u Notes from the Underground: September 2009

Why I don't dig libertarianism that much any more

Tuesday, September 08, 2009

Over the last 3 years, the strength of my belief in libertarianism has waned. I still am libertarian enough to have Hayekian moments every time I go to the grocery store, and I shed an internal tear of joy every time Bryan Caplan writes another blog post arguing for immigration reform. But still. I've found myself disagreeing more often with people and writers I once admired; I've given up reading Reason.com and Cafe Hayek and Amit Varma for the most part. This doesn't at all imply that I am fan of govt. regulation all of a sudden; that is a separate issue.

Here are bunch of reasons why this may have happened, in roughly increasing order of importance, I think.

1. Signaling (the cynic's explanation): As I come across more and more libertarians, may be the philosophy doesn't seem as exclusive as it did before, and I consequently derive less signaling benefit from holding such beliefs. In short, libertarianism is no longer cool.

2. Simple indifference to politics: I am less interested in politics and self-righteous debates than before; politics is the mind-killer.

3. Research funding: Given that for the last 3 years, I've been supported as a grad student by the U.S. govt., a principled stand against govt. spending is a bit hypocritical, no? In general, research on today's scale simply needs govt. funding; and while the many inefficiencies of current academia is a topic I'd love to talk about, I'll spare you for now 'cause that's a separate topic.

4. Foxes vs. hedgehogs: Philip Tetlock studied for 20 years the predictive accuracy of political experts and wrote a widely acclaimed book about it. Basically he found that experts who were skeptical of grand theories and used "local", ad-hoc models ("foxes") were generally more accurate forecasters than experts with overarching grand theories to explain all developments ("hedgehogs"). Now this doesn't carry over cleanly to policy debates, but it does suggest that attachment to simple, elegant theories in social science is not such a great idea. Among the major political ideologies libertarianism is probably the simplest and most elegant one, and all of a sudden this doesn't seem like praise. (May be this explains why engineers and geeks, with their training in math, are overrepresented amongst libertarians.)

5. Corporate social responsibility: I no longer accept the Friedmanite view of corporate social responsibility - that a company can do whatever it takes to maximise profit so long as it obeys the law. It was right and proper that De Beers be pressured to stop putting "blood diamonds" out on the global market, even though the company may not have technically been breaking any law. In general, companies will cut corners, lie, and indulge in all sorts of manipulative behaviour that even 6 year olds know are wrong. Turning a blind eye to all of this just because it's technically legal seems quite callous to me.

6. Defer to the experts: Frankly, no matter how intuitively appealing free market economics ("Econ 101") may feel, I should shut up, realize there's economics beyond Econ 101, and simply believe in whatever the average expert on any given topic believes. E.g. when Ron Paul comes along arguing for the gold standard - I don't even need to know the technical arguments as to why this is loony; all I need to know is that practically no reasonable economist thinks this is a good idea. This strategy is very sound as far as it goes, except that there are topics where it is non-trivial to figure out what the average expert believes in, and there are topics which are a combination of ethics and empirical knowledge (corporate social responsibility, the role of the govt. in protecting the environment, abortion etc.) and therefore there are no clear experts to defer to.

7. The recent financial crisis: Beware those who are not surprised by surprising seeming data; the scale of madness displayed by Wall Street in the subprime crisis can fail to surprise only if you are a investment banker yourself or you've made a thorough study of human irrationality. (Judge Posner surely deserves some credit for having the guts to revise his life-long beliefs, although I haven't read the book.) The main surprise is not even that investment bankers were greedy, but that they were *flat-out stupid*. Having their own careers, financial security and reputation at stake was not enough incentive for these people to act rationally. *That* is what scares me; greed is widely reviled, but greed has predictable consequences, one can turn greed around to society's advantage (which is how markets work when they do). On the other hand it is stupidity that has unpredictable consequences; there is no saying how things might turn out when you deal with mad men. The only philosophy that's survived this whole mess is Nicholas Taleb's, and his theories have nothing at all to do with libertarianism.

So there you go. Today's piece of tangentially related advice: it's a good strategy usually to hold off on proposing solutions until you have understood the problem at hand properly.