2021-02-08

The Tyranny of Merit?

PXL_20210208_174839188 The Tyranny of Merit or What’s Become of the Common Good? is a book by Michael J. Sandel. You will without doubt find people speaking kindly of it, for example here. For my part, I think it a poor book badly written.

By coincidence I'm (re-)reading Popper's The Open Society and its Enemies, and I find the conflict between rationalism and irrationalism has become the most important intellectual, and perhaps even moral, issue of our time. This book stands on the wrong side of that division: it is polemic, rhetoric, populist, careless of contradiction and fact.

Of course, it is not entirely without merit (fnarrr). It correctly notices that those who have risen through their own merit may well come to believe that they have risen through their own merit, and disdain those who have not so risen; whilst those who have failed to so rise may come to despair. Unfortunately, that's pretty well it for the good bits. And when his editor said "that's an excellent start Michael but I'm afraid you'll have to pad it out a bit" he duly did so.

His central problem is his failure to understand meritocracy4. For him, meritocracy is where the the "best" people rise to the top and/or are in charge, and get the rewards they "deserve". By using the word deserve, he tangles it all up in morality: if I am born clever, do I really "deserve" the rewards that come with that? But this is wrongthink; the word "deserve" is confused. Instead, the world pays people well who are able to do useful things; note that we're talking at this point about an idealised meritocracy; the issue of are we a fake one can come later; at this point we're interested - or he is - by whether a meritocracy is just1. There's no requirement or even meaning to asking if those people "deserve" those rewards. Instead, they are paid them for a reason: so they will do that job, instead of a different one. It is as stupid as asking what the "true" dollar-value of a product is; the answer is always "what people will pay for it".

Eventually (p 125) he comes to consider two other systems: free-market liberalism (a-la Hayek) and welfare state liberalism (a-la Rawls). He presents Hayek giving exactly my argument. He presents Rawls saying... something, but I didn't pay much attention; I already know I disagree with Rawls. So how does he get rid of Hayek's view? He doesn't. He just says "morally and psychologically, the distinction between merit and value becomes vanishingly thin". But this is no answer to a defence of "true" meritocracy. It only leaves him the rather thin "disdain" idea.

The assertion (p 136) that Hayek doesn't understand that things other than market value, have value, is drivel. So what we get is a fatal problem for his theory: market value isn't moral worth. His answer (again, p 136) is to take market value as a proxy for social contribution, which is lying worthy of Plato6.

In his version, free-market liberalism differs from meritocracy. In mine, it doesn't5.

There's some discussion of social mobility, and of credentialism. This discussion is somewhat confused because whilst vaguely related to meritocracy the connection is weak, and he isn't ever clear whether he means true, false, or well-that's-what-you-see-in-the-world meritocracy.

His solution


By p 155, we begin to come to his solution. Should we go back to hiring based on prejudice? Fortunately, he doesn't suggest that, though his "does not mean that merit should play no role in the allocation of jobs" is rather weak. Presumably, he does think that something other than merit should play a (substantial?) role - but he doesn't say what that thing or things should be. But his main suggestions are about education, and work.

Because he is a Harvard professor, he disdains to think about anything as plebian as early education, and instead thinks only about college. He asks (p 169), should higher education retain its role as arbiter of opportunity? As soon as you ask this question you - but not, alas, our author - realise that the answer is that "should" is again wrongthink. No-one has designed or legislated the system that way; it has simply grown up, as a result of many many choices, and so there is no "should". To change it... where would you even start? He doesn't know, so instead proposes making entrance into Harvard more of a lottery.

As to "work", his idea appears to be recognising the dignity of labour3. Unfortunately, he then decides that the most important role we play in the economy is as producers, not consumers2. There may be points of view (his is "civic conception") from which this makes sense; but it is also the all-too-common view that leads to protectionism and other such stupidity; so it is a dangerous idea to push. It gets worse; he realises that our wages don't represent our true "value" - see above - but instead says that our true value is (p 209) the "moral and civic importance" of our work, As though that can in any meaningful way be evaluated. Instead it just leads to the politics of envy: "my morality says you are not worth your wages", an all-too-common view... which he proceeds to display, in discussing finance, lower down: did you know, some of those dirty financiers get more than Harvard professors do?

Anyway, back to dignity of labour. He's for it. It is important to our self-esteem, and so on. But - ironically, he too has confused meanings of value - he means people getting decent-paying jobs. His ideas for achieving this, though, are thin and vague: "some restrictions on trade, outsourcing, and immigration" - i.e., protectionism; more of Trump. No thank you.

But he has another idea about work. First he begins by making an all-too-common mistake: that the finance industry is non-productive. His solution? A financial transactions tax. Which is fuckwitted, albeit all-too-often popular. The EU is in favour of it: need I say more? But... as a solution to societies problems, it is weak to the point of confessing that you don't really have any solutions.

P 210: cites Hegel as a reference for his ideas. FFS. Has he no shame; has he not read Popper? That seems a good point to end this review.

What would you do instead?


Once you, unlike our author, realise that meritocracy is just free-market liberalism, the answer becomes obvious: don't do something else. Don't read this book; read Hayek instead.

Update: practical politics


Reading the Graun (a crap article that upholds the usual journalistic practice of beginning with several paragraphs of irrelevance) I find The Tyranny of Merit is Sandel’s response to Brexit and the election of Donald Trump. In this review I've largely ignored the practical politics side, because I was more interested in the idealised, theoretical view. the book doesn't really distinguish the two; we swap from one to another and back as we go along. So, a better book would have much more sharply distinguished the two.

