-recourse or jingle mail. In America banks cannot penalize prepayment whereas in Canada they can and in Canada their is recourse for mortgage defaults. Canada has no crisis and America does. Hence deregulation of mortgages to allow prepayment penalties, recourse in cases of default and regulation to eliminate zero LTV would have prevented this crisis.
The argument above is pretty crappy but its light years ahead of Jacob's argument. I have given an actual regulation that I think caused the crisis and I have given a real world case where the regulation is not present and there was no crisis. Jacob never even told us what regulation he had in mind. I guess we were supposed to magically read his mind and figure out the regulation ourselves. His argument is incomplete.
Oh, don't be a moron. The incentives were all wrong, without needing the least of government encouragement. The moral hazard alone, of a system that privatizes profits and socializes losses, is enough to ruin everything.
Dudes, this whole discussion has become waaaaay to divorced from reality.
Clearly now – the email & IMs have been released – a significant part of this is plain fraud on the part of the rating agencies. When they went public, they went from neutral, independent bodies to “service companies,” being paid by instrument sellers for ratings. Thus management allegedly forced employees to positively rate instruments despite the real risk, and to neglect to fix known errors in the ratings model.
Complete change of business model, and one that compromised the entire system. If you want to ask where new regulation should be, it should start there: to assure the independence and neutrality of ratings.
Calling each other “morons” and the like is just counterproductive. There was real crime here. The financial system is grown-up stuff for the real world, not simply signaling one's political allegiances. Please set aside your political biases and examine the facts as they are coming to light. Otherwise this discussion is pointless.
The problem with your analogy is that rabies just exists in nature. But neither the housing bubble nor the securitization bubble that magnified the housing bubble's effect were products of the free market. Both were created by bad government policies that distorted incentives: bad interest rate policy, bad tax policy, and stupidly written regulations that created an incentive for regulatory arbitrage by securitization of low-quality mortgages (read Arnold Kling on this last, he's particularly good). Yes, a bureaucrat-god could have come up with better regulation that would have prevented the mess: but part of the larger libertarian point is that the incentives and knowledge available to political actors are such that they are unlikely to do regulation that well in practice.
So, to bring it back to your analogy, what the Canitarians are saying is that the vets should lay off the dogs because
(a) they are drunk and Parkinsonian and likely to botch the vaccinations
(b) even more, *they are the principal carriers of rabies in the world*.
But Nicholas, housing bubbles also exist in nature. The fact that this particular housing bubble wouldn't have occurred is no more to the point than that that particular rabies epidemic wouldn't have occurred. It did occur.
And it occurred within a regime that implements a body of regulation. So libertarian, zero-regulation doctrine simply isn't apt. The extant regulation is a political reality. The rational policy question, then, is what action to take at the margin. And it doesn't appear that salutary policy action would have required anything like God-like omniscience; indeed, the argument is that rational and economically beneficial action probably would have been taken had it not been for the conviction that regulation should generally be avoided.
How exactly do you know subprime is neither necessary nor sufficient to have gotten us into this situation? Your argument is non-existent. I can also make argument without giving reasons:
Your a moron who was born from a frog. Why should we trust someone born from a frog. Obviously your frog nature was both necessary and sufficient to cause this mess. You bastard.
I think the argument above has about the same amount of content as your argument. Which is to say it has no content.
You also failed to address my argument. I was giving a prototype argument and claiming that Jacob's argument was insufficient. Your argument is insufficient for the same reasons. Namely all you have argued (without proof) is that “the system” is enough to lead us to these problem because it privatizes profits and socializes losses. First of all you are already wrong. There have been speculative crises where the government gave absolutely no help to the speculators. So it is possible to have these type of problems in a market system even when losses are not socialized! Secondly you, just like Jacob have failed to provide an alternative system that would have prevented this crisis and you have failed to explain how regulation could prevent this crisis.
A few examples of possibly beneficial regulations:
- Limits on the percentage of mortgages a bank can securitize, or a requirement that a bank must own (must not sell along) some percentage of the assets it securitizes.
