The insufferable conceit

neuschwanstein01

Two problems plague the analysis of the financial system, problems that are related. Let’s call them the twin delusions. One is the persistent use of metaphors to characterise what is happening in the markets by people who do not seem to understand what a metaphor is, so they are seduced by them. The second is the mathematicisation of transactions, which creates the illusion that “the system” can be analysed as if it is like a physical system subject to scientific laws.

Let’s go to some basic definitions — to quote Marcus Aurelius: “What is it, what does it do?” Financial and economic markets are TRANSACTIONS. GDP, for instance, is not an indicator of wealth, or consumption, or growth. It is a recording of transactions. If there is a property bubble, for instance, consumption and wealth might actually fall, as people transact more aggressively over an existing stock of dwellings. I can remember an economist was asked by the Nebraska state government how to raise the state’s GDP. His response was: “Well, you could burn down the Capitol building.” He was right, of course. That is why, for instance, GDP in Japan rose after their tsunami. As people cleaned up the mess, they transacted more.
This is where the twin delusions hit. To characterise transactions metaphors are created, or the transactions are turned into a metaphor. So, we talk of national GDP as if it is a metaphor for the nation.
“Australia’s GDP went up 3%” = “Australia is doing well.”
This sounds very different from “Australians transacted 3% more” and allows the army of economic pundits to acquire an authority about their analysis of Australian GDP, analyses which become self reinforcing. Australia’s GDP is rising, therefore Australians are doing well therefore Australians are more confident therefore Australians do well.
The second of the twin delusions is to mathematicise the recording of the transactions. So, for instance, economic transactions such as GDP, which is a number, can be cross referenced with other numbers in the financial sphere, such as interest rates, or currency transactions.
“Interest rates fell and GDP went up so that must be an indication of XYZ ratio., especially when we look at the $A cross-rate ….”
Such correlations may be correct – mathematicisation is nor necessarily wrong, it can be right. But the illusion is created that these correlations are necessary, like physical laws. That is far from inevitable. Except for the purely computer driven activity (admittedly becoming increasingly dominant) transactions are created by people. People have to decide that there is some shared value system and minimum level of trust to engage in a transact. I often think that the word is interesting: trans (across) act (an act). I wonder “across what?” The answer must be some shared belief about value. So when that belief starts to come apart, such as during the GFC, the artifice starts to fall to bits, the “system” starts to disintegrate.
The point about the twin delusions is that they take us a step away from the fact. The fact is that transactional systems are a human artifice conducted by humans. Humans are at its centre. And humans produce that wonderfully unpredictable thing: HUMAN BEHAVIOUR. They are self conscious, unpredictable, they feel more strongly about losing money than gaining it and so on, as an Economist article points out.
“To take one example, the “people” in economic models have fixed preferences, which are taken as given. Yet a large body of research from cognitive psychology shows that preferences are in fact rather fluid. People value mundane things much more highly when they think of them as somehow “their own”: they insist on a much higher price for a coffee cup they think of as theirs, for instance, than for an identical one that isn’t.”
People are also capable of understanding metaphors and mathematics, which produces a kind of infinite regress in the twin delusions of metaphors and mathematical analyses. That is one reason why conventional analyses of markets are so often wrong.
Columbia University economist Jeffrey Sachs recently commented that the financial system is plagued by large scale fraud . He blamed it on a  docile president, a docile Whote House and docile regulators;
“We have a corrupt politics to the core, I am afraid to say, and . . . both parties are up to their neck in this. This has nothing to do with Democrats or Republicans,” Sachs told the Philadelphia conference, “Fixing the Banking System for Good.”
Sachs described an environment of Wall Street buying off politicians with their huge campaign contributions. In the 2012 election cycle, political contributions by the securities and investment sector totaled some $271.5 million, compared with $176 million in 2008, according to the Center for Responsive Politics.
“I meet a lot of these people on Wall Street on a regular basis right now,” Sachs told the conference, hosted earlier this month by the nonprofit Global Interdependence Center. “I am going to put it very bluntly: I regard the moral environment as pathological. And I am talking about the human interactions . . . I’ve not seen anything like this, not felt it so palpably.”
Sachs is right in his observations, of course. But I am not sure he is right to imply that it is new. I think Greed and Wall Street have been bedfellows as long as Wall Street has existed.
What, I think, is new is the way the “pathology” is concealed. It is easy to cover up greed and its immorality by either deploying a metaphor – “these are the way the capital “flows” are going and we have to invest accordingly – or by creating a mathematical equation. In both cases the activity is pushed one step away from what it is – an activity between humans – and so decoupled from anything human such as morality, or ethics or what is good for society. By being denuded of its human element, scientised, as it were, the question of personal responsibility is removed. In other words, the greed is not new. It is the sophistication of the cover up that is new.
That is what the twin delusions enable:
“Sachs said these same people on Wall Street are out to make billions of dollars, and believe nothing should stop them from doing that. “They have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to people, to counterparties in transactions,” he said. “They are tough, greedy, aggressive and feel absolutely out of control in a quite literal sense, and they have gamed the system to a remarkable extent.”
Sachs’ outburst stunned the crowd. “There was an initial shudder, is how I would describe it, because they could feel the passion that was in the discussion,” said attendee Dennis Peacocke, head of Strategic Christian Services, a religious group that advocates on topics of economic and social justice. “Jeffery Sachs’ comments were full of conviction. I was applauding him for bringing values and ethics into the discussion.”

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Comments

  1. Alex Heyworth

    In theory, the transactions that make up GDP should result in utility for both parties – otherwise the transaction would not occur. Thus an increase in GDP ought to reflect an increase in utility creation.

    The problem comes when many transactions are not willingly entered into, or the perception of utility is distorted by market restrictions or lack of knowledge.

    • Pfh007MEMBER

      Related to that observation is the question of whether a fall in the level of transaction and thus GDP should be treated as a matter of national horror – especially if the transactions that have declined were simply the foam associated with a speculative rise in asset prices.

      In some circumstances a fall in GDP might actually be a positive development. Certainly, alternate transaction activity should be encouraged to occupy those whose previous activities are no longer valued but the idea that cutting interest rates is the solution is mistaken – in most cases all that action seeks to achieve is the resumption of particular types of transactions.

      It would be far better, when GDP falls, to direct attention to reforms that are likely to facilitate more transactions of a productive nature.

      For example: reducing red tape and pointless box ticking exercises, barriers to entry to markets, rent seeking, constipated markets – eg land.

  2. The aim is to reduce Govt funded debt, so –
    Where is the wage restraint?
    Why is cutting low wage public servant jobs more important?

    Why this Govt isn’t held accountable for the ever increasing “Govt funded” wage rises in the top end of town,
    1. Doctors/Surgeons – top wages earners in the country
    2. Lawyers – (for boat people) e.g.
    3. Bureaucrat’s/Consultants – (you name it!)

    “I guess it isn’t the job of the Gov’t that determines the wages as it is the Remuneration Tribunal”!
    No wonder the Govt can achieve a modest GDP, just by increasing Taxes and levies to fund growing public sector wages at the top end of town.

  3. There is a further problem in that most people actually do not understand what modelling is about. Or at least do not agree on what modelling is about. Mathematical modelling, like any tool in the hands of the ignorant most likely will be dangerous. As SoN points out.

    As an example, one may well be able to model many forms of human behaviour in aggregate, to a usable level. However, applying that model to try to scry individual behaviour is probably doomed. Yet when one mentions modelling, some people assume that it is the attempt to model individual behaviour, and others will assume that when one refers to modelling, it is the first, approximating type of model that is referred to.

    Unless people get that distinction clear in their minds, it is a little pointless discussing things.

    The next point is that people with poor understanding of modelling often make the mistake cited by SoN that once something is expressed mathematically, it is accurate. In fact the key to good modelling is to understand that mathematical models are often wildly INaccurate – but that nonetheless, they can pick up trends and establish possible causal factors in the events being modelled. Those causal factors might be discerned only by lucky guessing without the mathematical model. Sometimes it is a matter of choosing between an inaccurate model which sort of points in the right direction, and a total stab in the dark without any model at all. Often the pointing in the right direction suggested by the model leads to research and development in that area which then improves (or disproves) the model. And so we progress.

    • In general too many people are financially and numerically illiterate, let alone understanding statistics, modelling and forecasts.