The idea that the "metropolitan elites" look down upon the "proles" is a commonplace, though. Our author gets no points for that. He would get points if he could clearly tie that attitude into his theorised meritocratic disdain. But other than hand-waving, he doesn't do that. Did the Lords of say 16th century England despise the peasants of their day? In my image of the times, yes; on our author's theory, they shouldn't have; or at least, less than the ME do today. Do you believe that? I'm doubtful.

As to the "disdain effect", I think he remains confused, as to whether it means meritocracy is overall a bad thing, or whether it is merely a defect in meritocracy. For example, from the Graun: Even a perfect meritocracy, he says, would be a bad thing. “The book tries to show that there is a dark side, a demoralising side to that,” he says. Notice the contrast of the Graun's "a bad thing" and his "dark side". So if it is merely a defect, then how much of a defect is it? It could just be a minor one - I think it is - hardly worth much worrying about. How would you know? Simply repeatedly emphasising that the defect exists gets you nowhere.

Update: Book Review: The Cult Of Smart by Fredrik DeBoer by SSC/AST


This review touches much of the same ground, ending with a plea against formal educattion.

Notes


1. He doesn't do a good job of defining just (rather as Plato fails) and the word is susceptible to intuitions. Fortunately his discussion around p 124 is sufficiently muddy that an exact definition would not help. For myself, I prefer Hobbes' defn: that which is not unjust. And what is unjust? Breaking covenants. Therefore, a meritocracy is just. As is a dictatorship. Which just shows you that it isn't a good question.

2. He then compounds his error by asserting that  consumption-is-primary is "today so familiar that it is hard to think our way beyond it", quoting the Sainted Smith. Again, his thinking is muddled: this is the primary view of std.economics, but not of the public, and not of pols.

3. Dignity of labour is a good idea. But the trouble is that is what it is: an idea; a state of mind; an opinion. Anyone can have it. Anyone flipping burgers at MacDonalds can have it. But our author is not brave enough to argue that people should think like that. Because he has fallen into his own traps: he has confused value with dollar-value. The idea of burger-flipping fills him with horror, and he cannot really conceive of anyone doing that having any dignity in their labour; he is, in the end, a snob.

4. Of course, he could solve this problem by clearly defining meritocracy, in his favour. If it means "rewarding good work / good deeds (merit) because people of merit deserve (in a moral sense) those rewards", then he'd be OK. But in his characteristically mushy way - in stark contrast to Popper - he never does define meritocracy, as HarvardMag notes. They suggest defining it as Amartya Sen suggested: a system for “rewarding good (or right) deeds for their incentive effects, but that's my defn, because of the use of "incentive" rather than "deserve".

5. If your prejudices lead you to think that think implies that "that the only gauge of merit is what it can be sold for" then you really need to work on your prejudices. Or, you can try reading the comments.

6. Since it comes my way, I offer you "Were she to encounter Françoise at the moment (which Françoise called “the noon") when, wearing her fine cap and surrounded with every mark of respect, she was coming down stairs to "feed with the service," Mme Villeparisis would stop her to ask after us. And Françoise, when transmitting to us the Marquise's message: "She said to me, 'You'll be sure and bid them good day,' she said," would counterfeit the voice of Mme de Villeparisis, whose exact words she imagined herself to be quoting textually, whereas in fact she was distorting them no less than Plato distorts the words of Socrates or St John the words of Jesus. Françoise was naturally deeply touched by these attentions. Only she did not believe my grandmother, but supposed that she must be lying in the inter ests of class (the rich always supporting one another) when she assured us that Mme de Villeparisis had been lovely as a young woman. It was true that of this loveliness only the faintest trace remained, from which no one-unless he happened to be a great deal more of an artist than Françoise would have been able to reconstitute her ruined beauty. For in order to understand how beautiful an elderly woman may once have been one must not only study but translate every line of her face". From Place-Names: The Place.

Refs


* Growth, Not Equality: American history shows that expanding the economy benefits everyone by Amity Shlaes.

69 comments:

Arthur said...

Thanks for a fun review, I suppose I need to read that Popper book now.

However, I’m not sure why you assert that meritocracy is the same as free-market liberalism. Do you have a reference for that? Presumably in a meritocracy, the best (however defined) people are the ones who get more money and power etc. But in free-market liberalism, doesn’t property (and power) largely remain with whoever starts with it, and their inheritors, friends, etc.? Persistent ownership, I think, counters meritocracy. On a large scale this is evident in the relative wealth of western nations relative to the third world: no matter how capable and deserving a young Nigerian may be, they are unlikely to achieve the same level of wealth and power as the stupidest son of an American real-estate mogul, say. Not that we have a perfect free-market liberal society here, but it seems closer to that than a true meritocracy.

William M. Connolley said...

I'm glad you liked it. I realised (after I'd pressed publish) that this was supposed to be on the somewhat more informal "other" blog. But it can stay here now.

