Aphorism of the Day

Better to be a sap sometimes than a good person never.

Image: My photo, taken two years ago in Alon Shevut, Israel

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Captured in Passing: New York Public Library, NY

Image: My photo, taken this June

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The Possible Problem with Voluntary Exchange

The thing is… everyone’s actions here are voluntary

Libertarians like myself [ed. — no longer accurate] like to defend contracts and other exchanges because they’re voluntary. When two capable adults reach an agreement to exchange their legally owned objects, labor or money, then presumably they both believe they’ll be better off once the exchange has been made. The problem with this argument, as a friend of mine recently pointed out, is that it could be extended to virtually every human action, even ones we have no interest in defending. For example, if I were held at gunpoint I would think myself better off giving up my wallet, and my assailant would think himself better off with the wallet and no blood on his hands. Both of us are taking the actions we deliberately and rationally believe will advance our interests, but there’s something clearly wrong going on.

Now, this case is extreme and we can intuitively see that there are differences between it and an ideal voluntary situation. But what are the distinctions? The first one is that I’m being threatened with violence. Let’s set that aside for now. The other distinction is more interesting. Mike Munger, an economist at Duke, tries to define the perfect voluntary exchange in order to distinguish it from other scenarios which are problematically voluntary. The main difference he finds is in scenarios where, while both parties consider themselves advantaged by the deal, the difference in alternatives in huge. So in my previous example, my alternative to giving up my wallet was death, while my assailant’s alternative was to go without $100.

Munger argues that this intuition, that a major difference in alternatives is unfair, undergirds much of our support for economic regulation. We oppose selling ice at super high prices to people in disaster zones because the higher prices hardly compare to the need for ice; we are shocked at the sale of kidneys because kidney failure is so dramatically worse than not receiving a couple thousand dollars in compensation. This intuition is behind what we call exploitation: sweatshops appear to take advantage of people because workers in third world countries have so few alternatives, while corporations could always pay more for workers at home.

But when we blame the exchanges taking place — the selling of a kidney, the setting up of a sweatshop — aren’t we, as Munger argues, reversing causality? The problem isn’t the exchange, which if anything helps improve the situation, but rather the underlying causes which lead to a disparity in alternatives. It’s not the kidney seller who made your kidney fail, nor the sweatshop owner which left your country in crushing poverty. Outlawing these exchanges would be like prohibiting me from handing over my wallet, while leaving criminals free to stick me up. We should be combatting the source of differences in alternatives, not the exchanges which can alleviate them.

Image: Civil War era cartoon from the Library of Congress

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Two Views of Freedom

Is our will just being bent by the winds of of determinism?

I recently read Steven Landsburg’s interesting but often befuddled book, The Big Questions. It’s a fun book because its view is so vast and its conclusions so sweeping. He tries to tackle basic questions of the universe in 200 pages or so, and inevitably stumbles many times. I’ll try to present a few problems I noticed, and offer alternative possibilities. In this post I’ll challenge Landsburg on his defense of free will.

In his first chapter, Landsburg tries to rid us of our doubts about free will once and for all. “No college sophomore,” he writes, “has ever turned in a paper denying the existence of free will without first choosing to do so…. You simply cannot be a conscious human being without making choices all the time.” Though he admits that our actions are all initially determined, and that “if you know the state of a human being and his surroundings on Monday and have sufficient computational power, you can predict with certainty the actions of that human being next Friday…”, he still believes that the fact that our will has an effect on the world is sufficient to demonstrate our free will. Indeed, paraphrasing Robert Nozick he writes, “Determinism is true but thermostats can still control the temperature…. Likewise, determinism is true but you can still control your life.” And for those who think that the ultimate determined nature of this will quashes its claim to freedom, he dismisses them out of hand:

What caused your decision to get drunk and watch Mystery Science Theater the night before your philosophy finial? Free will. An insane person might object that free will can’t be it at all, because free will is just a shorthand term for an indescribably complex process involving trillions of neurons, which in turn can be described in terms of quadrillions of atoms… So what? You still have free will, and you know it.

Though he doesn’t cite him, this is all in the tradition of David Hume, who in An Enquiry Concerning Human Understanding posited that the entire free will debate was a semantic one, simply confused by what we meant by liberty.  “By liberty… we can only mean a power of acting or not acting, according to the determinations of the will, that is, if we choose to remain at rest, we may; if we choose to move, we also may.” Under this definition, free will could be fully determined and remain free.