      Even it they were, there seems to be a distinct lack of clear thinking and analysis in Australia.

      One of the most memorable topics I learnt HSC 1979 was clear thinking component of English subject, do they still do it? Or has it become an inconvenience for media and politicians?

      • I remember having to buy a text called “Clear Thinking” and another called “Precis Writing” for English in Form 8 (1964 – showing my age) Loved what I learned, am very aware that since then, a lot of people have missed out on this very useful basic stuff – not necessarily the learners fault btw. Another huge education department curriculum FAIL imho.

      • Yes a big fallacy being that things follow normal distributions as if it is some law of nature.

  4. Well, good on them. Since no one dares demand decent politicians and then most snicker when a few people do protest against this greed (OWS), good on them.

  5. Melanie Phillips: (In “The Culture War For The White House”)

    “…..I see this financial breakdown, moreover, as being not merely a moral crisis but the monetary expression of the broader degradation of our values – the erosion of duty and responsibility to others in favour of instant gratification, unlimited demands repackaged as ‘rights’ and the loss of self-discipline. And the root cause of that erosion is ‘militant atheism’ which, in junking religion, has destroyed our sense of anything beyond our material selves and the here and now and, through such hyper-individualism, paved the way for the onslaught on bedrock moral values expressed through such things as family breakdown and mass fatherlessness, educational collapse, widespread incivility, unprecedented levels of near psychopathic violent crime, epidemic drunkenness and drug abuse, the repudiation of all authority, the moral inversion of victim culture, the destruction of truth and objectivity and a corresponding rise in credulousness in the face of lies and propaganda — and intimidation and bullying to drive this agenda into public policy.

    The financial crisis was brought about essentially by a public which threw away all notions of prudence and committed itself to spending today what it could never afford to pay back tomorrow, and a banking, regulatory and political sector which ruthlessly and cynically exploited and encouraged such catastrophic irresponsibility with a criminal disregard of the ruinous consequences for the poor. The financial crisis and our social meltdown are thus combining to form a perfect cultural storm…..”

    • drsmithyMEMBER

      Thanks for identifying an author I need to studiously avoid in the future.

      • I thought it was quite good actually. Contrary to the youthful views of my past self, I feel that culture is more valuable than rules in most contexts. Rules are most useful as a transition from poor culture to useful culture but not a replacement for it.

        So while I will happily dispute the relevance of much traditional culture, I would not dispute it’s value. We may have removed much traditional culture to our benefit, we have not found successful replacements for much of what we threw out with the bath water.

        An obsession with measurements and accountability has led us down a dangerous path for much that has value cannot be measured, and without measurement, responsibility is more valuable than accountability.

        http://www.theatlantic.com/national/archive/2011/12/what-americans-keep-ignoring-about-finlands-school-success/250564/

      • drsmithyMEMBER

        I thought it was quite good actually.
        Which part did you like more ? When she blamed the financial crisis on poor people and society’s moral decay on atheists, or the part where she described Obama as marxist ?

        Or was it when she unsubtly implies that if you’re not Christian, your morality is inherently inferior ?

      • dumb_non_economist

        For the life of me I cannot understand how anyone can believe that to have a good moral compass you must have a strong religious belief. In my experience I have found that those who wear their religious beliefs on their shirt sleeves are the ones, in general though not always, that I trust the least. I could guarantee you that ALL of those Wall Street thieves attended church religiously.

        You only need to go back a couple hundred yrs when the church was very strong and look how the upper end of town behaved to see the bs in that. Or, look at the Catholic Church and its hierarchy to see the lie in this. The senior church leaders imo are no different than politicians, and they same could be said for senior business leaders. Rape and pillage!

      • dumb_non_economist

        I’ll add that I don’t think there’s been a great decline in morality, just in the facade.

      • Why must I view the world as binary right and wrong, good and evil?

        Why must I agree wholly with the message of an author in order to find value in their ideas?

        Why can I not some central themes of a piece, combine that with my own perspective on the world and arrive at a different location?

        If I can do such a thing, is it acceptable for me to “like” something?

        Had you bothered to read my response you might have commented instead on what I was suggesting i.e. I don’t advocate a return to the past but accept some significant value from the past has been lost and inadequately replaced.

        The human race reverts to hedonism in the absence of a higher purpose and this is ultimately the source of our troubles.

      • drsmithyMEMBER

        Why must I view the world as binary right and wrong, good and evil?
        You shouldn’t. That’s the problem the author has.

        Had you bothered to read my response you might have commented instead on what I was suggesting i.e. I don’t advocate a return to the past but accept some significant value from the past has been lost and inadequately replaced. The human race reverts to hedonism in the absence of a higher purpose and this is ultimately the source of our troubles.
        Yet like the author’s claim that the faithless are the cause of our problems, you offer neither evidence for, nor justification why, nor example how, this is true.

      • http://theconversation.com/out-from-the-cave-have-we-lost-the-purpose-of-education-12374

        This fantastic article appeared in The Conversation and is quite relevant to the discussion here.

        “Measuring the immeasurable

        The values education initiative in Australia clearly showed that when we are explicit about constructing values together and finding shared ground of what it means to be generous, have integrity, etc., this has a significant positive effect on pro-social behaviour, well-being, and – surprise, surprise — academic outcomes.Yet how is values education or any other of the various well-being education initiatives going to be sustained when its outcomes cannot be measured every year by ticking boxes? The answer is they cannot and that is what we are seeing on the whole in Australian education, from universities to pre-schools.Perhaps Oscar Wilde was right when he said that common sense is not that common. But I would argue that there are ways to foster common sense, and there are ways to inhibit it. I think it would be common sense to look to countries like Denmark, for example, who have had social and whole person-centred values embedded in their societal and educational structures for a long time. Denmark consistently is reported as one of the happiest as well as the mostprosperous countries in the world.Instead, we have adopted an already failed US-UK model, centred around individualism, narrow academic achievement, and a rationalistic-economic view to life that is completely self-destructive in the long run — unless we stop to think about it. If we do stop to think about it, we may, at first, emerge blinking from Plato’s cave, unaccustomed to the light, but we will, over time, see a better and more human vision for education and our future.”

      • Interesting, with reference to Denmark, as the State has a church. Vast majority of Danes are members – 80% or more I think. I wonder how much of an impact that has on their societal harmony?

    • This debate over the role of personal responsibility and duty has much more depth than your glib retort gives it drS.

      Why is wealthy Australia so able to produce cultural and physical degeneration – people so fat, so poorly read, so addicted to the mindless pursuits of tv, grog, gambling and porn. People who in every possible way fail their children and families absolutely?

      I think the left always want to polarise a discussion on responsibility as being a discussion on lack of opportunity and inequality. The two really actually weave themselves together in the most complex of ways.

      The best parts of religions transcend the religion itself and speak of the human condition and the practical ways that evolved over thousands of years that we came to address the inevitable inequities and hardships of life – and they invariably speak of personal responsibility, discipline and duty.

      • drsmithyMEMBER

        This debate over the role of personal responsibility and duty has much more depth than your glib retort gives it drS.

        What “debate over the role of personal responsibility” ? All the relevant article (and particularly the quoted section) represents, is a begging-the-question-logical-fallacy assertion that society’s malaise is the fault of godless commies, and a comical argument that if only we were good little Christian capitalists, everything would be hunky-dory.

        It’s superficiality is outweight only by its absurdity.

        Life is too short to waste on the rantings of a close-minded, bigoted idealogue with a tenuous grip on reality.

        Why is wealthy Australia so able to produce cultural and physical degeneration – people so fat, so poorly read, so addicted to the mindless pursuits of tv, grog, gambling and porn. People who in every possible way fail their children and families absolutely?

        The human condition ?

        You are promoting an argument that this “moral decay” is somehow a recent development, yet there a few things more consistent throughout human history than the greed and avarice of the wealthy.

        That someone would frame such an argument from the position of supporting the church, one of the greatest examples of organisational profligacy and moral bankruptcy one could hope to find, is just insulting.

        I think the left always want to polarise a discussion on responsibility as being a discussion on lack of opportunity and inequality.

        Probably because the usual outcome the right wants when they start talking about “responsibility” is take away as much of it as possible from the fortunate and wealthy while simultaneously making it as hard as possible for the weak and poor to exercise it.