Why is M "the same as" FML? In a sense they aren't: M is (narrowly) a method of selecting candidates for positions; FML is about economics. But they are both the "natural" outcome with no interference, according to abstract rules rather than special casing. M is just what you get, if you don't artificially restrict your pool of candidates to people of your race, sex, family, political party or club. FML is what you get if the govt doesn't prevent you from trading with people, imposing arbitrary rules, and so on. And in both cases there's an "honesty" caveat: if you employ a person to select candidates for you, and don't monitor them, then they may well decide to favour their friends; if you buy-n-sell, you may well collude behind the scenes, if it is to your advantage.

But your question was more trajectory-dependent. Wimping out, I would say that's a mere practical problem. Not doing that: past-wealth is a problem for both M and FML in that in both cases people don't get what they "ought" to have. But only if you use the words "ought" or "deserving", which I carefully eschewed, as does Hayek.

In practical terms, I think worrying about the privilege of those born to wealth (whether rich by USA terms, or simply anyone in the USA, which makes you rich in world terms) too much is a mistake. Because there is no solution (I mean no quick solution; you can try solving it slowly through death taxes and so on) - these rich people are not going to give up their wealth and you cannot force them - and because trying too hard distracts you from more useful things, and is likely to make the problem worse.

Phil said...

Consider the music business back before recording. Every theater needed a band. Want music in the lobby? Or in a club? Or for a wedding? Hire someone to play. Lots of reasonable paying positions so many musicians can make a reasonable living... And very good musicians could make more. So it was a M.

After recording, recorded music and films mostly replaced bands and actors. Lobby music, recorded music everywhere. Very few musicians can make a reasonable living... and most of the few that can are very very wealthy. Still is an M.

Seems to me like the first is far more desirable for almost every musician. Do you see a difference?

Tom said...

I think I'm having a slow day. Why is a financial transactions tax worse than, say, VAT? Or income tax?

William M. Connolley said...

> musicians

You're looking it from the view of the producer, not consumer, which as noted is an error.

> FTT

Umm, I've internalised this, but https://en.wikipedia.org/wiki/Financial_transaction_tax#Evaluation seems decent. The main problem, though, is that idiots see it as free money and only damaging to a business they don't like.

Phil said...

Most people are both producers and consumers.

Does income distribution matter? Or would a Pharaoh and everyone else having just barely enough to live on be just fine for you?

I've give you a hint. Odds are you wouldn't be the Pharaoh.

William M. Connolley said...

> Most people are both producers and consumers.

Sigh. If you're looking at music, say, you look at it (economically) from the viewpoint of the consumer of the music: the person paying for the service.

> Does income distribution matter?

Yes, certainly, to the people receiving the income. But this isn't a sensible question, as everyone already knows the answer.

Arthur said...

A “mere practical problem” hmm? I thought practical solutions were a good thing? But your argument generally sounds like one of those ”in the long run” situations, which Keynes had a rather famous response to! As to getting the (unmeritorious) wealthy to part with their money, there are many approaches from war and violent revolution to high taxation and inflation, all of which saw some success in the mid twentieth century... a financial transactions tax or Warren’s wealth tax are I think gentler solutions along those lines that could also be tried. That is, if we really wanted to have a more meritocratic society.

Anonymous said...

In my opinion, the point of an economic system is to optimize utility for humanity. Free-market capitalism is a reasonable approximation, in that it rewards people for producing things with market value, thereby increasing the production of market value. And to the extent that market value and human utility are correlated, this is good.

Unfortunately, there are a LOT of ways in which this doesn't work. Externalities is an obvious one, but somewhat correctable within the framework (e.g., tax pollution which achieves Coase theorem optimal emissions). Even here, though, Coase and the market don't actually address just outcomes... e.g., with a Coasian tax society as a whole balances pollution and production for optimal total production, but says nothing about distribution of outcomes. For that, you have to think about taking the taxes raised by the pollution tax and giving them to offset the harm to those breathing the pollution.

But there are harder problems. What about people with no market value because of some kind of disability? Free-market capitalism leads to a solution where those people can't earn income. Because they can't earn income, there's no incentive to produce goods that might help them. That's a failure mode.

Information asymmetry is also a big one. Because of it, free-market capitalism rewards those who pull the wool over their consumer's eyes for just long enough (e.g., Trump University).

Some percent of market rewards also go to luck (rather than skill, hard work, and other productivity measures). Also, there's a lot of salesmanship and non-productivity metrics used for hiring and promoting (see, sexism, racism, height-ism, attractiveness bias, "knowing the right people", etc.). So it isn't pure meritocracy. And I think these problems are especially prominent at the highest levels of income.

And these problems combine: the market rewards people who come up with ways to produce things the richest people want. To the extent that these rewards are not incentivizing production work, then we are allocating societal resources inefficiently.

So, to sum up: there are a number of reasons for progressive policies. By giving resources to the poorest people, you give the market reasons to come up with solutions to help those people (which I think will increase total societal utility). By taxing the richest people, you take away resources from people who would be spending those resources on things that don't increase societal utility very much. These progressive policies _might_ reduce incentives for the poor or the rich to work harder... the rich because they get less reward for working harder, the poor because they don't need to work as hard to stay fed... but I think that neither effect will be large. Generally, the people with high incomes that I know work hard for some combination of wanting non-monetary reward (e.g., acclaim, feeling productive, etc.) and/or to earn enough to buy something (which means a higher tax rate actually would incentivize them to work harder). At the poorer end, I think at low incomes, lack of money actually reduces productivity - see Terry Pratchett's great paragraph on buying shoes, but also because of lack of healthcare, danger of slipping into homelessness, having to rely on predatory lenders, etc.

