Archive for the ‘Economics’ Category

The Real Story About Inflation

September 16, 2022

Inflation is a bad thing. The whole point of money is as a receptacle of value; fluctuating value defeats the purpose. The $10 you put in the bank a year ago has now lost you a dollar. Things you buy cost more. The poor — who always seem to get the short end of the stick — are especially hurt.

No wonder voters are angry. Republicans are having a field day banging the inflation drum. But how to fix it, they haven’t a clue. (While actually bearing much blame for inflation, as we’ll see.)

Inflation ramped up in the ’70s. Nixon tried wage and price controls. Bzzt, wrong answer, as any good economist would have predicted. Then Paul Volcker of the Federal Reserve succeeded in wringing inflation out of the economy by raising interest rates high enough to induce a recession. A big part of the problem was public expectations of inflation, which became a self-fulfilling prophecy, especially as workers demanded higher wages (with unions often still strong enough to get them). And Volcker also succeeded in whacking those inflation expectations.

Interest rates remain the Fed’s key weapon against inflation. The Fed, and central banks elsewhere, have for decades now generally targeted inflation rates around 2%, considered a benign level — particularly to steer clear of deflation, a different nasty problem. Until lately they were succeeding. But while today the public still does not expect persisting high inflation, mounting worldwide government debt levels cause financial market concerns that they’ll deal with it by printing money — i.e., to inflate the debt away.

Republicans do have a fair point in blaming current inflation on the 2021 stimulus legislation; that probably was over-generous, and a contributing factor. But so was the very similar stimulus passed under Trump in 2020. And his tax cut, way over-generous to the rich and corporations, driving up government debt and borrowing. Republicans remember fiscal virtue only when out of power.

More money sloshing around in the economy spurs inflation because in effect purchasers bid up the prices of things they buy. And businesses paying more for raw materials forces them to raise prices. They also buy labor; and when inflation makes dollars worth less, businesses must offer more to attract and keep employees. And meantime, another big factor is pushing up wage costs — a worker shortage.

We see “Help Wanted” signs all over. In particular, customer service type jobs go begging. Understaffing is ubiquitous. Flights are cancelled for lack of personnel.

Some of this is lingering fallout from the pandemic, which discombobulated our economy in myriad ways. One concerns productivity, which seems to have stalled. The productivity effects of increased remote working are yet unclear. And the “quiet quitting” phenomenon doesn’t help. It all forces labor costs, and thus prices, higher.

Another giant workforce factor is demography. Population growth is slowing or even reversing in the rich world. And with Americans getting more education (delaying work), retiring earlier, and living longer, the working share of the population inexorably shrinks.

That labor gap used to be filled by work-hungry immigrants. But guess what? Thanks to Trump and Republican xenophobes, immigration is way down. Another big reason for the worker shortage, forcing businesses to raise pay, and prices. A cause of inflation which Republicans don’t want to talk about.

We’ve also foolishly been waging war against globalization and trade. Buying cheap stuff from other countries kept prices and inflation down. Trump put the kibosh on that too. His tariffs equate to direct rises in consumer prices. In fact, globalization and trade benefited all participating countries — a “gigantic shock absorber” for the world economy, said Isabel Schnabel of the European Central Bank, by keeping supply and demand in balance through adjustments to production rather than price swings. That factor too is crumbling.

All these inflationary pressures are only minimally amenable to the Federal Reserve’s interest rate tweaks. (Which President Biden, by the way, doesn’t control anyway.) So when you hear Republicans rant about inflation, ask what’s their plan.

“Evil Geniuses – The Unmaking of America – A Recent History”

August 24, 2022

Kurt Andersen’s 2020 book is about “political economy.” He argues that ours went from being basically fair to unfair, the turning point around 1980. Achieved by his title’s “evil geniuses,” the rich and corporations working with right-wing political forces.

I previously reviewed Andersen’s excellent 2017 book, Fantasyland,* chronicling America’s descent out of reality-based epistemology. His new book is a polemic, history with attitude. For most of the time in question, I was politically on the side he castigates. Yet I actually agree with much in this book — today’s “conservatism” having betrayed the principles I’d embraced. However, I think Andersen’s argument goes way overboard. And the book is maddeningly tendentious and bloated. I got tired of shameless brazen repetition of words like “shameless brazen greed.”

Andersen’s tale really starts in the 1960s, with the counterculture abhorred and producing a backlash, which right-wing politicians and ideologues, in cahoots with business interests and the rich, exploited to get their hands on levers of power, which they utilized to pick apart the old New Deal political economy. The details of the culture clash have metamorphosed over time, but the basic story continues — if it’s not anti-war hippie drugheads demonized, it’s welfare moochers, or sexual deviants, or non-whites, or immigrants, and so on.

The “evil geniuses” pursued their agenda in three key ways: gutting labor union power; reducing regulation; and cutting taxes on corporations and the wealthiest. Andersen sees this as wrecking our past social contract with a rising tide lifting all boats — now most boats are stuck in the mud while the yachts of the rich speed ahead. Inequality widens. Andersen thinks we’ve actually turned the clock back, beyond the New Deal, to the “Gilded Age” of “robber barons.”

A key villain of his is economist Milton Friedman, who posited that a corporation’s sole obligation is to seek profits for its shareholder owners, which Anderson says green-lighted that “shameless brazen greed.” I understand Friedman to have been arguing that society is actually best served when businesses stick to their knitting, producing what people want to buy, while leaving other concerns more properly to the political sphere.

More generally I’m dubious of Andersen’s notion that there were villains and villainies behind everything that happened. Some of it, yes, but far from all. It’s an ancient human proclivity to see all phenomena as caused by conscious agents — that’s how we got cosmologies populated by gods. Yet much of the time, it’s instead that “stuff happens,” for reasons other than intentional calculated action. For example, a big part of Andersen’s story concerns globalization and the “hollowing out” of America’s industrial job picture. As if his “evil geniuses” contrived that just to enrich themselves. Instead it happened inexorably due to fundamental tectonic economic and geopolitical forces, as well as technological developments.

Which Andersen worries will continue gathering force, with AI and robots eliminating more and more jobs for humans. That actually makes us collectively richer. Our key challenge, as Keynes foresaw back in 1930, is how to enable the mass of people to enjoy the fruits of that wealth. And for all Andersen’s lamentations, the fact is — as he acknowledges, sort of — we haven’t done badly on that score. While the rich have gotten a lot richer, the poor have not gotten poorer (globally they’ve advanced tremendously). And if the middle class has been shrinking, it’s a case of more people rising into the ranks of the reasonably affluent than falling into penury.

I was reminded of Thomas Frank’s 2004 book, What’s the Matter With Kansas — which I read while on a cruise filled with very average Americans — and reviewed critically in 2010.** Frank was suffering from the frustration of liberals baffled by what they saw as so many people voting against their economic interests (that is, for Republicans). I saw it as people understandably voting their values rather than their mercenary interests. (Ironically, it’s Democrats who decry “money being everything.”)