        The best parts of religions transcend the religion itself […]

        No, the “best parts of religions” are entirely independent of them. Requiring no subscription whatsoever to the dogma, supersition, fear and exclusionary bigotry of religion to follow and benefit from.

      • Now, let me see:

        Over large (I dislike the ‘F’ word).
        Is in court proceedings over their kids’ who are claiming they have not behaved in an appropriate way toward her family.
        Likes being photographed at the races.
        Agrees with mindlessly simplistic suggestions about people in Africa being happy to work for $2.00 per day.
        Has had a fair amount of their money given to her by others.
        Left winger.

        Nup. Can’t think an example actually. Could you elaborate?

      • http://onegoodmove.org/fallacy/howto.htm

        “Using Your Knowledge

        In your day-to-day life you will encounter many examples of fallacious reasoning. And it’s fun – and sometimes even useful – to point to an argument and say, “A ha! That argument commits the fallacy of false dilemma.”It may be fun, but it is not very useful. Nor is it very enlightened.The names of the fallacies are for identification purposes only. They are not supposed to be flung around like argumentative broadswords. It is not sufficient to state that an opponent has committed such-and-such a fallacy. And it is not very polite.This Guide is intended to help you in your own thinking, not to help you demolish someone else’s argument. When you are establishing your own ideas and beliefs, evaluate them in the light of the fallacies described here.When evaluating the ideas and arguments proposed to you by others, keep in mind that you need to prove that the others’ reasoning is fallacious. That is why there is a ‘proof’ section in the description of each fallacy. The ‘proof’ section is intended to give you a mechanism for showing that the reasoning is flawed. Apply the methodology described in the ‘proof’ section to the passage in question. Construct your own argument. Use this argument – not the name of the fallacy – to respond.”

      • Exactly my point – it’s the human condition and religions (irrespective of their other failings) have been good at, through the process of time, identifying these core elements to the human existence. Including coping with the wealth and greed of our aristocratic classes.

        The left have done serious harm to peoples lives as they shifted blame to circumstances – it might not be peoples fault but it is their responsibility.

        Thats life… all the good intentions in the world haven’t changed it yet.

      • drsmithyMEMBER

        Exactly my point – it’s the human condition and religions (irrespective of their other failings) have been good at, through the process of time, identifying these core elements to the human existence. Including coping with the wealth and greed of our aristocratic classes.
        If by “coping with” you mean “excusing, justifying, condoning, nurturing and manipulating”.

        The left have done serious harm to peoples lives as they shifted blame to circumstances – it might not be peoples fault but it is their responsibility.
        Right. Because if there’s one thing outcomes are completely independent of, it’s circumstances. Being born poor and having no education is no reason whatsoever to need welfare to survive. Losing your job and being diagnosed with cancer is no justification whatsoever for needing publicly-funded healthcare.

        Thats life… all the good intentions in the world haven’t changed it yet.
        Yet good intentions (religion) are what we should rely on to improve the situation ? You don’t think something a little bit, say, REAL might be more effective ?

      • drS, you seem to have a very binary view of the world. Let’s say I agree with you, and that the old systems are indeed inferior to the new systems. Does that then make the new systems perfect? Or can lessons be learnt from the old system?

        As I said in another comment below, if I could define a path that relied upon the human race adopting one religious orthodoxy or other, and could guarantee that it would lead to a happier and more prosperous society, would you follow it?Can you make the right choice for the wrong reasons? Can the end justify the means… even if the means is not as you say… “REAL”?

      • drsmithyMEMBER

        drS, you seem to have a very binary view of the world.
        Indeed. I have very little tolerance for hypocrites preaching salvation through bigotry and ignorance.

        Let’s say I agree with you, and that the old systems are indeed inferior to the new systems.
        That wouldn’t be agreeing with me, as I have said nothing whatsoever about the value of “old systems” vs “new systems” (whatever that is supposed to mean).

        As I said in another comment below, if I could define a path that relied upon the human race adopting one religious orthodoxy or other, and could guarantee that it would lead to a happier and more prosperous society, would you follow it?
        If I could define a path that relied upon the human race killing all but every third person, and could guarantee that it would lead to a happier and more prosperous society, would you murder your parents ?

        Can you make the right choice for the wrong reasons?
        Of course.

        Can the end justify the means… even if the means is not as you say… “REAL”?
        The impact of intolerance and ignorance bred from religion is quite real. Just ask any homosexual who wants to get married, or any teen mother who wasn’t told about sex and contraceptives.

      • How can you on one hand claim to abhor religion and 100% of everything it includes and on the other hand embrace open minded free thought? This is a contradiction as in any binary view and leads to the same close mindedness that you purport to reject.

        Suppose that we are talking about Religion 2.0 that has none of the baggage and bigotry of the earlier model, but still relies on mysticism as a motivating force to achieve everything you have ever wanted from the world. Would the end justify the means?

      • drsmithyMEMBER

        How can you on one hand claim to abhor religion and 100% of everything it includes and on the other hand embrace open minded free thought?
        I must have missed the part where I claimed to “abhor religion and 100% of everything it includes”. Perhaps you can quote it for me ?

        Suppose that we are talking about Religion 2.0 that has none of the baggage and bigotry of the earlier model, but still relies on mysticism as a motivating force to achieve everything you have ever wanted from the world. Would the end justify the means?
        Suppose that killing 2/3 of the population would be completely painless and non-traumatic for them, they simply go to sleep one night and never wake up. Would you still do it ?

      • @ dr S – the point is that responsibility and duty is a key part of the capacity for people to improve their lives. Regardless of how valid, excuses do not help, they provide reasons with no way out.

        You can put up straw men of absolute poverty and chronic illness, but the truth is that in Australia most of the malaise lies in those that have had reasonable opportunity and fair health. Even in examples of chronic depravation, there is little doubt that just pure welfare provides nothing but entrenched depravation.

        The left want to provide people with excuses, religions have worked out that this is useless. Religions won’t fix the problems – they never have – but they tend to not offer excuses, and this is primarily because time has shown they don’t work.

      • drsmithyMEMBER

        @ dr S – the point is that responsibility and duty is a key part of the capacity for people to improve their lives.
        And…? Are you suggesting that the best way for people to improve their lives is to do nothing more than offer empty platitudes while ensuring them suffering and harm if they don’t step up (the conservative right-wing religious method), rather than offering them the opportunities for education, employment and good health they may not have been fortunate enough to have inherited from their parents (the left-wing social democracy method) ?

        Regardless of how valid, excuses do not help, they provide reasons with no way out.
        Rubbish. Identifying the root causes of problems is the most important step in trying to fix them.

        You can put up straw men of absolute poverty and chronic illness, but the truth is that in Australia most of the malaise lies in those that have had reasonable opportunity and fair health. Even in examples of chronic depravation, there is little doubt that just pure welfare provides nothing but entrenched depravation. The left want to provide people with excuses, religions have worked out that this is useless.
        So what do you think the Venn diagram of Greens voters and bogans looks like ? How about Greens voters and devout christians ?

        You appear to be living in a mirror universe where it is the Right that tut-tuts about and tries to constrain conspicuous consumption, while acknowledging the difficulties of the less fortunate, and the wealthy and bogans all vote for the communist Greens with their promises of lower taxes and more middle class welfare.

        Presumably this is the same mirror universe Melanie Phillips occupies, with her belief that it’s faithless “marxists” who have been increasingly infiltrating Government for the last few decades, rather than free-market and religious fundamentalists.

        (Or are your posts just some elaborate satire ? If so, good job !)

        Religions won’t fix the problems – they never have – but they tend to not offer excuses, and this is primarily because time has shown they don’t work.
        Wow, seriously ? Did that whole paedophile priest thing just pass you by ?

      • drS – I do enjoy your responses because the are always the very raw essence of the left ideology, usually mixed with the polished cleverness of the new urban left.

        I’m tongue in cheek some of the time, but in this case i’m really exploring the empty negativity of the alternative case and the brutality of the case i put forward (at a very superficial level).

        I enjoy Noel Pearson on this issue – the collision of the welfare mindset with the harsh brutality of personal responsibility and duty.

      • drsmithyMEMBER

        I do enjoy your responses because the are always the very raw essence of the left ideology, usually mixed with the polished cleverness of the new urban left.
        Believing everyone deserves equal opportunities and wanting create a wealthy society based on that is “the very raw essence of the left ideology” ?