And I haven't even gotten into positive externalities of good infrastructure, educations systems, etc. etc.

I still want free market capitalism to be the _base_ of my economic framework because I do think the fundamental premise is sound, it can just be improved substantially through progressive modifications.

William M. Connolley said...


> people with no market value because of some kind of disability... they can't earn income, there's no incentive to produce goods that might help them

That makes no sense. If they have "no income" then they starve to death; the lack of tailored products is not their problem. Which shows you the solution: in our societies, there is some form of safety net, roughly equivalent to a (low) minimum income.

> I think these problems are especially prominent at the highest levels of income

Because you're familiar with such? No, the reverse: because you like me are entirely ignorant of such.

> the market rewards people who come up with ways to produce things the richest people want

This is falsified by experience, for example, the market for cheap socks. Or cheap cars. Or cheap phones. Or...

> there are a number of reasons for progressive policies

In reality, yes. Because outside of a few wild-eyed crazies, no-one is arguing for letting the poor starve on the streets.

But this is straying from the point of the post: would you appoint, ideally, based strictly on merit? If not, what else would you use?

Nathan said...

"M is (narrowly) a method of selecting candidates for positions; FML is about economics. But they are both the "natural" outcome with no interference, according to abstract rules rather than special casing. "

This is really interesting.
Do you have some point in history, that you can refer to, when have either M or FML actually existed?


"If they have "no income" then they starve to death" Well, for most of Humankind's existence we haven't had income... Probably people grew their own food or begged.

William M. Connolley said...

https://wmconnolley.wordpress.com/2012/03/17/the-new-aristotelians/

Nathan said...

If either M or FML were a 'natural' outcome. Shouldn't they have existed at some point?
I am arguing they are not natural, and have never existed.
They're an imagined outcome of no practical value

CapitalistImperialistPig said...

>>Don't read this book; read Hayek instead.

Your second clause sounds like terrible advice, not that I am likely to ready Tyranny of Merit either. I have read enough of Hayek's drivel to know that it is something I am not willing to pay any more for. The problem of value is a deep one, as Popper agrees, but your theory, and Hayek's, is both shallow and repugnant. What people are willing to pay for is complex and varied and includes cocaine, being allowed to kill and torture, and have sex with children, as the career of Jeffrey Epstein exhibits, as well as mundane necessaries like food and shelter.

The problem with this theory of value is that it celebrates a system that is ultimately destructive of society and most of its members. It is contrary to human nature, or, at least, promotes aspects of that nature that are destructive of humans most useful instincts.

Humans managed to outdo our fellow apes because we were better at cooperating. That cooperation is based on a combination beneficent instincts and punishment of greed and selfishness. Capitalism unrestrained, as Popper frequently points out, relies solely and unreliably on only the former.


CapitalistImperialistPig said...

@Arthur. Not to discourage you reading Popper's TOSAIE, but here is my capsule version: Plato bad, Hegel worse, also Marx, but at least his heart was in the right (or left) place.
Why? Because they foolishly assumed future history was predictable and followed ineluctable laws that they had divined. Hari Seldon's disease, you might say.

I agree, but wish that he might have made his points more succinctly.

William M. Connolley said...

> natural

You've confused "natural" with natural.

> as Popper frequently points out

I don't think that's true; I think he rather rarely points "it" out. And I don't think he every points out that C relies solely on "beneficent instincts" - got a cite? And judging from your capsule review, you really didn't read TOSAIE with any attention.

CapitalistImperialistPig said...

The phrase "unrestrained capitalism" occurs 19 times in TOSAIE, and so far as I can tell, always in a negative context. I don't recall him mentioning beneficent instincts, but "exploitation" occurs 110 times, frequently in the context of the relations between capitalists and workers.

I have to admit that my attention flagged from time to time in TOSAIE. I guess I thought that it was obvious that Popper believed in an open society at least intellectually, even if he was reluctant to practice it in his personal life. Could you be kind enough to point out some crucial points that I missed?

Nathan said...

"You've confused "natural" with natural."


No I haven't, I truncated the sentence.


I am arguing they are not natural outcomes, and have never existed.

William M. Connolley said...

> I don't recall him mentioning beneficent instincts

So I think your "Capitalism unrestrained, as Popper frequently points out, relies solely and unreliably on only [beneficent instincts]" is you trying to foist your ideas onto Popper, but you're now prepared to admit that was an error.

> Could you be kind enough to

My review of TOSAIE is, alas, still in preparation.

Phil said...

Ah the wonders of deregulation and free markets!

$17,000 electric bills. For a few days.

Maybe kilowatt-hours are not the same kind of thing as avocados. After all.

https://www.nytimes.com/2021/02/22/opinion/texas-electricity-storm.html

The US Constitution has a formal amendment process. But not all amendments are formal, such as the two term limit set by Washington... Later made formal.

The 5 Trump Amendments to the Constitution

Phil said...

The missing link.

https://www.theatlantic.com/ideas/archive/2021/02/five-trump-amendments-constitution/618097/

William M. Connolley said...

I think those 5 amendments are spurious, and misdiagnose the problem, which is that the checks-and-balances system devised by the founders relied on the various branches being jealous of their powers; and yet that is no longer true of Congress, which has gradually ceded powers to the executive.

Phil said...

kWh == avocados?

Phil said...