But then the “values” actually represented by the GOP went haywire. Andersen’s book details much polling data suggesting that when it comes to specific questions, both the values and economic concerns of strong U.S. voting majorities now align more with Democrats. We saw this vividly when 60% voted this year to safeguard abortion rights — in Kansas, of all places.

Yet Kansans also keep voting for Republican politicians who oppose abortion rights and a lot of other things those voters actually favor. Why? The ensorcelment Republicans managed to put across in past decades, with cultural tribalism and demonizing Democrats, is still working. So those voters have their heads up their behinds.

Andersen professes some hope those heads can be extricated. Well, it wouldn’t do to have a completely dark book. Whereas he thinks Democrats have played patsy to his “evil geniuses,” he does consider it possible they’ll get their act together to capitalize on all the ways Republicans are actually screwing most voters and what those voters truly want. Especially as older ones die off.

This assumes evil genius Republicans don’t succeed in their effort to overthrow democracy.



Steven Pinker on Rationality

July 8, 2022

(This was my July 5 Albany Library book talk; slightly condensed)

Steven Pinker is a Harvard Professor of Psychology; a 600-pound intellectual gorilla of our times; author of a string of blockbuster books. His latest is Rationality – What it is – Why it Seems Scarce – Why it Matters.

In 2011, he wrote The Better Angels of Our Nature: Why Violence Has Declined. AndI recall where a radio interviewer was, like, Pinker, are you out of your mind? Violence declining? But of course that was well supported by evidence.

So now it’s Rationality. And many will similarly say, Pinker, are you out of your mind?

Evidence for human irrationality does abound. And this might seem the worst of times for a book celebrating rationality, with two big elephants in the room stomping on it.

One is American politics. Some voters have always behaved irrationally, yet the system functioned pretty well nevertheless. But now the inmates have taken over the asylum. Or at least one of our two parties; and recalling Yeats’s line: the best lack all conviction, the worst are full of passionate intensity.

Then there’s the international sphere. The Better Angels book emphasized three quarters of a century without wars among major nations. Russia’s Ukraine war blows that up. An assault on rationality.

But maybe, with the world seemingly gone mad, this book on rationality is actually timely.

The core of rationality is logic. Pinker gives the example of a logic puzzle, involving four coins. I’ll omit details; most people get it wrong. But Pinker says we’re better at applying logic when it “involves shoulds and shouldn’ts of human life rather than arbitrary symbols” like in the puzzle. He calls this our “ecological rationality,” our horse sense (though horses don’t have it to anything like our degree).

Here’s a simple logic problem that even many mathematicians, including Paul Erdos, have gotten wrong. The famous Monty Hall problem. On “Let’s Make a Deal,” there are three doors, one hiding a car and two hiding goats. You pick Door #1. Then Monty opens Door #3 to reveal a goat. Should you switch to Door #2? Most people say the one-in-three odds haven’t changed. Wrong! Monty opened Door #3 knowing it had a goat. He didn’t open #2 which, you therefore now know has a 2 in 3 chance of hiding a car. So you should switch.

Pinker emphasizes that rationality is goal oriented, saying “Do you want things or don’t you? If you do, rationality is what allows you to get them.” This entails using knowledge, which he defines as “justified true belief.” People are again logical and rational (generally) in everyday life, but too often fall down on the “justified true belief” thing.

Pinker suggests that seeking an ultimate philosophical reason for reason is misguided. Any postmodernist’s attempt to argue against reason implicitly concedes that rationality is the standard by which any arguments, even arguments against rationality itself, stand or fall. (Similarly, the assertion that nothing is really true would — if correct — apply to that assertion itself.)

And rationality is not just one among many alternative ways of seeing things. Not, as Pinker puts it, “a mysterious oracle that whispers truths in our ear.” Indeed, “reason is the only way we can know anything about anything.”

There’s a common idea that reason and emotion are separate, at odds with each other. Pinker quotes David Hume that reason is, and should be, “the slave of the passions.” While neuroscientist Antonio Damasio has shown that emotions give us the motivations for deploying reason, so the two are inextricably linked. Then Pinker notes that some of our goals can conflict with others; and “you can’t always get what you want.”

We furthermore have goals we don’t even choose, programmed into our genes by evolution. One rational goal may be a slim, healthy body; also making you more sexually attractive, thus advancing a gene-based goal of reproducing. While conflicting with a desire to eat a delicious dessert — which also serves an ancestral genetic goal, to load up on calories when you can. We use our reasoning minds to mediate among conflicting goals.

But of course not with perfect rationality. Scientific work, notably by Kahnemann and Tversky, has revealed many seemingly irrational human cognitive biases. Also programmed into us by evolution, during our long hunter-gatherer past. For example, we fear potential losses more than valuing gains. So may pass up a chance to win $5 if it means an equal chance to lose $4. Sounds irrational. But for our early ancestors, a “loss” could well mean death. And Pinker poses the question, what could happen to you today making you better off? What could happen making you worse off? A lot worse off? So maybe our loss avoidance bias is not so irrational.

And even if, in isolation, some of our ancestral cognitive biases still seem irrational, realize that we’re talking about short-cut heuristics enabling us to make quick intuitive decisions about stuff coming at us every hour of the day. If you had to think your way rationally through all of it, you couldn’t even function. But using that repertoire of innate heuristics, we do function quite well. Making their use quite rational in a broader overall perspective.

Now, what about morality? Hume famously said you can’t get an ought from an is — in other words, how things are (i.e., facts) can’t tell us how they should be (moral laws). Thus there can be no true moral laws, only opinions. Some solve this by invoking God as the source of morality. But that was knocked down by Socrates, in Euthyphro, asking whether something is moral because God says so, or does he say so because it is moral? If the former, why submit to his arbitrary edicts? But if God does have reasons for his moral rules, why not just embrace those reasons and skip the middleman?

Meantime, Pinker says morality is all about how we behave in relation to others. And there we can rationally recognize everyone’s right not to be unjustifiably messed with. If you feel free to bash others, you can’t say they cannot bash you. Thus Pinker posits impartiality as key — nobody’s personal perspective can override those of others. Which is basically the golden rule.

And note that this does not mean self-sacrifice. It’s actually rational from the standpoint of self-interest. Because it makes you feel good about yourself, and also makes a world that’s better for everyone, including you.

There’s a chapter on critical thinking. Pinker catalogs a host of traps we fall into: the straw man argument, moving the goal posts, what-aboutism, ad-hominem arguments, and so forth. Alas such things “are becoming the coin of the realm” in modern intellectual life. And Pinker quotes Leibnitz in the 1600s envisioning a world where all arguments would be resolved by saying, “let us calculate.” Lyndon Johnson liked to quote, “Come let us reason together.” Yet Pinker comments that life is not that simple, and doesn’t work by formal logic. We know what words mean, but applying them in the real world can be challenging. You can get in a lot of trouble nowadays trying to define the word “woman.”