        Here I was thinking it was just common decency.

        I’m tongue in cheek some of the time, but in this case i’m really exploring the empty negativity of the alternative case and the brutality of the case i put forward (at a very superficial level).
        Perhaps you can elaborate on “the empty negativity of the alternative case”, because I’m kind of struggling to see what’s either “empty” or “negative”.

        I enjoy Noel Pearson on this issue – the collision of the welfare mindset with the harsh brutality of personal responsibility and duty.
        Equality of opportunity does not implicitly produce equality of outcome. It does, however, contribute substantially more towards that goal than enshrining privilege and segregation.

      • There is nothing common about decency doc – we all want equality of opportunity, yet I have almost never seen anyone work against their own interest towards this end.

        The complexity does not arise because of the challenges with the logic!

      • drsmithyMEMBER

        There is nothing common about decency doc – we all want equality of opportunity, yet I have almost never seen anyone work against their own interest towards this end.
        I’m sorry to hear that.

      • Equality of opportunity is one of the most loaded terms in existence. The left and the right can both agree to it and be thinking fundamentally different things.

        I find that this cartoon sums it up perfectly:

        http://cdn.iwastesomuchtime.com/5232012052424iwsmt.jpeg

        Ultimately I find it comes down to ones perception of free will. If I am to accept that any determinism exists in the world then I cannot accept that any two people in the world have equal opportunity. For the most part the rhetoric of individual responsibility is an application of self serving bias from the monkeys in the above cartoon. http://en.wikipedia.org/wiki/Self-serving_bias

      • @ drSmit – a trite response. You would not have formed your views if you were not exposed to the hypocrisy of the world where vested interests rule.

        @N – that is the very simple and ostensibly comforting way of looking at the problem that the left loves. Of course the logic is not flawed, it’s the complexity of the solution that does you in. This is not a failure to see the truth by the right, it is a failure to care regardless.

        That is the key point about individual responsibility – the left want to portray it as a cynical attempt to deny circumstances. Religions, which tend to have a deeper functional wisdom built over thousands of years will tend to be apologists for existing structures and focus on the human condition.

        In essence – unless one is prepared to fight and die for structural change, and this is very rare (and often very transitory), then the answer to the gripes is ‘so what’ and the next question is how is one as an individual going to deal with the challenges at hand.

        And yes smit of course it does not mean people shouldn’t strive for equality and fairness, but individual responsibility is not tied to that cause.

      • drsmithyMEMBER

        You would not have formed your views if you were not exposed to the hypocrisy of the world where vested interests rule.
        Well, I do try to keep myself as grounded in reality as possible.

        Look, if you’ve managed to live a life without experiencing much altruism, or feel the need to frame any such behaviour – from holding the door for someone to running into a burning building to save a baby – as selfish, then I am genuinely sorry. I cannot imagine what it would be like to live with such a cold, cynical and depressingly pessimistic outlook on the world.

        That is the key point about individual responsibility – the left want to portray it as a cynical attempt to deny circumstances.
        As opposed to… A sadistic and greedy attempt to deny circumstances ?

        You use the example of bogan conspicuous consumption as shirking personal responsibility, and blame it on the “left”. The absurdity of this is most easily demonstrated by contemplating what proportion of said bogans feel their best interests lie in voting for the Greens.

        When the cries from the wealthy and religious conservatives turn first and primarily towards removing privileges like their low (or nonexistant, in the case of churches) taxes and middle-class welfare, and not in fostering bigoted ignorance and making life even harder for the poor, I might start to believe their interest lies in promoting “personal responsibility”. Until then, people like you and Melanie Phillips have a great deal of excrement, and an extremely large hill to push it up, to convince me otherwise.

      • You are a vitriolic chap at times smit. I’d say you are more bitter than me by a mile! But really once the discussion goes personal its not really about the topic any more is it.

        Take away personal responsibility and all you have are excuses – and the slick urban left and the chardonnay socialists do this in spades – without a care for the carnage they make of people’s lives.

      • drsmithyMEMBER

        Take away personal responsibility and all you have are excuses – and the slick urban left and the chardonnay socialists do this in spades – without a care for the carnage they make of people’s lives.
        Yeah. I mean if we didn’t help people who needed it at all, their lives would be just peachy. No education, no healthcare, no social mobility, no hope.

        No worries ?

      • Well that’s hardly my case. Again the straw man of heinous deprivation when the issue is personal responsibility.

      • Why would one fail to care about a signal as to the route cause of a problem? It does not point to a solution, it is but a measurement of the current success. The rhetoric of personal responsibility equally useless if it is intended to point directly to a solution. A typical left/right discussion focusses equally on these pointless endeavours. The left likes their rhetoric because it appeals to their empathy and altruism, and the right like theirs because they can protect their conscience by placing the blame on others.

        Neither direct income distribution nor forcing people into hardship are efficient strategies, they are just the most obvious ones. My question then becomes, how can we use income redistribution to increase personal responsibility and decrease inequality? In fact I like to think of inequality as irrelevant when compared to social mobility, which should be the primary measure of the left and the right.

        http://www.informationisbeautiful.net/visualizations/left-vs-right-world/

      • drsmithyMEMBER

        Well that’s hardly my case. Again the straw man of heinous deprivation when the issue is personal responsibility.
        You mean just like the straw man that “the left” wants to “take away personal responsibility” ? Or the other one, that “the left” tries to excuse the abrogation of personal responsibility ?

        Don’t talk to me about straw men when you have a whole battalion of them behind you.

      • drsmithyMEMBER

        Neither direct income distribution nor forcing people into hardship are efficient strategies, they are just the most obvious ones. My question then becomes, how can we use income redistribution to increase personal responsibility and decrease inequality?
        America was doing a pretty good job of it post-WW2 until the Neo-Liberals, and their brothers-in-arms, the fundie Christians, started their rise to power in the ’70s. That cancer has been slowly spreading to other western countries, with similarly disastrous results for equality, wealth distribution and social mobility in all of them.

    • Militant Atheism!

      Bollocks, not the good old god fearing baffoons the Seppos have in power. How rich to point at Atheism as the root cause.

      Mind you there’s a great YouTube clip where one Aussie politician squirms over his belief that the world is a few thousand years old. These people couldn’t agree on the colour of shite. What him writhing! He not the only one but agreat eexample of lack of courage in ones convictions.
      https://www.youtube.com/watch?v=_Yl4y9-VniI&feature=youtube_gdata_player

      • drsmithyMEMBER

        Militant Atheism!
        I love Militant Atheism ! Between it and my obsessive stamp non-collecting, I still have my whole Sunday free !

      • Melanie Phillips, the author of that piece, is an atheist herself.

        It is just that she is a rare breed of atheist who sees competing values systems as having played either a useful or a destructive role in civilisational progress – something that is actually self evident to all except the haters of the very best values system utilised by any civilisation so far. Simply going by the evidence.

        “Militant atheists” are effectively nihilists who will throw out the baby with the bath water in their rage. Besides Melanie Phillips, Theodore Dalrymple and Keith Windschuttle are two more examples of atheists who are not stupid moral relativists at the same time.

  6. David P. Goldman (pseudonymed “Spengler”), at Asia Times Online:

    “Benedict XVI is Magnificently Right”

    – concluding paragraphs:

    “…..If moral rot has taken hold of a society, the market mechanism will take it to hell faster and more efficiently than any of the alternatives.

    There is an even greater flaw in the theory of the free market, perhaps, and that is in the assertion that the market can form adequate expectations about the future profitability of firms and make proper judgments about allocation of capital. How do we explain away the misallocation of capital to Internet stocks during the late 1990s and to homes in the United States (and elsewhere) during the ensuing years?

    The world simply is too uncertain for the market to look more than a year or two over the horizon. Technological and social change occurs in unexpected and dramatic ways, frustrating the best guesses of the cleverest entrepreneurs, not to mention the stodgy decisions of central planners. The market cannot form accurate long-term expectations; at best it can imagine future outcomes. The quality of its imagination in this case depends on cultural factors that transcend economic judgment.

    Americans spent the 1990s in a fantasy world, where technological change supposedly would transform the human condition, taking as their intellectual guide science-fiction writers like William Gibson. There was nothing wrong with the market mechanism as such; what went haywire was the childish imaginings of the American public.

