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22 August 2008

Coase and the Cost of Adaptation

I've written about Coase Theorem before. But I had another thought about it. The idea of the theorem is that it doesn't matter who gets the right to decide what happens to things (or who gets the property rights), the outcome should be the same. Theoretically, the two (or more parties) will negotiate and the optimal use of the resource will be figured out. The benefits of using the resource as well as it can be used mean that everyone can have a bit more stuff. There are plenty of issues with it - unequal incomes, difficulty monetising the "vibe" of things that people enjoy, and the fact that people don't really negotiate with each other that much. But even so it does have some sense to it and it is used a lot by governments to justify their decisions.

The government will use it to say that it doesn't matter if they give land rights to indigenous people or mining companies. If indigenous people get it the mining company will just pay them to leave. If the mining company gets it they will make people leave without paying them. The second option might not seem "fair", but of course, in economics there is No Such Thing as fair. And even though it isn't fair the economists are happy because the land really should be used for mining because that is clearly its most productive use. Or at least that is the reasoning.

I think that is all quite silly, however even if you think it's reasonable I don't think you can be indifferent between who gets the property rights in the first place. The government largely assigns property rights arbitrarily. There is really no way around this, which I suppose is one of the dumb things about property in the first place. When the government assigns rights to one party, it is effectively imposing costs on the other party. They're either going to have to forgo a whole lot of benefit or buy that benefit from the other party. Often those costs are enormous, as in the case of communities moving to make way for big developers.

I'd suggest that those costs (which should of the same magnitude for whichever party doesn't get the property rights) are more difficult to absorb for the less organised party. Even if you think they can both negotiate equally, the more organised party will be better able to insure themselves against large, uncertain costs. Mining companies do it by distributing shares amongst a large number of people. Indigenous communities have to just get up and move.

It's hard to imagine an aboriginal community insuring itself against the possibility of losing a court case which forces them to move to another town. It's very easy to imagine a mining company insuring itself against the possibility of losing a court case which prevents them from mining somewhere they hoped to mine.

The ease with which a mining company can adapt to change makes the cost of that uncertainty or the arbitrariness of the government's/court's decision far more manageable. It is also a purely monetary cost which is easier to distribute over time or amongst others.

So I would suggest that in a disagreement between two parties, the property rights should always be given to the party least able to protect itself from the costs of not having those rights. According to Coase, this shouldn't affect ease of development at all. The mining companies can still buy the right to mine from the little guy if it's really the most productive use of the land. But by biasing your decisions towards the weaker party society can benefit from better risk distribution which comes entirely for free.

8 June 2007

Wikileaks

I've been on the Wikileaks mailing list for a few months now, and it looks like things are starting to speed up. It's trying to create an anonymous database of of leaked documents, that can be reviewed and evaluated by the public. I reckon it's a fantastic idea and wish there was more I could do to help them.

The criticisms of it have been that people will just release random lies and propaganda. Except that kind of misses the point. Anyway can publish a lie on their website. A lie only has as much credibility as the website publishing it. If Wikileaks is never able to be able to distinguish between lies and leaks, then it will never gain any credibility. The idea is that it should be the public and not bureaucrats who decide if something is worth releasing to the public. You should have to convince a lot of people that they don't need to know something before you can prevent them from knowing it. That's the rather ridiculous paradox of government secrecy, but I think that the burden of that paradox should be placed on those who want to keep secrets.

The only real difference Wikileaks makes is that it attempts to break the link between leaks and resulting punishment. Organisations shouldn't be able to feel confident that their secrets are safe because they can threaten their employees with prison or violence in the event of a leak. They need to convince their employees that those secrets really deserve to remain secrets. If the people who clearly need to know this information can't be trusted to agree that it should be kept secret then who decides?

The Wikileaks folk seem to have a lot more nous than I'd originally thought. At the beginning it was all a bit confused, and unclear if anything was happening at al. I recently sent them an email with a few suggestions about random things in response to an email they'd sent out. They replied with "Thanks. But we've already thought of all that." Which is always very encouraging.

The idea conjures up dreams of a Cryptonomicon type haven and I wonder how many of the Wikileaks guys have read that. I'm not convinced that real anonymity is ever truly possible on the internet. Especially since for the people who need it the whole network surrounding them is controlled by the people wanting to know who they are. I don't think the internet has added a lot to the amount of information shuffling around China for instance.

7 June 2007

Militant Atheism

A few people have noted, with mild panic, the publication recently of some particularly bigoted anti-religious books. Perhaps buoyed by their success in discrediting extremism, militant atheists are turning to critiques of softer religious sorts. They're targeting those people who have managed to reconcile the nastier aspects of their faith with gentler ideas and interpretations. Apparently the "moderates" are now providing rhetorical refuge for religious fundamentalists. They give "faith" an undeservedly good name.

I read the excerpt from Christopher Hitchens new book in the Good Weekend the other day with faint horror. I've read some of his other attacks, and occasionally find myself agreeing with him. But this latest piece is all generalisation and hyperbole. The book is called God is not Great: How Religion Poisons Everything. I'm quite sympathetic to the idea that religion gets most things wrong, but I was amazed at how unpersuasive he was. He did not have a single criticism of what I would call moderate religion. He seems to have based his conceptualisation of faith based on religious history that is 100 years old. The mood of his book bore a fascinating resemblance to that of some of Tony Abbott's opinion pieces. There is a complete failure to really understand the "enemy". They both end up looking naive and out of touch, because their mischaracterisations are so complete. They attempt to get you worked up about an issue and explain it simply, but for most people it comes across as hysterical.