Another chapter deals with probability and randomness. Many people have only a vague sense of what probability really entails. Do you fault the weatherman who said there’s a 10% chance of rain, and you get soaked? Or the political analyst who gave Hillary a 70% probability of winning? And we tend to judge an event’s probability by the availability heuristic, another Kahnemann-Tversky cognitive bias. That is, we judge how likely something is by how easily examples come to mind. Like with plane crashes.

In a state of nature, lacking better information, that’s not necessarily irrational. But modernity does give us better information, telling us plane crashes are much rarer than car crashes. Yet many people operate on the opposite assumption. And the availability heuristic scares people off from nuclear power — we vividly recall a few high profile accidents (which actually killed very few) — while ignoring the tens of thousands of deaths caused annually by air pollution from conventional power plants. They don’t come to our attention. Pinker calls the news media an “availability machine,” serving up stories which feed our impression of what’s common in a way that’s sure to mislead. (It’s why people always think crime is rising.)

The book goes through many examples of how we commonly misjudge probabilities. For example, it’s reported that a third of fatal accidents occur at home. Does that mean homes are very dangerous? No; it’s just that we spend a lot of time there. We confuse the probability that a given fatal accident occurred at home with the probability that a fatal accident will occur while at home. Two very different things.

Or how about this? A majority of bicycle accidents involve boys. Does that suggest boys ride more recklessly? Or — that boys ride more than girls?

We also overrate the significance of coincidences. I’m often at my computer typing, with the radio on. Is it spooky when I hear a word on the radio just as I’m typing the same word? Not really. I type a lot of words, and hear a lot of words. So such coincidences are bound to occur regularly. Even sometimes with obscure words. My favorite instance: Equatorial Guinea mentioned on the radio just as I was working up a coin from that country. What are the odds? Well, finite.

There’s a chapter on Bayesian reasoning, named for Thomas Bayes, an 18th century thinker. It’s all about how added information should modify our predictions. Like in the Monty Hall problem: his opening one door added information. A key concept is the “base rate.” Suppose 1% of women have a certain disease. There’s a test for it, 90% accurate. Suppose a woman tests positive. What is the chance she has the disease? Most people, including doctors, give it a high probability — forgetting the base rate, which is again only 1%. Bayesian math here tells us that with a disease that rare, a test 90% accurate will produce about ten times more false positives than true ones. So the gal’s likelihood of having the disease is only about 9%. In Bayesian lingo, the 1% is the “prior” — prior information giving us expectations we modify with further information — the test.

One of the most hated theories of our time, Pinker says, is “rational choice theory.” Associated with Homo Economicus, the idea that people act to maximize self-interest. Well, of course we know they do; yet don’t always. Pinker cites an experiment where money-filled wallets were dropped, and most got returned. However — was that really against self-interest? Again, most people feel good about themselves when doing the right thing; shameful and guilty otherwise. And what is life about, if not feelings? Pinker comments that rational choice theory “doesn’t so much tell us how to act in accord with our values as how to discern our values by observing how we act.”

So far I’ve talked about making decisions and choices for ourselves. But it’s another thing when dealing with someone else who’s also trying to maximize their self-interest. This is game theory, which Pinker says explains a lot of behavior that might seem irrational. He mentions the game of chicken, which I once wrote a poem about:

Here’s the trick to playing chicken:

You just keep driving straight,

And don’t swerve, ever.

The other guy will always swerve first.

You’ve got to be crazier than the other guy.

And if the other guy is crazier than you,

And doesn’t swerve,

And you’re killed in a fiery crash,

So be it.

The classic illustration for game theory is “the prisoner’s dilemma.” Two partners in crime are interrogated separately. Each is told that if he rats on the other, he’ll go free, and the other gets ten years. If both talk, each gets six years. If neither talks, each gets six months. So collectively they’re better off staying mum, but only if both do, and neither knows what the other will do. Self interest for each says talk. And if both talk, they’re screwed with six year sentences.

There’s seemingly no good solution. But if the game is repeated, it turns out the best strategy is tit-for-tat — betraying a partner only if previously they betrayed you. And in fact much of human social life resembles this. We indeed behave toward others like it’s a repeated series of prisoner’s dilemma; and that’s why social cooperation tends to prevail. We still can get “the tragedy of the commons,” where individual self-interest ruins things for everybody. But that’s not actually so common. People mostly restrain themselves.

Next topic: correlation does not mean causation. The concept of causation, says Pinker, is at the heart of science — figuring out the true causes of things. So we can do something about them.

Pinker likes to put some humor in his books. A husband couldn’t satisfy his wife in bed. They consult a rabbi. He suggests they hire a buff young man to wave a towel over them in bed. It doesn’t work. So next the rabbi suggests switching: the young man shtups the wife while the husband waves the towel. An lo, great results. So the husband declares to the young man: “Schmuck! Now that’s how you wave a towel.”

And that’s how Pinker illustrates the concept of causation.

So finally he gets to the question: what’s wrong with people? Saying we have a “pandemic of poppycock.” Belief in Satan, miracles, ESP, ghosts, astrology, UFOs, homeopathy, QAnon, 2020 election fraud, replacement theory. And when science produced one of its greatest near-miracles — Covid vaccines — a lot of of Americans said no thanks.

Pinker acknowledges that all the logical and cognitive pitfalls he discussed play some role. But none of that could have predicted QAnon. He also won’t blame social media, pointing out that conspiracy theories and viral falsehoods are probably as old as language. Look at the Bible — talk about fake news. Meantime, even the most flagrant conspiracy mongers still behave, in mundane day-to-day life, with great rationality. So what indeed is going on?

For one thing, rationality can be a nuisance, producing unwelcome answers. Pinker quotes Upton Sinclair: it’s hard to get someone to understand something if their income depends upon their not understanding it. So we use motivated reasoning to reach a preferred conclusion. Indeed, Pinker says the true adaptive function of our reasoning ability may be to win arguments: “We evolved not as intuitive scientists but as intuitive lawyers.” Thus confirmation bias: we embrace any supposed information that confirms a cherished belief, while dismissing or disregarding anything discordant.

However, Pinker suggests the rational pursuit of goals needn’t necessarily encompass “an objective understanding of the world.” Which might conflict with, for example, a goal of fitting in with your peer group (a big propellant for confirmation bias). Pinker calls this “expressive rationality” — adopting beliefs based not on truth but as expressions of a person’s moral and cultural identity. (A related word perhaps strangely doesn’t appear in the book: groupthink.)