"yet that is no longer true of Congress, which has gradually ceded powers to the executive."

So why is that?


The USA is one election away from never having an election again. How do we fix that?

Phil said...

Oh, and the reverse is happening in the States. The likely to be Republican State Houses, that way because of Mr Mander, are trying to take powers from Governors, likely to be Democratic as is a state wide vote.

Phil said...

Texas as an example of “privatizing the gains and socializing the losses.”

And why Mars is different

https://www.nytimes.com/2021/02/23/opinion/us-politics-texas-mars.html

William M. Connolley said...

> Congress, which has gradually ceded powers to the executive

Ah, as to why, that's complex; I don't really know and couldn't put it into words. My favoured solution is less govt; I think this is a better approach than getting bogged down in partisan politics.

> https://www.nytimes.com/2021/02/23/opinion/us-politics-texas-mars.html

Ahem: anything starting "In the last six months I’ve heard one phrase more often than I had in my previous 66 years" is to be distrusted. Do not believe in the Age of Gold, or anyone who professes it.

Texas is an interesting case. I think that article's "“After a heavy snowstorm in February 2011 caused statewide rolling blackouts and left millions of Texans in the dark,” The Times reported Sunday, “federal authorities warned the state that its power infrastructure had inadequate ‘winterization’ protection. But 10 years later..." is kinda right, though he doesn't manage to interpret his words correctly. Texans have had 10 years to decide if they want to spend more money to avoid occasional blackouts, and the answer seems to be "no". It isn't obvious to me that their answer is wrong. The exact reason they don't want an interconnect to the rest of the US deserves some scrutiny too.

Mars is different of course: that's an example of throwing money (aka, resources) at a problem; but you can't solve everything that way. Notice that he doesn't mention that other glorious success, the SLS.

"The Mars landing is the poster child for letting science guide us" - is that true? We used science - well, mostly engineering - to get the thing there and land it; and the purpose is at least ostensibly science. But did we use science to guide as to whether to spend all that money on it, rather than elsewhere? Not obviously.

Phil said...

Ah yes, the universal answer to all problems, less government. You can't say why there is a problem, and less government doesn't mean less "bogged down in partisan politics."

Texas is an interesting case. Electric power producers are paid by the kWh produced, for that and only for that. Not a penny for resiliency. Texas wanted their free market experience. They got it. They don't like it. Even Ted Cruz thinks it's wrong.

Look from the EPP's point of view. They need to make a profit with normal weather, so need to cut costs for things like insulation and buildings and cold weather options... So in all cases, they make money. So what if they lose a day or a week due to very cold weather. That's a small fraction of their 20 year investment timeframe.

Look from a new mother's point of view. The power went out in the middle of the night. The baby is cold. The lights don't go on, maybe a flashlight. The room is cold. Sure, bring the baby to bed with you, and put all the blankets on one bed. Can't make morning coffee. Or breakfast. Soon, the water doesn't run. Can't go anywhere, the streets are icy. The toilet is frozen. Can't cook, the stove is electric. And then a couple more days of this.


Ah you say, she should have bought resilient power! What a great idea. Only problem is that isn't for sale. The market rules don't allow for it.

Of course you don't see a problem. You didn't live through it.


Resiliency is a grid level feature. It is a political decision, not an economic decision. And you want all decisions to be economic. Good luck with that.

William M. Connolley said...

> less government doesn't mean less "bogged down in partisan politics."

But it does. Because the less govt does, the smaller an area politics controls, the less partisan politics there is, or that people need care about. If the govt ran no schools, all the school-related politics would vanish.

> Texas wanted their free market experience. They got it. They don't like it.

{{cn}}. People don't like blackouts, and if you ask them they'll say "no thank you". They'll say the same about higher electricity prices. So we go by revealed preferences. From The Economist "First is the flow of people and businesses to Texas, which has no state income tax. Failing at something as essential as heating and electricity may tarnish its image in the short term but is not likely to be a permanent setback".

> You didn't live through it.

Well neither did you.

> It is a political decision, not an economic decision

I disagree. It is a cost-benefit trade-off, susceptible to economic analysis. You don't want it looked at that way, because you don't like the answer.

Phil said...

"But it does. "

But it doesn't.

Uneducated kids is a real problem, not just a partisan political problem. But you knew that, didn't you?


"revealed preferences"

The problems with that is decoding what exactly is being preferred. Is it that they hate the place, but they need a job badly and will put up with the place? Or do they love the place and put up with the job? Exactly how is the difference between those "revealed"?



"I disagree. It is a cost-benefit trade-off, susceptible to economic analysis."

Sure, it is a political decision that can be made aided by economic analysis. The change has to be network wide, so it isn't an economic decision. It isn't made by individuals. It is a political decision.

Nathan said...

"But it does. Because the less govt does, the smaller an area politics controls, the less partisan politics there is, or that people need care about. If the govt ran no schools, all the school-related politics would vanish."


Like all Libertarian claims, they're big on not having any evidence.... Just claims

So there have been long periods of time without Govt's running schools. Can you show there was no school-related politics?
Or is this the 'natural' outcome? That doesn't ever actually happen, because other factors interfere.

" It is a cost-benefit trade-off, susceptible to economic analysis."

And yet you won't do the work either! It's just claim after claim, with no evidence.

William M. Connolley said...

> Can you show there was no school-related politics?