    The future pope’s 1985 paper insists that it is mere moralizing, not morality, to dismiss what economics has learned about the market mechanism. But economics cannot find a remedy for the imagination of an evil heart, or a foolish one, for that matter. Ethics founded on religion are the precondition for long-term economic success, if for no other reason than economies depend on family formation. If the present economic crisis helps the West to reflect on its moral weakness, the cost well may be worth it….”

  7. “And yet in these days, if that men have riches,
    Though they be hangmen, usurers or witches,
    Devils-incarnate, such as have no shame
    To act the thing that I shall blush to name,
    Does that disgrace them one whit? Fie, no.
    …There is no shame for rich men in these times,
    For wealth will serve to cover many crimes.”

    – George Wither, Abuses Stript and Whipt, (1613)

    Wither’s writing “gave such offense that he was committed to the Marshalsea prison for several months.” British Bibliographer 1 (1810), pp 4-5.

  8. An Act Against Usury

    Edward VI, King of England and Ireland

    “…For as much as usury is by the word of God utterly prohibited as a vice most odious and detestable as in divers places in Holy Scriptures it is evident to be seen which thing is by no godly teaching, and persuasions can sink into the hearts of divers greedy, uncharitable and covetous persons of this realm, nor yet by any terrible threatenings of God’s wrath and vengeance that justly hang over this realm for the great and open usury therein daily used and practiced, they will forsake such filthy gain and lucre, unless some temporary punishment be provided and ordained in that behalf. For reformation whereof be it enacted by the authority of this present parliament, that from the first day of May, which shall be in the year of our Lord 1552, the said act and statute concerning only usury, lucre, or gain of or for the loan, forbearing, or giving days of any sum or sums of money, be utterly abrogated, void and repealed. And furthermore be it enacted by the authority aforesaid, that from and after the first day of May next coming, no person or persons of what estate, degree, quality or condition, soever he or they be by any corrupt, colorable or deceitful conveyance, slight, or engine, or by any way or mean shall lend, give, set out, deliver, or forbear any sum or sums of money to any person or persons, or to any corporation or body politic to or for any manner of usury increase, lucre gain, or interest to be had or hoped for over and above the sums so lent, given, set out, delivered or forborne, upon pain of forfeiture of the value, and well of the sum or sums so lent, given, set out, delivered or forborne, as also of the usury, increase, lucre, gain or interest thereof. And also upon pain of imprisonment of the body or bodies of every such offender or offenders, and also to make fine or ransom at the King’s will and pleasure.”

    • That was probably originally drafted without punctuation as well – those were the days. (Almost forgot what an Act looked like without the now standard Orwellian title)

      There were no doubt many times in history when people watched the bankers grinning like cheshire cats and said “you know i reckon we’ve just let this debt thing get out of hand a bit” – now is one of those times for sure.

  9. What was our western world like before the debt-economy?

    Thorold Rogers, Professor of Political Economy at Oxford University in the middle of the 19th century wrote: ‘At that time (i.e., the Middle Ages) a laborer could provide all the necessities for his family for a year by working fourteen weeks.’

    …the fiery 19th century historian William Cobbett, after visiting Winchester Cathedral and marveling at its beauty, told his son: ‘That building was made when there were no poor wretches in England called paupers… when every laboring man was clothed in woolen cloth and when all had plenty of meat and bread …’

    Thus we have a picture of a well-fed, prosperous community, working commercially, or for gain, about one third of the year and with dozens of holidays a year… It was a time when Englishmen called their land ‘Merry England,’ when they owned their property with allodial title (irrevocably free and clear), instead of paying ‘rent’ (as property owners do now… in the form of property taxes to the government).

    It was in the Middle Ages of Europe when the magnificent Gothic cathedrals were constructed with voluntary subscription and labor, edifices of such beauty and power as to amaze the modern onlooker. Dozens were constructed, all without mortgages or debt of any kind; without usury. A society without usury is nowadays derided as inevitably backward, if not impossible. Those who visit the medieval Gothic cathedrals of Britain and Europe gaze upon massive edifices of splendor and proportion which we, with our usury and technology, have yet to equal.”

    – Michael Hoffman, Usury In Christendom: The Mortal Sin that Was and Now is Not (2013)

    • Sell on News

      Yes, and people turn up their noses at the supposedly backward Middle Ages … tks, I’ll try to get that book. One thing is for sure, Goldman Sachs won’t leave a legacy like a Gothic cathedral. No beauty or grandeur there.

      • Highly recommended. I’m reading it presently. A very thorough, well-researched, and hard-hitting exposé on the history of usury in the “Christian” West.

        The Church has a lot to answer for, in capitulating to avarice and losing its own moral compass in the Renaissance vis-a-vis its previous millennia-old canonical position on usury. By its pre-Renaissance standards, all subsequent popes, ecclesiastical authorities, and much of the laity would be deemed heretics.

    • Ronin8317MEMBER

      I’m pretty sure ‘evidence based history’ was not in vogue in the back then. The idea of a person in the Middle Ages being able to work ’14 weeks’ to feed his family defies what the bone records says. Most people in the Middle ages suffer from malnutrition and constant hard labour.

      Voluntary conscription? MUHAHAHAHAHAHAHA

      • There is a subtle difference between “conscription” and “subscription”.

        The Middle Ages encompassed the 5th to 15th centuries. It would be interesting to see actual details of bone records for specific countries, accurately dated to the specific periods in those countries when usury was banned.

      • So men really were happier as serfs under a theocracy? That is an interesting way of looking at it.

        I am still inclined to say that property rights and the keeping of the fruits of one’s own labours had a lot to do with the kind of progress we had since John Locke, and that we did NOT have before that.

        But I am with you on the finance sector getting way out of hand over the decades, especially since monetary stability was abandoned.

        Yes, those cathedrals are magnificent. But it is odd if they are taken by socialists, to represent evidence of something desirable about that past era. One could take them as evidence of the value of theocracy and serfdom, just as much as evidence of the value of the absence of usury. Of course what many socialists desire IS virtually a surrogate system of theocracy and serfdom.

        The former USSR might have tried to match the munificence of the cathedral era, but it was all pretty kitsch and brutalistic. Which is what the results of militant atheism usually are.

      • From Matt Ridley: “The Rational Optimist”:

        “…..Even allowing for the hundreds of millions who still live in abject poverty, disease and want, this generation of human beings has access to more calories, watts, lumen-hours, square feet, gigabytes, megahertz, light-years, nanometres, bushels per acre, miles per gallon, food miles) air miles, and of course dollars than any that went before. They have more Velcro, vaccines, vitamins, shoes, singers, soap operas, mango slicers, sexual partners, tennis rackets, guided missiles and anything else they could even imagine needing. By one estimate, the number of different products that you can buy in New York or London tops ten billion.

        This should not need saying, but it does. There are people today who think life was better in the past. They argue that there was not only a simplicity, tranquillity, sociability and spirituality about life in the distant past that has been lost, but a virtue too. This rose-tinted nostalgia, please note, is generally confined to the wealthy. It is easier to wax elegiac for the life of a peasant when you do not have to use a long-drop toilet.

        Imagine that it is 1800, somewhere in Western Europe or eastern North America. The family is gathering around the hearth in the simple timber-framed house. Father reads aloud from the Bible while mother prepares to dish out a stew of beef and onions. The baby boy is being comforted by one of his sisters and the eldest lad is pouring water from a pitcher into the earthenware mugs on the table. His elder sister is feeding the horse in the stable. Outside there is no noise of traffic, there are no drug dealers and neither dioxins nor radioactive fall-out have been found in the cow’s milk. All is tranquil; a bird sings outside the window.

        Oh please! Though this is one of the better-off families in the village, father’s Scripture reading is interrupted by a bronchitic cough that presages the pneumonia that will kill him at 53 – not helped by the wood smoke of the fire. (He is lucky: life expectancy even in England was less than 40 in 1800.) The baby will die of the smallpox that is now causing him to cry; his sister will soon be the chattel of a drunken husband. The water the son is pouring tastes of the cows that drink from the brook. Toothache tortures the mother. The neighbour’s lodger is getting the other girl pregnant in the hayshed even now and her child will be sent to an orphanage. The stew is grey and gristly yet meat is a rare change from gruel; there is no fruit or salad at this season. It is eaten with a wooden spoon from a wooden bowl. Candles cost too much, so firelight is all there is to see by. Nobody in the family has ever seen a play, painted a picture or heard a piano. School is a few years of dull Latin taught by a bigoted martinet at the vicarage. Father visited the city once, but the travel cost him a week’s wages and the others have never travelled more than fifteen miles from home. Each daughter owns two wool dresses, two linen shirts and one pair of shoes. Father’s jacket cost him a month’s wages but is now infested with lice. The children sleep two to a bed on straw mattresses on the floor. As for the bird outside the window, tomorrow it will be trapped and eaten by the boy….”