Pinker focuses here on our political polarization, between what have really become “sociocultural tribes.” Resembling religious sects “held together by faith in their moral superiority and contempt for opposing sects.” True of the woke left, but especially Republicans, now epitomizing members of a religious cult — whose sense of selfhood depends upon their not understanding that their deity is a stinking piece of shit.

But most Americans actually consider themselves less susceptible to cognitive biases than the average person. That’s the Dunning-Kruger effect — people with deficient thinking skills lack the thinking skill to recognize their own deficiency.

So Pinker says the paradox of how we can be both so rational and so irrational lies in self-aggrandizing motivation. Just as the core of morality is impartiality, likewise with rationality, one must transcend self-interest. I try to apply an ideology of reality — shaping my beliefs on the facts I see — rather than letting my beliefs shape the facts I see. But that does not come naturally to most people.

As Pinker notes, the most obvious counter-example is religion. Yet this book about rationality has relatively little to say about religion. Perhaps Pinker feared turning too many people away from his message. But “faith,” as Mark Twain put it, means believing what you know ain’t so. Believing things despite lack of evidence; even in defiance of evidence. And Pinker does say, “I don’t believe in anything you have to believe in.”

But what does it really mean to believe something anyway? An interesting question. Many religious people believe they’re going to Paradise. Yet few are in any hurry to depart. Pinker distinguishes beliefs consciously constructed versus intuitive convictions we feel in our bones. And we divide the world into two zones: hard factual reality, where our beliefs tend to be accurate and we act rationally; and a zone where reality is more elusive, a zone of mythology, not undermining our day-to-day functioning. There, even holding a false belief can be rational in the sense of serving certain goals — making one feel good, tribal solidarity again, or avoiding fear of death.

Pinker does fault our society for failing to sufficiently inculcate some of science’s foundational principles (which contradict religion): that the universe is indifferent to human concerns, that everything is governed by basic laws and forces, that the mind is something happening in the brain. Thus ruling out an immortal soul.

But, ever the optimist, he also reminds us how much rationality is actually out there. Some people distrust vaccines, but not antibiotics (and so much else in modern medicine and science). And culture can evolve. Ours has evolved tremendously; a lot of what was acceptable not so long ago is no longer acceptable. (There may be some overcorrection.)

It’s a battle against what Pinker sees as a “tragedy of the rationality commons.” Wherein self-interested and self-motivated argumentation gobbles up all the space. Yet he thinks the greater community can mobilize against this; for example, internet media in particular have awakened to the problems, roused by two big recent alarm bells: misinformation about Covid, threatening public health, and about the 2020 election result, threatening our democracy.

The final chapter is titled “Why Rationality Matters.” As if that still needs answering. Pinker presents a whole catalog of how common mistakes of rationality cause concrete harm. He cites one study identifying 368,000 people killed between 1970 and 2009 from blunders in critical thinking. I said to myself: really? Only 368,000? And of course countless Americans died from Covid irrationality.

Yet still, immense technological progress, improving quality of life (and its length) has been achieved through rationality. Likewise our moral progress, in a great roll-back of cruel unjust practices. Pinker says that in researching this, his greatest surprise was how often the first domino was reasoned argument. Very powerful after all.

I would add that globally speaking, a huge factor propelling human rationality has been the spread of education (the Dunning-Kruger effect notwithstanding).

Well, it might seem like I’ve veered back and forth between positive and negative. But I’ll conclude with the book’s final words: “The power of rationality to guide moral progress is of a piece with its power to guide material progress and wise choices in our lives. Our ability to eke increments of well-being out of a pitiless cosmos and to be good to others despite our flawed nature depends on grasping impartial principles that transcend our parochial experience.”

That is, rationality. Humanity’s best idea.

Alternatives to capitalism?

June 12, 2022

Denounce “capitalism” or the market economy all you want – but what’s your alternative? This system was not foisted on us. Rather, it’s the natural paradigm for human economic relationships; everything else is an attempt to impose some artificial one. Stone age people had a market economy – trading flints for pelts, for instance, at an exchange rate they’d negotiate.

The invention of money made things a whole lot easier. Yet some people demonize money (“the root of all evil”) and the whole concept of selling anything for money (not to mention that bugbear, “profit”). They fantasize instead a “sharing economy” – you share your flints with me, and I share my pelts with you.

Indeed, such sharing too is fundamental to human nature. We share a lot, especially among friends and family. Among strangers, not so much – we are altruistic, but only up to a point. That greatly limits the scope for a “sharing economy.” You may persuade your pal to share some flints, but will have a tough time cajoling GM to share its cars. In fact, how would cars get made at all in a “sharing economy?”

The great beauty of a money/market economy is that all the contributions of the many disparate people needed to produce a car get rationally and efficiently organized, via everyone in the picture being compensated for what they provide, out of the money you pay for the car. Otherwise – no cars. Nor pretty much anything else you buy.

So a “sharing economy” would be fine, as long as you’re happy living in a cave sharing flints and pelts.

Of course, the real-world alternative to a capitalist, market economy has been socialism, where the government does everything. And I say “has been” because few apart from Bernie Sanders still think this is a good idea. Turns out that absent a profit motive, with the associated impetus to satisfy customers, you get East Germany’s Trabant car rather than West Germany’s BMW.  And also a government too powerful for its own good (or yours). “Democratic socialism” has proven an oxymoron; whatever you can say about Cuba, or Venezuela, “democratic” ain’t one of them (unless you torture the word’s meaning, as socialists will do).

However, there’s another conceivable alternative – worker cooperatives – businesses owned by their employees, bridging the divide between capital and labor. Nothing incompatible here with market economics or even capitalism. And the profits go to those who produced them, nowhere else. What’s not to love?

Actually, we’ve gone partway toward that model, with many employees owning stock in their companies, especially in 401k plans; and pension funds have huge shareholdings. Yet we’ve seen very few firms owned outright by their workers.

You might wonder why workers in a plant being closed don’t just organize to buy and run it themselves, so they can keep their jobs. Well, plants get closed for economic reasons. Workers won’t ship their own jobs overseas, but wishing won’t make them and their products competitive in the global market. Workers investing their own hard-earned money in a struggling business is not a great idea.

But what about a thriving one? Employees pooling funds to take over, say, Delta Airlines, might be theoretically conceivable, but the sum required would be daunting. And even a seemingly healthy firm might not be a sound long-term investment. The world changes. Too many people have put their nest-eggs in their own employers’ stock that plummets. Enron was a prime example. Not to mention the managerial problems, with big conflicts of interest, that employee ownership would entail.

Guess we’re pretty much stuck with plain old capitalism. Boo hoo; but it’s raised global average real dollar incomes five-fold in the last century, lifting billions out of poverty. Maybe not such a bad system when you really think about it.

Meantime, a kind of “sharing economy” is emerging in the form of enterprises like Uber and Airbnb – people sharing their cars and homes. Of course they don’t do it altruistically, but for money. Thus this actually highlights the true virtue of free market economics – people finding ways to create value for other people, and thereby benefiting themselves. What’s not to love?