Indeed, no. For example, in the run-up to the first school-type legislation, there was undoubtedly school-related politics. But you're being awfully literal here. "all the school-related politics would vanish" is a vague statement that needs to be vaguely interpreted: there would be less politics, and if the state managed to keep its grubby fingers off, even that would decline. Of course, opportunists and bandits and unions will always try to pile in.

> you won't do the work

I think you're confused. Phil said "It is a political decision, not an economic decision". I disagreed: "It is a cost-benefit trade-off, susceptible to economic analysis". This is like arguing whether the planets move through physical laws or because they are pushed by angels. Arguing for the physical laws carries no commitment to doing the maths.

Phil said...

Notice the set overlap.

A political decision | An economic decision

A political decision can have economic reasoning behind it. An economic decision might be politically motivated.

By claiming that economic reasoning can apply to a political decision does not change that it is a political decision.

As the grid is common, and the grid was decided by politics not to be robust but rather as cheap as possible, Texas froze in the dark.

There isn't a competing alternative grid in Texas that is reliable. My sister and her family who live in Texas couldn't have picked a grid that was more expensive but robust.

A grid is a "natural monopoly". It isn't reasonable to set up two grids.


Go to 204.

Nathan said...

"Arguing for the physical laws carries no commitment to doing the maths."

This doesn't apply in Economics, as physical laws were 'proven' and someone did the maths based on experiments -they now form the basis of physics.
No such laws have been 'proven' for economics. No one bothers to check the data with Economics.


""all the school-related politics would vanish" is a vague statement"

Yes, very vague!

Like this one:
"My favoured solution is less govt; I think this is a better approach than getting bogged down in partisan politics."

Is Govt smaller in the US than in the 80s? Probably? Is it less Partisan? I would think not.

Phil said...

https://capitol.texas.gov/billlookup/History.aspx?LegSess=76R&Bill=SB7

Phil said...

There is no market in Texas for reliable electric power. Only a market for the cheapest electric power.

Fine. Until the chilly winds do blow.

Phil said...

https://www.youtube.com/watch?v=bifp1phB_50

Phil said...

Or the Kingston Trio

https://www.youtube.com/watch?v=3wgc8rX4FbE

Phil said...

So, looking forward rather than backwards, how might the Texas reliability problem get fixed?

Summarize the important points:
Lowest cost power is not going to be the most reliable. Texas law only considers lowest cost power.

More reliability has a cost. And you rarely get what you don't pay for.


So how could a market capture this? Texas would have to pass a law changing the nature of the electric market to allow customers to express a preference for more reliability. Right now, the market is in pure kWh.

Technically, each electric user would need to be disconnectable individually, so those that paid more would be disconnected last, and those that paid less would be disconnected first.

Each power generator would need to be paid not just by the kWh, but also by the predicted reliability. That way, natural gas turbines might be in buildings, like in cold places, so that they don't fail in cold weather. Wind turbines would want to get the heaters on the blades so that they could keep operating during icing conditions. And so on.



William M. Connolley said...

> how might the Texas reliability problem get fixed?

You're assuming too much here; that the Texas decide that they want to fix their reliability problem. Just because you think they ought doesn't mean they will agree.

> each electric user would need to be disconnectable individually, so those that paid more would be disconnected last

Yes, something like that could work. Or people could buy themselves batteries, or electric cars with reverse-flow, or the Texans / Feds could sort out whatever bizarre bureaucracy it is that prevents them connecting to the rest of the grid; or many other possibilities.

There are other questions to answer, though. Early on, it was reported that one reason elec-from-gas ran low was govt fiat obliging diversion of gas to heating. Was that indeed so? Was it important? And if so, was it a good idea?

Phil said...

>that the Texas decide that they want to fix their reliability problem.

Oh, I can assure you that there are some in Texas that really want to fix their reliability problem. But yes, it is and must be a political process. No market for reliability exists, and no market for reliability can exist with a political process.

>batteries, electric cars and other straws to grasp at

A fairly modest house might use 20 kW for electric heat. A large electric car battery is 100 kWh. 5 hours of heat at very best. At $100 per kWh for just the cells (ignoring the wiring, boxes, cooling, installation and such), the modest house would need 60 hours @20kW or $120,000. Far cheaper would be a backup generator, running off of propane (as natural gas would be expensive and might not be available) would be $20,000 or less installed. My dad, who lives in Colorado, is expecting a higher natural gas bill... due to the short supply/high prices.

"The typical price for a standard unit of natural gas is roughly $2.50. During the peak of the storm, prices surged to nearly $200."

https://www.koaa.com/news/covering-colorado/february-freeze-will-lead-to-higher-bills


>the Texans / Feds could sort out whatever bizarre bureaucracy it is that prevents them connecting to the rest of the grid;

That would require that Texas accept Federal regulation (under the Interstate Commerce clause) of their power grid. Which would raise their rates, as Texas would need to make their grid more reliable to meet Federal standards. This is probably the least likely outcome. Knowing Texans.

Nephew in Oklahoma lost power for a few hours at the worst of the storm.


Politics, nothing but politics.


>govt fiat obliging diversion of gas to heating. Was that indeed so? Was it important? And if so, was it a good idea?

Natural gas generation of electric power is about 30% to 65% efficient. Natural gas direct heating is about 70% to 95% efficient. If the goal is keeping people warm, it is a good idea.