      • Somewhat similarly Phil, there are many throughout recorded human history who have fallen prey to the prideful, comforting notion that their own time, society, systems, and values represent the present peak in a long, ever-climbing evolutionary progression, and as such, that all that came before must necessarily be of a lesser, “inferior” quality.

  10. This is a good example of why the forum should be made the one and only place for chatting, 12 posts here and none on the forum. Nobody’s going to bother posting much in the forum if the blog comments are kept open, why would you try to have the discussion in two places at once.

    • Pfh007MEMBER

      I think the point of the forum is that it will be used for different types of conversation – in form and content and perhaps length than those that appear under comments.

      Perhaps it will take a bit of time to work out how the forum could work effectively.

      For example: It would be excellent if threads develop that are directed to working out ways in which non MSM media can develop alternate lines of communication between the public and the true administrators of the country – the public service. The current model where we elect fools as our representatives to engage with the administration of the country is failing.

      In any event I am sure MB will be eager for feedback – shutting down comments on articles – on the first day – would appear a bit hasty.

      Having said that I suppose I should check it out.

      • it might also be a butterfly

        actually it’s a moth but it really looks like a butterfly

        had me fooled

        or it might be one of those things to point a natural language processor hooked up to a semantic analyzer feeding into a Bayesian network filtered through twitter and various other data vampires all in parallel hooked up to a quantum computer instantaneously recognizing sufficient crowd intelligence that a huge shift in positions would be triggered

        nah

        can’t be

        not here, not us!

        i’ve freaked myself out and am leaving the session

        p

  11. MichealMEMBER

    It makes you realise that GDP is used as an indicator by those that control and charge transaction fees. It is an easy formula to politicise and to trade on. If GDP stagnates, governments seem like they are not doing anything and trading momentum is lost. The type of interaction of the transaction is not apparent.

  12. Ronin8317MEMBER

    GDP is easier to measure than ‘well being’. As the two have a positive correlation, it is used. While a rising GDP may not make the citizens much happier, a falling GDP almost always means the citizens are suffering.

    Somewhere along the way, the economic profession has changed from ‘how to manage and benefit human society’ to ‘how to make money’. When you do not ask the right question, you will never get the correct answer. The most fundamental question should be “what is credit?”. Once you understand this, you’ll realize a fundamental problem with the economic system : GDP growth requires a similar increase in debt, leading to the boom-bust cycle.

    If boom-bust cycle is inevitable, a government should save during the boom, and spend during the bust (on infrastructure). Unfortunately, governments just wants to spend all the time, and surplus during the boom will be a paper-thin at best. Some of the fault lies with those economists who advocate any surplus to be spent on tax-cuts. To make matter worse, the same economists are calling for spending cuts during the ‘bust’. which makes you wonder : are they really that clueless? or do they take pleasure in human suffering? Why is it necessary for a government to bail out the banks, while bail out the their citizens is ‘irresponsible’?

    The field of marcoeconomics needs a revamp to incorporate politics into their equations. Otherwise, the formulas are meaningless.

  13. Stephen Morris

    Forgive me for a prolonged reply to this stimulating article (and no doubt it will be deleted if I have outstayed my welcome), but the problem goes even deeper than our blogger has acknowledged.

    If we are to be rigorous we must address the whole issue of “Cardinalism” in Economics and ask if the cardinal values beloved of economists have any objective reality at all. If not, then we are dealing with nothing more than theology.

    “The Church of Cardinal Preferences” is a belief system which holds that ordinal preferences can be mapped onto cardinal numbers in such a way as to allow the cardinal numbers of one individual’s preferences to be compared against the cardinal preferences of another individual’s preferences using the operations of cardinal arithmetic (“plus”, “minus”, “greater than”, “less than” and “equal to”).

    This is, of course, the basis of Utilitarianism, the idea that there is some objectively real thing (call it “Utility”) that can be “added” and “subtracted” using the laws of cardinal arithmetic.

    In fact it pre-dates Bentham by at least half a century. We see it referred to obliquely in Rousseau’s famous line:

    . . . the general will studies only the common interest while the will of all studies private interests, and is indeed no more than the sum of individual desires. But if we take away from these same wills, the pluses and minuses which cancel each other out, the balance which remains is the general will.

    This assumes of course that the “wills” (or today we might call them “preferences”) are defined under the operators “plus” and “minus”, the operators of cardinal arithmetic. If they were, economics would indeed be a simple matter of maximising the sum of cardinal utility.

    But not all measures are cardinal. Vectors are not cardinal. For example, you can’t “plus” and “minus” vectors using simple cardinal arithmetic. They may point in different directions. You can’t say that “north” is greater than “east”. (For any particular vector the northern component may be greater than the eastern component, but that tells us nothing about whether north “outweighs” east.)

    Likewise with preferences. It is tempting to believe that we can somehow “add” one individual’s preference for faster flight times and “subtract” another individuals distaste for aircraft noise, to get an objectively real “answer”.

    This “conceit” (as this blogger has called it) is reinforced by the use of monetary values to do the bookkeeping for transactions in the marketplace. Believers who haven’t stopped to consider the issue carefully believe that they may extend this bookkeeping to the aggregation of preferences in general.

    However, we can demonstrate quite easily that such comparison is possible only under very narrow assumptions.

    If we go back to the foundations of Economics we may start with the observation of Ronald Coase (in his Alfred Nobel Memorial Lecture):

    “ . . . what are traded on the market are not, as is often supposed by economists, physical entities but the rights to perform certain actions.”

    [We could go back one step further and define a “right” as an “enforceable preference”, where the enforcement is carried out by a “State-like Entity”. A State-like Entity is an entity which de facto is able to enforce preferences. It may be a sovereign state, but it might also be sub-national polity like a federal state of an elected local council. It might be the judiciary of a sporting league. It might be a mafia. Under feudalism it might have been a baronial court operating independently of the monarch. It might have been the Church exercising its jurisdiction over certain matters (such as marriage, or the regulation and punishment of the clergy). It might even be a family. (As a child I have a “right” to sit at the head of the table if my preference to do is enforced by my parents who are the de facto State-like Entity in this regard.)]

    When Cardinalism is applied to State-like Entities themselves itself it can be shown to yield no unambiguous solution.

    The exchange value of any bundle of rights is determined by the marginal seller and the marginal buyer (or a hypothetical marginal seller and buyer). For both marginal seller and marginal buyer, the indifference point between the bundle and an amount of cash (i.e. the cardinal “value” they place on it) depends on their initial endowment of wealth. Richer buyers are prepared to pay more to buy while rich seller require more to sell. The opposite is true for poorer buyers and sellers.

    In other words, the value determined by any such transaction is biased towards the initially well-endowed. If we were prepared to accept these initial endowments a priori then we might – perhaps – be able to attribute cardinal values to bundles of rights.

    But . . . . one of the capabilities of State-like Entities is that they can alter initial endowments of buyers and sellers through their taxing and spending powers, and thus, in principle, the values of all bundles of rights.

    Any proposal for which it is proposed to determine a “cardinal value” (as in a cost-benefit analysis) may – in principle – be “stapled” to a taxing and spending measure that would enrich those who support it (at the expense of those who do not) so that the supporters may bid up the value of the outcome.

    Of course, their opponents may put forward a counter-proposal that does exactly the opposite!

    The result is a theoretical bidding war in which the taxes and subsidies proposed by each side do not converge to any unambiguous finite solution but escalate to infinity.

    Thus, any attempt to apply Cardinalism to a State-like Entity leads to a divergent bidding war which cannot determine an unambiguous result.

    Now, committed Cardinalists might argue that such adjustment of initial endowments ought to be prohibited a priori. But that suggestion is itself nothing but a preference (one which would, incidentally, benefit the present rich at the expense of the present poor). Before it could be accepted, it would – by the logic of Cardinalism itself – need to validated by comparing its cardinal value against the cardinal value of other preferences (for example, the preference not to prohibited endowment adjustments) . . . . something we have just shown to be impossible!