Libertarianism: a crazy idea?

June 4, 2022

I’ve always considered myself basically libertarian. Recently I read Libertarianism: A Primer, by David Boaz. Published in 1997 — it might seem an artifact from a distant past.

And Boaz starts off saying libertarianism is (was) resonating with more and more people. But lately, it’s mostly become a dark perversion of itself, the word “freedom” fetishized by a deranged political right that no longer even believes in democracy. Their idea of “freedom” is to refuse mask wearing and vaccination, and allowing anyone to buy military assault weapons.

Actually violating libertarianism’s core idea of freedom to act as one chooses — provided no one else is harmed. Today’s vocal “freedom” lovers exposing others to potential infection (and shooting) certainly harms them.

Libertarianism assumes we have natural rights to “life, liberty, and pursuit of happiness.” Where do they come from? The Declaration of Independence said the “creator.” But nonesuch exists. The philosopher Jeremy Bentham famously called the idea of natural rights “nonsense on stilts.”

But imagine a world with just one person, John. Obviously John is free to act as he pleases. Then Sue shows up. By what right could Sue interfere with John’s liberty? That is the real question posed by the concept of natural rights. Not what’s the basis for John’s rights, but rather what’s the basis for anyone trumping them? If John’s rights are somehow debatable, surely that’s more true of a right to negate them. And this is always the issue regarding natural rights — not what justifies them, but what can justify their denial.

Boaz stressed the centrality of property rights. All liberty really equates to the right to own and enjoy the use of property. Without that, there isn’t much of anything you can freely do; making freedom meaningless.

Proudhon declared “property is theft,” and some indeed deem the whole idea of property problematic because some have more and others less. Romanticizing an imagined utopia where there is no “property” and everything is shared in common. A friend of mine thinks the solution to inequality and poverty is simple, with no need for economic growth. Humanity as a whole has enough wealth. Just (!) distribute it more equally.

But recall John and Sue. Similarly, the issue isn’t John’s right to his property, but the right of anyone else — Sue, the government, “society” — to dispossess John and grab control of his property.

Some (like my friend) do try to justify that by invoking some supposed greater good. Perhaps even John’s own good. But consider the arrogance of thinking you know what’s best for other people. Libertarianism is a stance of humility vis-a-vis other people. Unlike the “nanny state,” libertarians recognize that people differ in their wants and needs and what serves them; of which they themselves are the best judges. Furthermore, when government involves itself in so many matters, putting them all in the public square, that’s a recipe for conflict. A public square so thick with issues is a key cause of our political polarization.

Boaz argues that much government activity exceeds enumerated constitutional powers. He omits mention of the power to regulate interstate commerce, which has been interpreted quite broadly to cover all that. But anyhow, hasn’t this horse long ago left the barn? Making Boaz’s libertarianism seem a quaint if not irrelevant idea?

And government’s growth wasn’t usurpation. Voters have mostly welcomed government action, sold as improving lives and preventing harms. Even under Reagan and Thatcher, governments actually grew.

True, eliminating this or that government program or regulatory scheme would always harm some people. A full libertarian rollback would entail much harm. But — that harm would be dwarfed by the benefits in terms of greater overall societal wealth, enjoyed by most citizens. Simply put, less restriction on economic activity means more scope for wealth creation. But that foregone boon is invisible to the public when thinking about government activity.

Here’s a small example. Governments require licenses for innumerable professions, not just doctors and lawyers, but hairdressers, real estate agents, interior decorators, cosmetologists, and a zillion others. Sure, all justified to protect the public, and without licensing there would be horror stories. But the true main impetus for such licensing is that those professions want to stifle competition, and enlist government to do it for them. Eliminating the licensing would open up vast opportunities for more people to earn money and innovate to provide services to consumers, who would benefit from wider choices and lower prices. All that would far outweigh the occasional horror stories.

And here’s a bigger case in point: drug prohibition. Does it prevent harms from drug use? Maybe the tiniest bit. But even if it stopped all drug use, that benefit would still be dwarfed by the vast incalculable harm drug prohibition visits upon society. All the lives destroyed by incarceration, neighborhoods shattered by violence, all the corruption. America’s drug war creates murderous criminality in other countries too (a big cause of our immigration problems).

Imagine if we just stopped making drugs illegal. All those harms would go away. That would be a libertarian approach. Maybe not so crazy after all.

The Dalai Lama: Ethics for the New Millennium

March 14, 2022

This 1999 book says nothing remarkable. That’s what’s remarkable about it.

The Dalai Lama (Tenzin Gyatso) is known as a religious or spiritual leader. But he is Buddhist, which is more a philosophy than a religion, and there’s practically no religion in his book. No mention of reincarnation (even though it’s central to his own life story — he was deemed the reincarnation of his predecessor). No mention of any afterlife, or God, or references to scripture.

Leaving all that out makes for a book that can speak to everyone, giving us a take on ethics that’s universal. Unlike efforts messed up by dicey religious notions, this book doesn’t ask the reader to suspend disbelief, with propositions not readily accepted by our rational minds, which must be forcibly overridden by “faith.” In contrast, there’s very little here that doesn’t strike a reader as perfectly reasonable and indeed obviously true.

That might be a formula for anodyne platitudes. But not for nothing has this man spent his life thinking about the issues here addressed. Furthermore, in contrast to so much that’s written under the rubric of “philosophy,” here there’s nothing abstruse, difficult, esoteric, convoluted, or subtle. He tells it straight and clear.

But enough of characterizing the book. What does it actually say?

Everyone desires happiness and avoidance of suffering. So much a part of our nature is this (and it would be strange if it weren’t) that it requires no further philosophical justification. “Suffering” is self-explanatory but “happiness” is a much trickier concept (as exemplified by John Stuart Mill suggesting it’s better to be Socrates dissatisfied than a satisfied pig). The key dichotomy is between transitory sensations and feelings about one’s life as as whole. Gyatso doesn’t deny the pleasures of the former; but beware the “hedonic treadmill,” when satisfying a desire merely sets up the next desire.

In his view, the key to happiness — and to ethics — is avoidance of harm to others. Or, more broadly, promoting their happiness. (Recalling the golden rule.) This actually may not seem so obvious a proposition. I get there by positing that the only thing that can matter is the feelings of beings able to feel. Gyatso doesn’t put it that way, but the conclusion is equivalent.

It’s also the essence of ethics — harm avoidance and happiness promotion. But how this figures into one’s own happiness is again tricky. While Gyatso argues that it’s served by promoting the happiness of others, Garrison Keillor queried if one’s purpose is to serve others, then what purpose is served by the existence of those others? It’s not actually a supercilious question. Is “pay it forward” a sort of Ponzi scheme? (But the existence of feeling beings needs no justification. They just are.)

