The argument that people need to be deceived into social reform assumes either that they’re stupid or [clause which should be replaced with “selfish”].
What probability do you assign to the belief that 70% or more of current living humans are stupider, more short-sighted, and selfish than you are? I’m somewhat selfish in that I care far more about people I interact with than about distant (in time or space) strangers, but still likely in the top quartile on that dimension, and much higher on the first two.
I agree it’s worth questioning your beliefs in what reforms are useful to what segments of the population, and what segments will suffer (temporary and non-righteous, we hope) losses. but I don’t believe that the current population mix is capable of long-term self-governance without forceful guidance of elites.
But do you believe the free market can be effective at solving problems such as externalities if the proper incentives are put in place? If so, why do you believe people who are stupid and short-sighted can properly follow those incentives?
In economics, an “externality” is a consequence to some action which does not affect the actor (or which the actor does not care about). What makes it “external” is that it does not enter the actor’s optimization process and thus does not afffect the decisions he is making.
The problems with externalities is that they are a weapon of Moloch, that is, they subvert distributed coordination mechanism like markets. Pollution is a classic externality.
There are ways of dealing with externalities and the two main ones are:
Direct control by a central authority. If you don’t want coal power plants to emit sulfur into the atmosphere, you just make (and enforce) laws which forbid them to do do.
Changing the rules of the game. If you make it so the externality becomes a cost for the actor—that is, if you bring it into his optimization process—the problem disappears “naturally” because it’s not an externality any more. One way of doing this is giving the actor some property rights in whatever is worsened by the externality. Another is to make him liable for the problems so that they have costs for him (e.g. via lawsuits).
Externalities exist in the transaction (the territory), not in a model of the transaction (the map). The “decision”, remember, is not “a” decision made by a World Ruler. It’s a market transaction made by multiple parties, subject to agreed-on rules or arbitration. Externalities are created by the terms of the transaction. The terms of the transaction are only a model of the transaction in an extreme Marxist analysis such as Althusser would make (who basically turned materialism into strict behaviorism by saying ideas don’t exist, only actions—e.g., he would say a contract isn’t a transaction; people pushing green pieces of paper across the table is a transaction).
I’m starting to think there are a couple of different ways to frame the question. I’d been thinking of it along the lines of “my economic exchange model doesn’t include that the actors can understand the larger world”, which is definitely map, not territory: the exchange model of decisionmaking is simply missing a lot.
One can also think of it in terms of general decision theory—in this case “externality” isn’t something missing from the model, but something that the agent doesn’t care about as much as the analyst applying the term wants them to.
What probability do you assign to the belief that 70% or more of current living humans are stupider, more short-sighted, and selfish than you are? I’m somewhat selfish in that I care far more about people I interact with than about distant (in time or space) strangers, but still likely in the top quartile on that dimension, and much higher on the first two.
I agree it’s worth questioning your beliefs in what reforms are useful to what segments of the population, and what segments will suffer (temporary and non-righteous, we hope) losses. but I don’t believe that the current population mix is capable of long-term self-governance without forceful guidance of elites.
Thank you for your answer!
But do you believe the free market can be effective at solving problems such as externalities if the proper incentives are put in place? If so, why do you believe people who are stupid and short-sighted can properly follow those incentives?
Nope! humanity is doomed to suffer from it’s own stupidity, regardless of whether that suffering is traded for or imposed.
Does that mean making former-externalities become not-externatilities-any-more?
Solving any problems means former-problems become not-problems-any-more. How are externalities special?
I think you’re tripping up on jargon.
In economics, an “externality” is a consequence to some action which does not affect the actor (or which the actor does not care about). What makes it “external” is that it does not enter the actor’s optimization process and thus does not afffect the decisions he is making.
The problems with externalities is that they are a weapon of Moloch, that is, they subvert distributed coordination mechanism like markets. Pollution is a classic externality.
There are ways of dealing with externalities and the two main ones are:
Direct control by a central authority. If you don’t want coal power plants to emit sulfur into the atmosphere, you just make (and enforce) laws which forbid them to do do.
Changing the rules of the game. If you make it so the externality becomes a cost for the actor—that is, if you bring it into his optimization process—the problem disappears “naturally” because it’s not an externality any more. One way of doing this is giving the actor some property rights in whatever is worsened by the externality. Another is to make him liable for the problems so that they have costs for him (e.g. via lawsuits).
Externalities are in the map, not the territory. Calling something “external” just means your model is ignoring something that actually matters.
No; “externality” is an economic term meaning a cost or benefit imposed by a transaction on agents who were not parties to that transaction.
Yes. It’s an economic term for “easily foreseen consequences that we excluded from this simple transactional model of a decision”.
Externalities exist in the transaction (the territory), not in a model of the transaction (the map). The “decision”, remember, is not “a” decision made by a World Ruler. It’s a market transaction made by multiple parties, subject to agreed-on rules or arbitration. Externalities are created by the terms of the transaction. The terms of the transaction are only a model of the transaction in an extreme Marxist analysis such as Althusser would make (who basically turned materialism into strict behaviorism by saying ideas don’t exist, only actions—e.g., he would say a contract isn’t a transaction; people pushing green pieces of paper across the table is a transaction).
I’m starting to think there are a couple of different ways to frame the question. I’d been thinking of it along the lines of “my economic exchange model doesn’t include that the actors can understand the larger world”, which is definitely map, not territory: the exchange model of decisionmaking is simply missing a lot.
One can also think of it in terms of general decision theory—in this case “externality” isn’t something missing from the model, but something that the agent doesn’t care about as much as the analyst applying the term wants them to.