    When Cardinalists ask us to assign a “value” to something (especially aesthetic intangibles), they are actually pulling a very subtle rhetorical sleight-of-hand which most people don’t notice: they are subtly and implicitly limiting the “target space of available options”. They are implicitly asking: “What value would you place on this assuming that you actually had to pay for it from your current endowment of wealth and could not employ taxes-and-subsidies to your opponents to cover the cost?”

    But we need not accept having our target space of options limited thus. If we refuse to be tricked, we can assign any value we please and Cardinalism collapses.

    The assignment of arbitrary cardinal values (especially to aesthetic preferences) is not just a problem of measurement. It raises serious epistemological issues. In the absence of an in-principle method of determining unambiguously what those cardinal values are, it cannot be expected that other people should agree to their being attributed any objective reality. Cardinal preferences are akin to “Gods” which some people believe in and other people do not.

    I should note that I am not here to promote religious intolerance. If some people find belief in cardinal preferences a helpful way to deal with the world, far be it from me to suggest that their belief is “wrong”. Likewise, if there are any who believe that certain preferences are “The Will of God”, far be it from me to suggest that they are “wrong”. I have no Monopoly on Wisdom.

    But any suggestion that the assignment of arbitrary cardinal values to preferences gives them some sort of “objective truth” or “superiority” is theological nonsense.

    That of course leaves the issue of how to aggregate ordinal preferences (and indeed how decide which individuals are to have their preferences aggregated, and indeed what constitutes an “individual”) but those are answers which I must leave to another day.

    • Suggest you define/explain ‘ordinal’ and ‘cardinal’ at the start if your ant most people to read this.

      • Stephen Morris

        Cardinal numbers relate to the measurement of size and are defined under the operations of cardinal arithmetic, “plus”, “minus”, “multiply”, “divide”, and so on.

        Thus if one has 2 litres of water and one adds 3 litres of water, one gets 5 litres of water. (In general 2 + 3 = 5.) Or, 4 tanks of 3 litres each hold a total of 12 litres. Or, 4 tanks of 3 litres each have more water than 1 tank of 10 litres.

        Ordinal measurements may be ordered but not necessarily measured or added using cardinal arithmetic. Preferences are ordinal.

        For example, I may at an instant in time, express a preference ordering: 1st orange juice, 2nd apple juice, and 3rd grapefruit juice. Someone else might, at an instant in time, express a preference ordering 1st apple juice, 2nd grapefruit juice, and 3rd oranger juice.

        But (other than by making certain restrictive assumptions which are themselves preferences) there is no logically coherent way of saying things like: “I like orange juice 7.5 times more than she likes grapefruit juice.”

    • Thanks for your thoughts. It would seem to me that the benefit of predefined cardinal values is the ability to unite a large number of people to a more focussed purpose.

      Many people would object to a set of predefined cardinal values, such as those derived from religion, even if they were shown to meet intermediate species objectives more efficiently than other means, simply because they are “objectively” wrong.

      If I could define a path that relied upon the human race adopting one religious orthodoxy or other, and could guarantee that it would lead to a happier and more prosperous society, would you follow it?

      Can you make the right choice for the wrong reasons? Can the end justify the means?

      • F. A. Hayek, “The Road to Serfdom”:

        “…It was men’s submission to the impersonal forces of the market that in the past has made possible the growth of a civilization which without this could not have developed; it is by thus submitting that we are every day helping to build something that is greater than any one of us can fully comprehend. It does not matter whether men in the past did submit from beliefs which some now regard as superstitious……..The crucial point is that it is infinitely more difficult rationally to comprehend the necessity of submitting to forces whose operation we cannot follow in detail, than to do so out of the humble awe which religion….. did inspire…..”

      • F. A Hayek, in “The Road to Serfdom”:

        “……Freedom to order our own conduct in the sphere in which circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily re-created in the free decision of the individual. Responsibility, not to a superior, but to one’s own conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.

        That in this sphere of individual conduct the effect of collectivism has been almost entirely destructive is both inevitable and undeniable. A movement whose main promise is the relief from responsibility cannot but be antimoral in its effect, however lofty the ideals to which it owes its birth……

        “…….There is all the difference between demanding that a desirable state of affairs should be brought about by the authorities, or even being willing to submit provided everyone else is made to do the same, and the readiness to do what one thinks right oneself at the sacrifice of one’s own desires and perhaps in the face of hostile public opinion. There is much to suggest that we have in fact become more tolerant towards particular abuses and much more indifferent to inequities in individual cases, since we have fixed our eyes on an entirely different system in which the state will set everything right…….

        “……..The periodical election of representatives, to which the moral choice of the individual tends to be more and more reduced, is not an occasion on which his moral values are tested or where he has constantly to reassert and prove the order of his values….by the sacrifice of those of his values he rates lower to those he puts higher.

        As the rules of conduct evolved by individuals are the source from which collective political action derives, it would indeed be surprising if the relaxation of the standards of individual conduct were accompanied by a raising of the standards of social action…..Every generation puts some values higher and some lower than its predecessors. Which, however, are the aims which take a lower place now, which are the values which we are now warned may have to give way if they come into conflict with others?…….

        “….It is certainly not material comfort, certainly not a rise in the standard of living or the assurance of a certain status in society, which ranks lower…..Are not the things which we are more and more frequently taught to regard as “nineteenth century illusions”, all moral values……..?

        “…..What are the fixed poles now which are regarded as sancrosanct, which no reformer dare touch……….? They are no longer the liberty of the individual, his freedom of movement, and scarcely that of speech. They are the protected standards of this or that group…….discrimination between members and nonmembers of closed groups, not to speak of nationals of different countries, is accepted more and more as a matter of course; injustices inflicted on individuals by government action in the interest of a group are disregarded with an indifference hardly distinguishable from callousness; and the grossest violations of the most elementary rights of the individual…….are more and more often countenanced even by supposed liberals.

        All this surely indicates that our moral sense has been blunted rather than sharpened…..

        “….It is, indeed, those who cry loudest for the “new order” who are most completely under the sway of the ideas which have created this war (WW2) and most of the evils from which we suffer. The young are right if they have little confidence in the ideas which rule most of their elders. But they are mistaken or misled when they believe that these are still the liberal ideas of the nineteenth century, which, in fact, the younger generation hardly knows. Though we neither can wish nor possess the power to go back to the reality of the nineteenth century, we have the opportunity to realise its ideals – and they were not mean. We have little right to feel in this respect superior to our grandfathers; and we should never forget that it is we, the twentieth century, and not they, who have made a mess of things. If they had not yet fully learned what was necessary to create the world they wanted, the experience we have gained ought to have equipped us better for the task……

        “……Perhaps the best guides through some of our contemporary problems will still be found in the works of some of the great political philosophers of the liberal age, DeTocqueville or Lord Acton, and, to go even further back, Benjamin Constant, Edmund Burke, and the “Federalist Papers” of Madison, Hamilton, and Jay…….”

      • This is where you lose me, Phil… liberalism can only take you so far and collectivism has done more for humanity than liberalism ever will. There is no mapping from “the best interest of the individual” to “the best interest of the species”. There isn’t even a mapping from “the perception of best interest of the individual” to “the best interest of the individual”.

        Ultimately I suspect liberalism is an ideal to which humanity lacks the maturity to execute effectively and probably always will. As with the pursuit of any ideal, dystopia awaits.

      • Stephen Morris

        Commenter PhilBest (to whom I do not seem to be able to reply directly, so I have replied to commenter Nogen instead) has quoted a number of statements of belief and preference from F. A. Hayek.

        However, it is not at all clear what the significance of these is.

        Specifically, there is nothing in these quotations to demonstrate how

        {F. A. Hayek’s preferences concerning the manner in which ordinal preferences ought to be aggregated}

        may be aggregated with

        {preferences of other individuals concerning the manner in which ordinal preferences ought to be aggregated}.

        Any argument which relies on the concept of “freedom” needs to address the logical problem arising from Coasian Symmetry. (See also here.)

        In the absence of that, it is purely rhetorical: it may demonstrate how a certain individual comes to hold certain preferences, and it may even convince others to hold those preferences, but it give no insight at all into how those preferences may be aggregated with the conflicting preferences of other individuals.