A related issue is whether there’s truly any such thing as altruism. If doing something for another makes me happy, per the Dalai Lama, isn’t that actually self-serving? My daughter and I have had this conversation endlessly about my philanthropy.

I answer this way. My feeling good about philanthropy is not a bad thing that negates the happiness in others it produces. It augments it. If both donor and recipient benefit, that adds to the global quantity of happiness. Which is what it’s all about. And though Gyatso suggests there is a difference between self-serving and selfless altruism, I believe our egos and self-regard are so powerful that the latter cannot truly exist.

Notably, a chapter is titled “The Ethic of Restraint.” I read it shortly after writing about how restraint and its lack creates a power imbalance between good and evil. Moral action concerns not just one’s good impulses, but restraining the negative ones we all experience. Gyatso dilates upon how negative thoughts and feelings — anger, jealousy, resentment, etc. — undermine one’s ability to be happy. While positive ones — kindness, compassion, love — serve it. Thus giving us the lifelong task of controlling the former in favor of the latter. Taming a wild elephant, the book says.

This promotes inner peace, deemed the sine qua non of happiness. And inner peace helps us to restrain our negative feelings.

All fine and dandy. But how does one know when one is doing that? Self-justification is also a powerful force. Even from the standpoint of promoting the well-being of others, fallible humans can get it wrong. Hitler, Mao, and Pol Pot believed they were working for human betterment. Gyatso would say they lacked inner peace. I don’t think it’s quite that simple.

Interestingly, he rejects the idea of “karma” as commonly understood, some sort of cosmic force for giving people their just deserts. Gyatso sees that as powerlessness. Instead, he says, what happens to us does depend on our actions, but as direct consequences, not due to some mystical force. (Which of course does not exist.)

I did not agree with every word. He impugns “the culture of perpetual growth” as leading to “discontents.” He seems to mean inequality, then bizarrely says that if Europe were the whole world, the “endless growth” ideology might be justified; but elsewhere people are starving. In fact he takes for granted that globally, poverty is worsening.

A common mistake. Actually, poverty has been plummeting for decades (apart from the recent pandemic effect) — and it’s thanks to economic growth. Not the cause of poverty and inequality, but their remedy. The world will never be equal, but human life can be made better for more people if there’s more wealth available.

That’s an ethical proposition.

The Tyranny of Merit — And Trumpist Revolt of the Losers

March 1, 2022

What is justice? People getting what they deserve — for good or ill. Thus talents and efforts being rewarded. That’s meritocracy.

But meritocracy has a downside, argues Michael Sandel in The Tyranny of Merit. In a society where rewards are unconnected to merit, such as a hereditary aristocracy, non-aristocrats don’t feel shamed by their deprivation. However, in a meritocracy, where winners are reckoned deserving, loserhood is compounded by the sting of feeling personal inadequacy.

That, Sandel posits, drives the populist political upsurge — the Brexit vote, the Trump vote, and so forth. A revolt by meritocracy’s losers, against the winning elites. Feeling disrespected, and resenting it. He says idealistic rhetoric about “going as far as your talents and efforts can take you” creates that resentment, in people whose talents and efforts just don’t take them very far.

Aggravated by disappearance of the 1950s kinds of jobs enabling masses to join the middle class. But rather than jobs “shipped overseas,” the far bigger factor is technology and automation. We’re manufacturing as much as ever — just doing it with much less labor. That frees up people to be productive differently, making us collectively richer. Indeed, the middle class is not disappearing; and more people are rising rather than falling out of it. It’s poverty that’s been shrinking; moreover, Americans classed as “poor” today would, in terms of the life amenities they enjoy, have been rated “middle class” not many decades ago. So the problem Sandel sees is not just economic.

He challenges the very idea of deservingness. I myself have flourished, thanks to traits like intelligence, conscientiousness, etc. Thus deserving? But did I deserve to have those winning traits? Was there some innate, pre-existing deservingness in me, entitling me to be so endowed? Or was it just the luck of the draw?*

The Bible’s Job experienced a blitz of misfortunes, and protested to God this was undeserved. But that’s not how it works, God replied, in Sandel’s reading. “Not everything that happens is a reward or punishment for human behavior.” And this Sandel deems “a radical departure from the theology of merit” infusing the rest of the Old Testament. Going on to discuss how Christianity forever wrestled with the deservingness problem, that is, whether you get into Heaven by being good or because you’re so predestined. (A philosophical black hole.)

Sandel extensively discusses what “luck” really means in the context of inequality. He doesn’t even think intelligence has much to do with it. A football star earns more than a ditch digger because society just happens to be set up in a way that rewards the former more than the latter. Should we try to undo that? By bailing out losers? Hobbling winners? They’re not morally equivalent.

And even if we recognize that success is ultimately a matter of luck, which should be somewhat rectified, to negate such luck entirely would seem, well, crazy. If, for example, everyone is equalized no matter their talents and efforts, then why develop skills or work hard? That was the fatal flaw in the communist idea (which no nation ever truly implemented).

The book extensively discusses “credentialism” — how degrees, especially from elite institutions, serve to divide society between winners and losers. That’s meritocracy if you suppose well-educated graduates contribute more to society. Actually a problematic proposition. And the division is perpetuated because student bodies skew heavily to children of the better off. A more egalitarian society would give the rest better college opportunities. (Rather than compounding deprivation via crappy public schools in disadvantaged places.)

As suggested, Sandel bemoans meritocracy because its losers feel bad about themselves. He wants a society where nobody does. But what, you might ask, is really the alternative to what we’ve got? If rewards don’t go to merit, to talents, to efforts, then what kind of bizarre society is that? Is that just? Is it even conceivable?

That’s not what Sandel is proposing. In his eyes, meritocratic equality of opportunity is a good thing, but it’s not enough. It “does little to cultivate the social bonds and civic attachments that democracy requires.”

And, he says, “a sterile, oppressive equality of results” is not the only alternative to equality of opportunity. Another is “a broad equality of condition that enables those who do not achieve great wealth or prestigious positions to live lives of decency and dignity — developing and exercising their abilities in work that wins social esteem, sharing in a widely diffused culture of learning, and deliberating with their fellow citizens about public affairs.”

A nice utopian vision. But the harsh reality is that many people aren’t equipped for the kinds of jobs that “win social esteem” today, or to hold up their end of Sandel’s civic participation ideal.

I’ve long considered the inequality obsession misdirected. It usually comes down to resentment of wealth (the word “obscene” often deployed as a moral judgment). Very different from seeing poverty as morally repugnant. If there were no poverty — no absolute want — with everyone being able to live at least decently — then the very rich are simply not a problem.

Still, just relieving deprivation does not produce the kinds of civic paragons Sandel hopes for. He himself argues that welfare recipients often resent the relationship this puts them in vis-a-vis the rest of society. Part of the overall resentment fueling the populist revolt. Sandel is right that it’s a problem when large population segments feel such alienation. But he doesn’t really have an answer for it.