More normal winters, heat pumps make the electric heating reasonably efficient. Many Texas houses/apartments use heat pumps. Bitter cold, many heat pumps don't work and resistance heating replaces it.

Phil said...

I find I'm a decade out of date for heat pumps.

There are now heat pumps that work well, with a little loss of performance, down to -5F -20C

Dallas TX hit -2F, or 19C

COP of the very best of the heat pumps is almost 2 at -5F. Halve the above 20kW rough number above, all the batteries look twice as good, the generator option is about the same as is dominated by installation costs.

Phil said...

No market for reliability exists, and no market for reliability can exist without a political process.

Typo

William M. Connolley said...

> no market for reliability can exist without a political process

I think that's wrong or doubtful. Almost everyone buys insurance, for example, which is a similar process of paying more for "reliability". But it may very well be the case that people have preferred lower bills to reliability; or perhaps have preferred lower bills to the uncertain need for reliability. Perhaps experience will change their minds. It isn't obvious why pols should coerce them.

Phil said...

Wrong is relative, of course.

Sure, one might buy a pile of batteries and get more reliability at a high cost. Or buy a house on the same subgrid as a hospital or other critical infrastructure. As those parts of the grid are prioritized. Or various other ideas, expensive and/or impractical for most. Grasping at straws.

A Texan can't just click a box that says I want power with Oklahoma reliability. Texas has its own rules for the electric market, set by a political process. To change them requires a political process.

Phil said...

"Dan Patrick, the lieutenant governor of Texas, is clearly what my father would have called a piece of work.

Early in the pandemic he made headlines by saying that older Americans should be willing to risk death so that younger people could “get back to work.” More recently, he suggested that Texans who found themselves with $17,000 electricity bills after the February freeze had only themselves to blame, because they didn’t “read the fine print.”

Funny, isn’t it, how politicians who denounce liberal elitists sneer when ordinary Americans get into trouble?

But something else struck me about Patrick’s take on supersize power bills: How did we become a country where families can face ruin unless they carefully study something as mundane, as normally routine, as their electricity contract?

And electricity isn’t a unique example."

https://www.nytimes.com/2021/03/01/opinion/deregulation-health-care-electricity.html

Phil said...

Oh, and Texans have more choices now. They choose to not wear a mask and/or eat in crowded restaurants. Spend all night in bars. 100% open. Freedom to sicken and/or kill your neighbors and random strangers.

RIP Texas. Should distract from the fallout over $17,000 electric bills,

https://www.texastribune.org/2021/03/02/greg-abbott-texas-announcement/

William M. Connolley said...

You dislike of freedom is comical. If you (and PK) dislike choice, you could try communism. I visited Hungary in... 1989? The shops, literally, sold one type of bread: there was no need to choose. And Hungary was good compared to further in. However, I'm pleased that PK can bring himself to say "Some, maybe even most, of this expansion of choice was good". I think he makes too much of subprime; people then were being offered deals that were too good to be true, and that proved to be the case. Indeed, that's one of the things proverbs and sayings are for: to offer you guidance in your choices when things are too complex to fully evaluate. I think his "It wouldn’t take much to protect..." is wrong; this is just the usual "one more waaaaaffer-thin regulation won't hurt you" stuff.

Has anyone actually had a $17k bill, or was that made up? Texas Electricity Prices Are Lower Due to Deregulation.

Phil said...

Increase of choices is not a linear improvement.

Rye only VS the usual 10 types at the local market? Of course I'd like that increase of choice.

How about 100? 1000? How about 10,000, one of which will sicken you?

Our brains are not infinite. More choice means more mental load. Cognitive science has looked into this, but you would not go look for such studies.

$17k power bill. Yes, screenshot, but is the most extreme example. 250 or so different plans to choose, most people picked plans with lower risk to them, as did my sister. That just moved the risk elsewhere, lots of defaults, a $1,000,000,000 state bailout may be needed.

Texas electric reliability is lower due to deregulation.

And that wasn't a customer choice. It was a political choice. One less regulation can hurt you.

William M. Connolley said...

> or was that made up?

Apparently not, e.g. $17,000 Electric Bill? A Deregulated Power Grid Leads To Wild Prices For Texans.

> And that wasn't a customer choice

If you mean, the choice of deregulation, then I think you're wrong; it was a choice made by customers. The medium of the choice was political; and if they subsequently decide they don't like it, then can change their minds. But, at least they had the choice; I suspect that you would deny it to them.

William M. Connolley said...

More on Krugman: https://reason.com/2021/03/02/paul-krugman-thinks-youll-be-happier-with-fewer-choices-nonsense/

Phil said...

A good retailer will limit the number of kinds of bread sold in the store. It's good retailing, long known.

A libertarian rag, not a paper on Cognitive science. Yea, that's convincing. Real.


Texas. A political choice was made, where 50.1% of the voters decide for everyone. It wasn't an economic choice, where everyone can pick what they want out of a meaningful collection of choices.

You need to do the "hay stack" experiment. One needle, and 50,000 pieces of hay.

Phil said...

And since you like For Bees:

https://www.forbes.com/sites/carminegallo/2013/04/30/successful-retailers-learn-that-fewer-choices-lead-to-higher-sales/?sh=317264d5176a

William M. Connolley said...

> 50.1% of the voters decide for everyon

I'm glad to see you a convert to the problems of "tyranny of the majority" and recognising that pure majoritarian democracy is a bad idea.