  14. With you on the last 80%.

    The first bit though is a 0/10 in Econ 101.

    GDP is not a record of transactions but of value added in the various stages of creating stuff/services that people want to buy.

    ‘Transactions’ includes that but also trading of existing assets ( eg land and houses) and even betting which are enormous in totoal and nothing to to with any part of the National Accounts excepting transaction fees ( eg agents fees, valuation and advertising).

    The example you quote of the town hall is nothing to do with transactions but merely an astute observation that the building of the new city hall will generate production of materials and labor services and hence more of the much published GDP. It is only true because the public look at gross GDP and not ‘net’ (after deduction of depreciation and losses due to fire etc). The net version is published after a lag but never commented on .

    So please correct the first part of your article(and remove the word ‘transactions’) or mislead many of the non-economists reading this blog.

  15. Here is a communication from “the Maori Chiefs of New Zealand” in 1831, nine years before the Treaty of Waitangi, to King William IV of England, and his reply via his emissary James Busby.

    TO KING WILLIAM, THE GRACIOUS CHIEF
    OF ENGLAND

    We, the chiefs of New Zealand assembled
    at this place, called the Kerikeri, write to thee, for we hear that thou art the great Chief of the other side of the water, since the many ships which come to our land are from thee.
    We are a people without possessions. We have nothing but timber, flax, pork and potatoes, we sell these things, however,
    to your people, and then we see the property of Europeans. It is only thy land which is liberal towards us. From thee also come the Missionaries who teach us to believe on Jehovah God, and on Jesus Christ His Son.
    We have heard that the tribe of Marian 2 (the French – ed) is at hand coming to take away our land, therefore we pray thee to become our friend and guardian of these Islands, lest through the teasing of other tribes should come war to us, and lest strangers should come and take away our land. And if any of thy people should be troublesome or vicious towards us (for some persons are living here who have run away from ships), we pray thee to be angry with them that they may be obedient, lest the anger of the people of this land fall upon them.
    1 Petition sent to King William through Mr. Yate, per Colonial
    Secretary of New South Wales, November 16, 1831.

    Busby delivered the following reply in May 1833.

    MY FRIENDS You will perceive by the letter which I have been honoured with the commands of the King of Great Britain to deliver to you, that it is His Majesty’s most anxious wish that the most friendly feeling should subsist between his subjects and yourselves, and how much he regrets that you should have cause to complain of the conduct of any of his subjects.
    To foster and maintain this friendly feeling, to prevent as much as possible the recurrence of those misunderstandings and quarrels which have unfortunately taken place, and to give a greater assurance of safety and just dealing both to his own subjects and the people of New Zealand in their commercial transactions with each other, these are the purposes for which His Majesty has sent me to reside amongst you, and I hope and trust that when any opportunities of doing a service to the people of this country shall arise I shall be able to prove to you how much it is my own desire to be the friend of those amongst whom I am come to reside.
    It is the custom of His Majesty the King of Great Britain to send one or more of his servants to reside as his representatives in all those countries in Europe and America with which he is on terms of friendship, and in sending one of his servants to reside amongst the chiefs of New Zealand, they ought to be sensible not only of the advantages which will result to the people of New Zealand by extending their commercial intercourse with the people of England, but of the honour the King of a great and powerful nation like Great Britain has done their country in adopting it into the number of those countries with which he is in friendship and alliance.
    I am, however, commanded to inform you that inevery country to which His Majesty sends his servants to reside as his representatives, their persons and their families, and all that belongs to them are considered sacred.
    Their duty is the cultivation of peace and friendship and goodwill, and not only the King of Great Britain, but the whole civilised world would resent any violence which his representative might suffer in any of the countries to which they are sent to reside in his name.
    I have heard that the chiefs and people of New Zealand have proved the faithful friends of those who have come among them to do them good, and I therefore trust myself to their protection and friend-ship with confidence.
    All good Englishmen are desirous that the New Zealanders should be a rich and happy people, and it is my wish when I shall have erected my house that all the chiefs will come and visit me and be my friends. We will then consult together by what means they can make their country a flourishing country, and their people a rich and wise people like the people of Great Britain.
    At one time Great Britain differed but little from what New Zealand is now. The people had no large houses nor good clothing nor good food.
    They painted their bodies and clothed themselves with the skins of wild beasts; every chief went to war with his neighbour, and the people perished in the wars of their chiefs even as the people of New Zealand do now.

    But after God sent His Son into the world to teach mankind that all the tribes of the earth are brethren, and that they ought not to hate and destroy, but to love and do good to one another, and when the people of England learned His words of wisdom, they ceased to go to war against each other, and all the tribes became one people. The peaceful inhabitants of the country began to build large houses because there was no enemy to pull them down.

    They cultivated their land and had abundance of bread, because no hostile tribe entered into their fields to destroy the fruit of their labours. They increased the numbers of their cattle because no one came to drive them away.They also became industrious and rich, and had all good things they desired. Do you then, O chiefs and tribes of New Zealand, desire to become like the people of England ?
    Listen first to the Word of God which He has put into the hearts of His servants the missionaries to come here and teach you. Learn that it is the will of God that you should all love each other as brethren, and when wars shall cease among you then shall your country flourish.
    Instead of the roots of the fern you shall eat bread, because the land shall be tilled without fear, and its fruits shall be eaten in peace. When there is an abundance of bread we shall labour to preserve flax and timber and provisions for the ships which come to trade, and the ships that come to trade will bring clothing and all other things which you desire.
    Thus you become rich, for there are no riches without labour, and men will not labour unless there is peace, that they may enjoy the fruits of their labour.

  16. Ray Evans in Quadrant Magazine October 2010, reviews Melanie Phillips’ book, “The World Turned Upside Down”. He comments:

    “….Melanie Phillips, then, stands her ground on Judaism and Christianity as the bedrock of Western civilisation and the unifying principle behind all the different theatres of the culture wars as the attack on these two religions. However, she describes herself in the preface thus:
    ‘I am an agnostic although a traditionally minded Jew. I have a deep concern for the security and survival of the Jewish people and for the security and survival of Western civilisation, which I believe are symbiotically connected.’
    And this raises a problem. James Franklin, in his review of Cardinal Pell’s book (Quadrant, July-August 2010), makes the following comment on non-theist conservatives:
    ‘Without some realist story about the metaphysics of morals, about the inherent as opposed to the conventional worth of persons, there are left only pragmatic arguments about what effects and side effects reforms might or might not have on our comforts, and political struggle. That leaves out something important, such as a solid sense of the reality of evil.’….”

    Rationalist geniuses can write usefully and at great length on causes and effects and consequences for society and the economy, but they will continue to be ignored just as much or more, as “Christian fundamentalists” are. Julian Simon, Bjorn Lomborg, Indur Goklany, Steven Hayward and George Reisman will continue to be ignored on environmental realities. Ludwig Von Mises and the Austrians will continue to be ignored on the subject of monetary follies. Charles Murray and Heather MacDonald will continue to be ignored on causes and effects in social development, crime, and law and order.

    Roger Scruton, in “Whatever Happened to Reason”?, puts it like THIS (but never mentions Christian faith as the missing ingredient)

    “…….intellectually speaking, the Enlightenment project, as Alasdair MacIntyre has called it — the project of deriving an objective morality from rational argument — is as much a reality for us as it was for Kant or Hegel. The problem lies not in giving rational grounds for morality or objective principles of criticism. The problem lies in persuading people to accept them. Although there are those, like John Gray, who tell us that the project has failed, the failure lies in them and not in the project. It is possible to give a reasoned defense of traditional morality and to show just why human nature and personal relations require it. But the argument is difficult. Not everyone can follow it; nor does everyone have the time, the inclination, or the requisite sense of what is at stake. Hence reason, which stirs up easy questions while providing only difficult replies, will be more likely to destroy our pieties than to give new grounds for them.
    What is wrong with the Enlightenment project is not the belief that reason can provide a trans-cultural morality. For that belief is true. What is wrong is the assumption that people have some faint interest in reason. The falsehood of this assumption is there for all to see in our academies: in the relativism of their gurus and in the misguided absolutism—absolutism about the wrong things and for the wrong reasons, absolutism that excludes all but the relativists from their doors…..”