Similar requirements for mortgage lenders. They must not be allowed to pass along all risk. They have to be incentivized to limit risky loans.
- Limits on the complicatedness of derivatives (e.g. disallowing CDO's-squared)
- An exchange for derivatives that clarifies the exposure of individual players and the market as a whole.
- Credit rating reform: regulations to ensure that rating agencies have incentives to properly assess risk of securities. One intriguing idea is to mandate that pay to ratings agencies is in some way conditional on the accuracy of the assessment.
There are probably many other possibilities. I'm sure there will be a vigorous debate over the next few years.
Great you have named some regulations. That step 1. Progress.
Now the next step is to show that the regulations would actually be beneficial and enforceable. I don't think the complicatedness regulation is enforceable since it requires a measure of complicatedness. Regulation 2 I agree with but I don't think it would have prevented this crisis. Regulation 3 also would not prevent anything because it penalizes after the fact. There is also the possibility that all these regulations could make things much worse.
Naming regulations is the first step. The next step is to give real world or theoretical evidence of the effectiveness of the proposed regulation.
Interestingly you avoided any regulations that would limit the defaults and riskiness of mortgage backed securities. Like for instance allowing prepayment penalties, forbidding ninja and zero LTV loans, allowing recourse mortgages (no more jingle mail). There is real world evidence of the effectiveness of these types of regulations, namely Canadian banks.
I think the point here, like Will said, is that the fuel behind this fire was the mortage practices encouraged by the government. However, I think it could also be argued that though this was the problem this time, it needn't have been since there probably should have been more regulation in certain areas of the financial market. That is what Will was trying to say I think. If libertarians learned anything, it is that maybe there should have been more regulation in this case. Libertarians are not anarchists, and to say that something caused by the free market dooms libertarianism is ridiculous.
The moral hazard now comes into play when the government bails out these institutions. Even having a concept of “too big to fail” is a moral hazard, as that encourages this type of behavior with the thought always in the back of their minds that if it goes south, they will get bailed out anyway. In a real libertarian world, people would be held accountable for their risks, and therefore people would be more cautious when taking risks, or not take them at all.
We might consider that failure to regulate these 'securities' was willful and part of a bargain to 'encourage' lenders to make 'sub-prime' (read “bad”) loans.
It is known that regulatory reform of the mortgage GSEs was proposed and opposed and defeated. Was Barney Frank just ignorant of the potential problems?
Or was he part of the bargain made to allow lenders to find a way to make money off of bad loans to fulfill policy goals?
The fact of the crisis occurring in a regime of extensive regulation tells us that having a regulatory system is no guarantee of effectiveness and further, can manage to coordinate problems into a crisis of GSE proportions.
Proponents of regulated economies like to cite some ideal state where the regulatory regime works in harmony with the market producing optimal results, even after failure after failure. Recall that a large justification for the creation of the FED was to prevent big depressions. The FED was established in 1913, sixteen years before the market crash of 1929.
It seems obvious in citing the mistakes of the FED board and other interventions of government at the time that they did not know what they were doing and thus did not comprehend the nature of markets.
Seventy-nine years later, they still don't.
They're all Keynesians now.
I think what can be determined from this is that in a regulatory environment, a certain balance is required. If tilted too much one way, the business environment can be stifling, tilted too much the other way, the business environment can get too “exuberant”.
This does not address the desirability of a regulatory environment except in the sense that the knowledge to create proper balance can be lacking, giving rise to the constant need for further “adjustment”.
A politically/centrally regulated economy is not stable. The feedback loop has to much delay and distortion.
Will,
I bounced here off Hit 'n Run. It impresses me that the Weisberg column has inspired a small flood of excellent libertarian short-form essays, yours included.
It would be of value to have columns like Weisberg's come out on a regular basis, to hone the cadres' skills and build the literature. It would be worth paying for this. Lucky for us, there are no shortage of volunteers providing targets.
And, your rabid dog analogy was golden!
Keep up the good fight!