John Searle in Freedom and Neurobiology, however, disagrees. By freedom we don’t mean merely that our decisions have an effect on the world and are made without overt coercion, but rather “The thesis of free will asserts that some actions are not preceded by sufficient causal conditions,” because determinism clearly “asserts that all actions are preceded by sufficient causal conditions that determine them,” these positions are in absolute disagreement. When we get drunk and watch Mystery Science Theater the night before our philosophy final (an example which says more about Steven Landsburg than free will, by the way) does our having made that choice matter more than the fact that we could not have made another? Can we really call it free?

Searle offers a possible way to grant us free will. His primary piece of evidence for free will is the feeling we experience when “I do not sense the antecedent causes of my action in the form of reasons, such as beliefs and desires, as setting causally sufficient conditions for the action… I sense alternative courses of action open to me.” But how is this “gap” between conditions and outcomes possible? Unfortunately, the science here is murky and Searle has to take to hand-waving. The only way to allow for indeterminism is to rely on quantum mechanics, and so Searle argues that if we are to believe our senses then we must believe that quantum mechanics is somehow allowing indeterminate rationality to act in the gap. How… well, he doesn’t say.

My essay on Hume and free will here.

Image: L’idiot via Barking up the Wrong Tree

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Cash for Kidneys

The United States is in a medical crisis. This is not an issue of escalating healthcare costs or an overseas epidemic, but rather a homegrown problem: a massive shortage of kidneys. The lack of available kidneys leads to around 4,000 deaths annually in the US, and over 85,000 people are waiting for one currently. The fact that kidney transplants are now incredibly safe – the mortality rate is .03%, and immunosuppresants allow for a high quality of life for receivers – makes this situation especially unbearable. In a recent Triple Helix article, for which I interviewed Nobel Prize winning economist Gary Becker, I explore possible ways to close this gap – and why that hasn’t be done so far. You can read the article here. First couple paragraphs below the fold:

Image: cwwphotos

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What does “harm” mean? Or, the importance of baselines

Me and myself: What you see is what you get (Self Deception)

Considering realistic alternatives is kinda important

Bryan Caplan asked an important question to economics bloggers via the Kauffman survey: “Taking into account its entire history, do you think the Federal Reserve has done more harm than good?”

The returns were surprisingly ambivalent: 56% of respondents answered that the Fed’s influence was mixed (40%) or harmful (18%). Caplan interpreted this as an important result, which should swing us against the Fed if we’ve any presumption against government intervention.

But does this survey really tell us much? The meaning of the question is extremely unclear. The relevant question isn’t whether the Fed has, on balance, done good or bad, but how beneficial it’s been relative to reasonable alternatives. And what those are is not revealed in the question. For example, has the Fed been better than a totally free market banking system would be? Or better than a state-by-state monetary system? Or maybe just compared with alternative policy decisions the Fed could have made, like targeting NGDP or strictly following the Taylor Rule?

And this just emphasizes the importance of baselines. When we’re evaluating policies and institutions, we should weigh not some abstract cost benefit analysis (whatever that would mean), but a comparison to real alternatives. This is the crucial point Scott Sumner makes when considering whether the Fed caused the Great Recession: clearly, the short fall in demand was not entirely the Fed’s fault. But it was reasonable to expect the Fed to continue its long-term policy of keeping nominal growth the same, and so when they failed to do so they caused the major problems our economy is suffering through now. Karl Smith makes a similar point during his interesting bloggingheads with Matt Yglesias, arguing that evaluating health care systems based on a comparison to a free market in health care is almost irrelevant because there’s no precedent for or much possibility of such a market starting up. Instead, we should consider the “real choice… between an stingy government run sector that actually spends less money on health care or a less stingy government subsidized sector that spends more money on health care.” I’m not sure I’m as pessimistic about all libertarian reforms, but sometimes perfect is the enemy of the good.

Photo: by jcoterhals via Barking up the Wrong Tree

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America Without the Dollar

New York Stock Exchange
A couple months ago, when discussing why a currency union worked so much better for American states than European countries, I questioned Paul Krugman’s assumption that our current dollar monopoly on currency was necessarily the best thing. Subsequently I did some research on the free banking era in the US, a time when in fact there was no federal monopoly on money and states differed wildly in monetary policy. It’s a fascinating and bizarre period, an era stretching from Andrew Jackson’s presidency until the Civil War, when banks issued their own money and some states were officially bankless. These various systems represent a number of fascinating case studies for historians and economists, who down the years have debated the various results from the so-called “wildcat” banks in free banking states as well as states which by law had no banking at all. Below the fold is the first paragraph of the paper I wrote on the subject:

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