His concluding paragraphs argue that the problem lies with different societal echelons leading largely separate lives. This recalls Charles Murray’s 2012 book Coming Apart (see my commentary, very relevant here).** Murray basically suggested (naively, I thought) that the upper classes should interact more with the rest. And what Sandel finally calls for is humility on the part of the rich and successful as “the beginning of the way back from the harsh ethic of success that drives us apart. It points beyond the tyranny of merit toward a less rancorous, more generous public life.”

And how to get from here to there? Sandel offers no clue.

The book does, again, attempt to explain Trumpist populism in terms of class resentment. Murray was right that social segregation has grown; Robert Putnam began Our Kids by similarly lamenting that rising barrier. But meantime, increasing egalitarian thinking means people no longer feel deferential toward their “betters.”

Who in past times were indeed widely seen as better, their elevated status accepted as right and natural. A social ethos epitomized by FDR, elite in every bone of his body, yet his leadership was totally embraced by the masses. In a society quite different from ours today. Trumpism is an antithesis of such FDRism.

As such it’s comprehensible. But FDR was a virtuous leader in many key respects, making the political support he inspired appropriate. Whereas Trump, like FDR very elite himself, is the opposite in character. Perhaps his fans latched on to him simply for lack of other alternatives filling the anti-elitist leader role. But it’s still tragically baffling to see unswerving cultist loyalty to a stinking piece of shit.

* Considering it the latter, philosopher John Rawls, in A Theory of Justice, argued for (in theory) setting up a society under a “veil of ignorance” where you don’t know what your status will be. He thought that would suggest an egalitarian system.


Fake vaccination cards

February 1, 2022

Two Long Island nurses have been charged with scamming over $1.5 million selling forged vaccination cards. Reading about this, a few things struck me.

They charged $220 for adults, and only $85 for children. Why such a big discount for kids? How about seniors?

Doing the math, they must have sold at least 7000 cards to net $1.5 million. Now, I do mail order business myself, but have never managed to sell 7000 of anything (except cheap bulk coins). How did they succeed in connecting with so many buyers? Especially given that sales promotion obviously couldn’t be public. They must have been much savvier businesspeople than me. Imagine putting such talents to legitimate enterprise!

However, my wife remarked that they couldn’t have been so smart because they got caught. I’ve written about how often small time crooks do get busted; many bookkeepers embezzling from businesses through phony checks. It’s surprisingly common.

The nurse case reminded me about a local business genius who, at the pandemic’s start, imported 100,000 masks costing $1 each, and tried to sell them for $10. He was criminally charged with price gouging. Didn’t sit well with me; if buyers were willing to pay $10 for something wanted and needed, where’s the crime?

But anyway, the story was weird, because this guy operated a little pizza place, and it was a mystery how he imagined moving so many masks. In the event, he apparently sold almost none, getting stuck with the rest — losing most of his investment. So his crime’s chief victim was himself.

But back to the fake vax cards —

What really puzzles me is the mindset of someone paying $220 for a fake card when you can get a real one for free. Of course that requires vaccination, which some people oppose. For that foolishness many thousands have paid with their lives. But put even that aside. While it’s true that cards are occasionally required for some venues, if you’re anti-vax, where’s the logic in falsely posing as a vaccinated person — which you’re against being?

And for those calling this a “freedom” issue, engaging in such fraud surely undercuts any notion of a principled stance. The freedom claims are anyhow rubbish — nobody has freedom to endanger others. And those nurses, by aiding people faking vaccination status, are likely culpable for resulting Covid infections and deaths.

But maybe using a fake vax card is really just about giving a middle finger to the vaccine-promoting establishment.

A final note: looking at my own vax card, it’s not much to forge. Dates of jabs just handwritten, with no sort of certification. My daughter, in Jordan, got a card there with a QR code on it, now widely required internationally. Who’s in the third world country?

El Exigente at the NY International Coin Show

January 22, 2022

The New York International Coin Show is the premier event. It used to be each December; until 2001 when there was a little problem with the location — the World Trade Center. Organizers managed to scramble a new venue for January, so it’s been January ever since. It started in 1972, was cancelled in 2021 due to Covid, but went ahead this year — the fiftieth. I’ve attended every one.

It’s truly international, many dealers from overseas, which is what makes it great. Though fewer than usual this time, with Covid still inhibiting travel.

The show goes several days; Thursday is “Early Bird” day, with $125 admission. I do that on the theory that “the early bird catches the worm” — some good buy that would soon have been snapped up. Also, “Early Bird” day is less crowded, making things more efficient. And more prudent this time with omicron peaking (January 13). Entrance required vaccination proof, and masking, which everyone scrupulously observed. It worked; I eluded infection.

Setting out, it felt as though the previous show (pre-pandemic) had been a century ago. But once immersed in the familiar ambiance, it was like yesterday. The cast of characters doesn’t change much year to year; many old friends to nod to. Like BCD, the greatest Greek coin collector ever (whom I visited in Athens in 1992). It’s sobering to see the aging, once young guys morphing into old guys. (It’s nearly all guys.) Reminding me of the party in the final chapter of Proust’s Remembrance of Things Past.

And of course there’s another step after the progression from young to old. One I missed seeing there was Lucien Birkler. Still living, but over 80 I think, long in poor health, having lost both legs to diabetes. Yet he’d nevertheless work coin show after coin show. A tribute to human indomitability. But nothing goes on forever.

I go to buy; wasn’t expecting to find much. Several dealers were remarking on how, in particular, it’s getting impossible to buy from auctions, someone will always outbid you. Yet I came away with a good haul of worthwhile material. Even surprisingly a coin from one of the auctions connected with the show, a lovely Lucius Verus sestertius, for $480.* Looking much better in hand than the catalog photo; from the “New York Sale” run by a consortium of dealers. And Goldberg’s cheerful Glenn Onishi delivered it to me personally, saving the shipping fee.

I spent a couple of hours with Robin Danziger of Educational Coin Company. Another guy I’ve known forever. I once visited their amazing Ulster County premises — imagine a Home Depot but filled with coins. Robin is someone who really loves them and their history. He had bags and bags I searched through, typically picking out a coin here and a coin there. Yes, I’m a careful, fussy buyer, very quality conscious.

Robin remarked that it was like selling to “El Exigente.” Referring to an old TV coffee commercial. White-hatted, El Exigente (“the demanding one”) is the buying agent, coming to a Colombian village. Frowning, he carefully inspects their coffee beans. Finally, a smile — and the villagers are joyful their harvest meets his exacting approval.

Examining some of my picks, Robin also commented, “You have terrific taste in coins.” Well, flattering the customer never hurts. One bag was all posthumous small bronzes of Constantine I. Common — but not at all if well centered and struck, with complete legends.