Michael, I find I am partial to your “Canesians” versus “Canitarians” argument perhaps because I have been partial lately to using medical analogies when describing the current financial crisis to people. It is fashionable at this time for people to attempt to discredit free market economics because something more “rational” would not have let the current crisis happen. My response is that planning so far has been quite rational and scientific if you consider the time dependency of our macoeconomic models: Like Black and Scholes, the model is good most of the time–except for those relatively rare, pesky up-or-down spikes of activity. I liken this to the fact that our own bodies work pretty darned well a vast majority of the time except for those pesky heart attacks or strokes that would kill you. What to do about those heart attacks or strokes? We can take measures to prevent them. If those measures are of uncertain efficacy, such as the consumption of red wine, if the cost is low “it doesn't hurt to try.” If the preventative measures are of high certainty, such as regular exercise, then we try our best to implement them regardless of the cost (this doesn't account for the cessation of cigarette smoking however). We can also try to measure our physiology for signs of an impending heart attack or stroke so that we can either take evasive measures or prepare ourselves for prompt corrective action should the event occur. We can also work on effective methods for damage control after the event. As far as preventive measures such as the difficulties of cessation of cigarette smoking are concerned, this can serve as an analogy for the effects of politics in our economic system.
Being someone with a physics and engineering background, I very well appreciate the constructive role non-linear dynamics can have in complex systems. Like with the human body, I like the idea that the body should be left to itself and it will function well most of the time. However, as technology improves we humans have found it useful to measure, intervene or downright replace parts of broken anatomies with something artificial–our solutions tend not to be perfect, and can leave us wanting for the original body once again. That equation however changes as technology improves. What will happen when artificial eyes are developed that are demonstrably better than what nature has ever provided, and impose a relatively low cost of adoption and maintenance? What about better, stronger and faster limbs? I remember as a child thinking, “Yeah, it would be cool to be Jamie Sommers–the Bionic Woman!”
As information technologies improve and the cost of their adoption and maintenance decreases, I am all for inserting certain types of artificiality into our economic system such as improved measuring systems (were the cost of Sarbanes-Oxley lower!), damage control systems and prevention systems if the efficacy/cost equation be optimized.
So, who is for complete non-intervention of your personal health?
The pretty-near centralized planning of the United States' economy during WWII was successful for the time, but fell apart by the Ford era (mid-1970s). Nixonian price and wage controls were not effective. Ford's “WIN” campaign was a joke. It could be that non-capitalist systems can be effective under some circumstances, for some periods of time, with some cultures, under certain scales.
Part of me as a suspicion that certain forms of increased regulation to our free market economy may be effective (such as transparency regulations, otherwise known as “measurement”) if their associated costs can be minimized (e.g., through improved information technology infrastructure). I also suspect however that even this can have a limit as we eliminate the measurement problems we may find ourselves face-to-face with the uncertainties of genetically constrained human psychology.
Perhaps the next advance will have to await wide spread genetic reprogramming of the human species.
Hi Nicole, one other thing I had in mind was that medical intervention has an extensive history of, well, f***ing up on the way to discovering what kinds of interventions actually work. (This is somewhat related to the point about improving technologies.) The success rate of <a href=
http://en.wikipedia.org/wiki/Theodoric_of_York“… of York might have led some to posit an a priori principle that nonintervention is always better, but now we know that would have been a mistake, perhaps caused by a toad or a small dwarf living in the stomach. In sum, the appropriate induction to draw from the history of science and technology seems to be that cautious experimentation is a better bet than principled nonintervention.
Michael, very well said! (I love the Theodoric of York example. I haven't thought of that character is years! It makes the point well.)
Hi Nicole, one other thing I had in mind was that medical intervention has an extensive history of, well, f***ing up on the way to discovering what kinds of interventions actually work. (This is somewhat related to the point about improving technologies.) The success rate of Theodoric of York might have led some to posit an a priori principle that nonintervention is always better; but now we know that would have been a mistake, perhaps caused by a toad or a small dwarf living in the stomach. In sum, the appropriate induction to draw from the history of science and technology seems to be that cautious experimentation is a better bet than principled nonintervention.
Michael, very well said! (I love the Theodoric of York example. I haven't thought of that character in years! It makes the point well.)