> It wasn't an economic choice, where everyone can pick what they want out of a meaningful collection of choice

And a convert to econ-is-a-postive-sum-game but pol-is-zero-sum, so let's have more econ and less politics! Luke 15:7.

Phil said...

>I'm glad to see you a convert to the problems of "tyranny of the majority" and recognising that pure majoritarian democracy is a bad idea.

A majority vote is the best idea, when as is often the case when a single decision must bind everyone to the result.


>econ-is-a-postive-sum-game but pol-is-zero-sum

Economics can be a positive sum game. Doesn't mean that it always is. It can negative sum, when a very few get very wealthy, and everyone else gets poor.

Politics can be a positive sum game as well. A good set of rules for the economics game can improve the outcome for most people.

Nathan said...

"You dislike of freedom is comical. If you (and PK) dislike choice, you could try communism."

Ha! Oh crikey! Madness...
Because of course, wanting something that limits freedoms = communism!
That's comical!

Tom said...

I wonder how those who are so anxious to protect untrammeled choice feel about regulations protecting consumers from the effects of bad choices brought about by, say, misleading advertising or over-aggressive sales tactics?

Wide boys in boiler shops have put a lot of people into poverty.

William M. Connolley said...

> Wide boys in boiler shops have put a lot of people into poverty.

"a fool and their money are soon parted".

There's a balance to be struck between freedom and paternalism. Almost no-one (certainly not me) argues for totally one side or the other.

I for example, would be happy to sign away all my employment rights (in a society that knew what that meant) because it would make people more likely to offer me a new job. Nor do I want any regulations protecting me from boiler shops, for the obvious reason. And the EU's shit-for-brains "click here to make this fuckwitted message about cookie preferences message go away" law was the product of idiot paternalists.

However, most people don't want to wake up with a $17k electricity bill; that's easy to understand. There's an easy fix for that: set a level above which you'd rather have no electricity.

If you had a specific case in mind though, do share it.

Phil said...

Which society would be the happiest?

Society one, where boiler shops fleece at will and the "wide boys" are driving fancy cars?

Society two, where boiler shops are empty ruins and the "wide boys" are pumping gas or washing dishes?



Your easy fix isn't. I'm unaware of any off the shelf way of doing this. Are you? Yet there was an easy fix, a fixed rate contract.

A fixed rate contract moves the problem to the electric "retail" companies, many of which will go bankrupt having delivered $9/kWh electric power and charging $0.09/kWh for it. Or the futures market.

Nathan said...

"I for example, would be happy to sign away all my employment rights (in a society that knew what that meant) because it would make people more likely to offer me a new job."

Really? And so if we compare places with fewer rights, how do they look?
I'll say.... pretty crap

Tom said...

I believe most free market advocates are in favor of some level of regulation. It is the level that is the subject of vibrant discussion, not its existence, if I read them correctly.

Nathan said...

Tom.

I think perhaps

Everyone posting here is .. in favor of some level of regulation.". However, if you raise regulation as a solution to anything at all, our host will cry 'but freedom!!'. Despite regulation being a useful tool in the shed.

William M. Connolley said...

A bit more on Krugman: https://www.econlib.org/paul-krugman-and-the-notion-of-choice/

Phil said...

Both Stalin and Hitler drank milk, so milk is typical of the authoritarian left and of the authoritarian right.


Assume choosing is zero cost, and you get one answer, sometimes absurd.

Observe that ideal computers must use energy due to the Second Law of Thermodynamics, and notice that humans are hardly close to ideal computers, and you get a different answer.

People choose faster, choose better, and feel better about their choices when given a realistic number of items to pick between. Every grocer knows this. Why doesn't "Econolib" know this?

Retailers also drink milk.

Phil said...

A hard part of both economics and politics is managing choice.

Assuming that more is always better leads to absurd results.

So rather that putting all the policy options to every voter, and voting on everything, practical systems use some form of representative to mediate between the infinite ways that a budget could be drawn up and a practical budget. Even New England Town Meetings, the closest form to direct democracy I've ever experienced first hand, do this. Sure, the Meeting might amend the budget presented by the Selectmen by a majority vote. But in practice, they rarely do. Why? The Selectmen have done their jobs, most of the time.

My sister-in-law lives in Fitzwilliam, NH.

https://fitzwilliam-nh.gov/

I'd suggest some time living in a Town Meeting town. Hard to scale up to city size, but a superior system for a small town.

William M. Connolley said...

It isn't clear to me that "A hard part of both economics... is managing choice... Assuming that more is always better leads to absurd results". What difficulties in Econ arise from excess choice, and what absurdities result?

Phil said...

What do you want from economics?

Is economics a myth, that explains why the Sun rises daily?

Or is economics a science, that tries to make non-trivial, testable and useful predictions about future behavior?

If a myth, then the real ways that people make choices are not in any way a hard problem, and no absurdities can arise.

Tom said...

Phil, economics is a tool. Used properly it can provide guidance on how to allocate scarce resources. You are writing as if it were a religion.

Phil said...

Some versions of economics are religions. Take an old version of a science, and refuse to adjust to new observations, and you have a religion.

Observation, more choices is not better above some number of choices. There is an incremental cost to each added choice, and that rises faster than the incremental benefit of an added choice.

Retailers know this. Experiments show this. Economics should account for this. A version of economics that doesn't is a religion.