When I chose just one, Robin picked out another, saying surely it too should qualify. I agreed it was lovely in all respects — save the mintmark being missing. But then he did point out one other I accepted.

I wound up with a goodly pile of purchases that pleased both of us.

Afterwards, another tradition, dinner with an old friend (a woman I’d dated in the early ’70s). Then caught the train back to Albany, picked up at the station by my wife — my best acquisition ever — and once again was in bed by midnight. Life is good.

* Really a bargain. The catalog notes it was bought in 1989 from Claude Amsellem — a dealer I remember from the New York show’s old days. And it originated in the Mazzini collection — the most famous ever for Roman bronzes. A nice bonus!

Noise: Noisier Than We Think

January 15, 2022

The word “noise” has a special meaning in fields like statistics. Referring to all the reasons why some result deviates from the ideal; like an incorrect prediction. It’s the concept of distinguishing noise from signal.

When people are convicted of identical crimes, with similar backgrounds and circumstances, etc., we nevertheless expect sentences to differ. That too is “noise.” But we don’t expect sentences to vary from thirty days to five years. Nor expect medical diagnoses to be very noisy, differing greatly from one doctor to another.

Such expectations are often wrong, with noise being a bigger problem than we realize. So says the 2021 book Noise – A Flaw in Human Judgment, by Daniel Kahneman, Olivier Sibony, and Cass Sunstein.

The book refers to “stable pattern noise,” encompassing characteristics about you, different from other people’s, that make your judgments differ; and “occasion noise,” referring to extraneous factors — like your mood at a given moment — that also affect them. Perhaps confusingly, both “stable pattern” and “occasion” noise are subsets of overall “pattern noise.

And the book also differentiates “level noise” — for example, different judges being generally tougher or more lenient — from (again) “pattern noise” when they differ in how they apply that in specific cases. The authors further speak of “system noise” as encompassing the last two together. You got all that? There’s also bias. And plain old error. All told, a whole lotta noise.

Early on, the book talks about insurance underwriters — professionals tasked with setting premiums to be charged corporate customers. Too high and the insurer will lose business. Too low and it loses money. When asked to guesstimate the variance among quotes by experienced underwriters (that is, the noise quotient), insurance executives typically say 10% or 15%. In reality it’s more like ten times greater. With hundreds of millions of dollars at stake.

The authors quote one veteran underwriter: “When I was new I would discuss 75% of cases with my supervisor . . . After a few years, I didn’t need to — I am now regarded as an expert . . . Over time I became more and more confident in my judgment.”

Now here’s the key point: her confidence grew as she “learned to agree with her past self.” Not from any objective confirmation that those past judgements were, in any sense, correct.

This describes a vast range of human psychology and behavior. It is, quite simply, doing what one’s always done. With no deep consideration of that behavior’s optimality. But — if we actually tried subjecting ourselves to such examination, comprehensively, we couldn’t function. Probably couldn’t get ourselves out of bed in the morning. That has to be recognized — even while we must recognize the suboptimality.

This applies to Kahneman’s entire well-known oeuvre — Thinking Fast and Slow, etc. Showing how evolution has saddled us with many non-rational biases in our thinking. Like putting more weight on potential losses than on equal potential gains. Because, for our distant ancestors, “loss” could very well mean loss of life. So a loss avoidance bias made sense.

But even if many of our cognitive biases are not rational, in a narrow sense, the whole system of cognition they comprise is deeply rational. Because, again, we couldn’t function if we had to subject every daily decision or choice to conscious examination. To avoid that, evolution has given us a system of cognitive shortcuts and quick decision heuristics. (The fast thinking of Kahneman’s book title.) And it must be a terrific system because it does enable most humans to function extremely well from moment to moment — and from year to year.

One concept that has grown in my thinking is the role of contingency in human affairs — ranging from individuals to groups to whole societies and their history. I have long been mindful of this effect in my own life, with tiny causes altering its whole course. The Noise book presents much evidence for how individual and group decisions can be affected by such small contingencies. Like something so simple, and seemingly unimportant, as who speaks first in a meeting. Jury deliberations a particular focus of concern. The authors write about cascades, describing how even just one expressed opinion can trigger a succession of responses by other people, not realizing how they’d been unconsciously influenced.

A striking finding is that in making various kinds of judgments or predictions, based on various bits of information, mechanical formulas almost always do better than human analysts, even supposed experts. The key reason — humans are just too plagued by noise. And so we see growing recourse to artificial intelligence to make evaluations, like medical diagnoses.

More: when a human evaluates a set of variables to come up with a judgment, it’s not a formulaic process, yet it’s as if a formula is being applied, albeit a complex one. Studies have found that when such an actual human’s judgments are made the basis for a computer model, which is then applied to the same variables, the model outperforms the human. We may think we bring complexity and richness and insight into our judgments. But what we really bring is noise.

And more: not only do such models outperform the humans they model, studies have found that any mechanistic formula, even randomly weighted, applied to the set of variables in play, will do better than “expert” human judgments.

But supplanting human judgments with mechanistic decision methods provokes backlash. When noisiness in criminal sentencing became evident, the consequently enacted federal sentencing guidelines led to objections that this interfered with judges, well, judging. People do still value the idea of human judgment, bringing a “holistic” perspective to any decision. “This has deep intuitive appeal,” the authors acknowledge.

But, they say, their recommended “decision hygiene” strategies mostly aren’t mechanistic, not jettisoning human judgment. Instead, they mainly urge noise reduction by breaking problems down into component parts. And recognize that while reducing noise is broadly desirable, excessive fixation on it can conflict with other values. Noise is like dirt in your home — its optimal amount is not zero, because attaining zero costs more than it’s worth.

Intelligence also helps combat noise. Yes, “intelligence” is a fraught concept. But the book argues that in fact, tests of “General Mental Ability” are highly predictive of performance. High achievers overwhelmingly tend to have higher GMAs. Even within the top 1%, gradations actually make a big difference. Someone in the 99.8% GMA percentile will likely significantly outperform the 99.0% person. (My own example bears this out. I think I’m at least close to 99%, but not higher. And I feel that difference, compared to really smart people.)

Conversely, lower GMA scores are predictive of people believing in bunk like astrology and falling for fake news. Here’s a GMA test question: in a race, you pass the runner in second place. What place are you in now? Your instinctive answer is likely wrong.

But on the other hand, I’ve long believed that carefully agonizing over a decision doesn’t necessarily improve upon your initial gut response. One chapter began by asking what percentage of the world’s airports are in the United States? “Thirty percent” immediately popped into my head. Then I said to myself, “Wait, let’s think methodically about this.” America has less than 5% of global population. But some big countries are much less developed. And we have a lot of little airports. Mulling over it all, I revised my answer to 15%.

The question introduced a discussion of how one’s first instinctive response is often actually better than a carefully considered one (because the latter is corrupted by noise). The correct answer: 32%!