Hitchens becomes ugly in his desperation to push the advantage. People have been convinced to be intolerant of the intolerant. Now he wants us to be intolerant of anything correlated with intolerance. And religious faith is certainly correlated with intolerance. But correlation isn't causation, and nor is it determination. People have tried before to attack social problems by attacking the measurable aspects most likely to predict the problem. But they seem to mostly miss. Although it might seem very modern and practical to just abolish religion as a cult, abolishing people and ideas doesn't work that well. And you very rapidly become the greater social problem.

20 April 2007

Argumentum Ad Hominem

It strikes me that I have only ever heard capable, wealthy people talk about the virtues of libertarianism. This does not invalidate the theory, but does call into question that value of their opinion. If you assume that there are "good" and "bad" outcomes for society, and we must pick an economic/social system which obtains the "best" outcome, then how do you choose it? You probably ask people what they think and what they themselves would prefer. In practice, no one really knows what the impact of most policies is on social welfare, so it is a difficult problem to test. So we tend to rely on the intuitive appeal of different ideas.

How much do you discount the opinion of someone recommending a policy that dramatically improves their own welfare? In most cases you discount the value of something someone says if it serves their own interests. However, if you have different people saying the same thing you are more likely to listen. The class of people recommending libertarian economics is very narrow. Mostly white, mostly male, mostly rich, mostly educated, mostly very capable of fending for themselves. Typically people who would do quite well in a tax-free, government-free utopia.

People recommending income equality and government intervention come from many different backgrounds. The majority of the poor. Many capable, wealthy individuals. Men and women. White and not. My question is do you put more weight on the opinions of 100 people from a diverse backgrounds (many of whom will be harmed by their recommendation) than the opinions of 100 people from the same background (all of whom will benefit from their recommendation)?

Let's say you set up an experiment. You ask people how much redistribution there should be. They can pick a number between 1 and 5 where 5 is complete income equality, and 1 is complete inequality. My intuition would be is that the people picking 1 and 2 would be far more homogeneous than the people up the other end. I suspect it would something like 95% high-income individuals.

Can you devise a weighting scheme that discounts votes based on the mean personal benefit of an option to the people choosing that option? Does mean personal benefit serve as a good proxy for the mean contribution of selfishness to a vote? Probably not, but maybe it is good enough to use. Of course, the wealthy would say the idea is foolish. It's a coincidence that the policies they support happen to benefit them personally. They don't support them because they are rich, but because they are clever. It's an unfortunate outcome that the correlation between cleverness the income makes them look self-seeking. If you could educate the poor, then they too would see the virtues of economic liberalism. Sadly, the poor are probably too stupid to ever understand. Perhaps we could develop a weighting system where high IQ led to higher weights. We could use income as a proxy for IQ. Or even the amount of land you own.

The poor are probably no less selfish than the rich, but the poor don't have the luxury of supporting ideals and policies that harm them. The many wealthy who support greater redistribution do have the luxury and they are the ones who bring down the mean personal benefit in the high redistribution categories.

I obviously support income redistribution. But that isn't evidence-based. I'm not completely sure that redistribution doesn't harm the poor. Sometimes I come up with ideas that would benefit me personally. I discount them a lot for that. Because I know how my mind works. Policies that are good and make my life better are far more appealing to me than policies which are good and make my life worse. Given that it's almost impossible to tell the difference between good and bad policies, I'm inclined to think that selfishness weighs in pretty heavily in most decisions. I doubt that this effect is much less for other people than it is for me. If I ever start recommending that we send old people to aged-care homes in Nauru for their own good, I hope someone will remind me that I've probably pulled the idea out of my arse.

This rant has all the hallmarks of the logical fallacy, except that I'm suggesting this in the absence of empirical arguments. If you're only data is the opinions of voters, then it might be reasonable to "attack the person". Committing the "fallacy" might result in better outcomes. If you're a benevolent alien dictator choosing between socialism and capitalism and your only data were people's preference and their incomes, you'd probably choose socialism.

All that can by summarised by the thought that there are capable and not so capable socialists but only capable capitalists. More importantly, I think that this is significant and not just interesting.

5 January 2007

Power and forgiveness

There can be no power without cruelty. If power forgives, it prepares its own destruction, because none will fear it when they see that it uses love and not the force before which one trembles.

Petr Chelčický

31 December 2006

Lousy Farmers

I've just read The Ethics of What We Eat. It was a very good book and it's definitely worth reading if you're unsure about all that stuff. Assuming you want to be surer - a lot of people seem quite happy with their current level of sureness even if it's low.

My dear friend Tully has been sweet-talking into becoming vegan again, offering me all sorts of vegan social events and treats. I went to some of those energetic sorts of websites where people try to convince you to change your life in three paragraphs. I needed a little more convincing though, because I'd felt like I had found a reasonably merry and practical vegan-vegetarian blend. Sadly, I hadn't.

I've decided to become Mostly Vegan. Between one and four are absolutely out. Five or higher will only be OK if I haven't made a choice to buy or include them in something.

## Ethical Hierarchy

  1. Eggs or chicken meat (battery chickens)
  2. Pig meat
  3. Fish
  4. Cow and sheep meat
  5. Dairy (battery cows)
  6. Eggs (free-range chickens)
  7. Dairy (free-range cows)
  8. Honey (organic happy bees)
  9. Scallops, mussels, oysters and clams

The main difference is that marginal eating and cooking decisions are going to be totally vegan. This means 100% vegan restaurant eating. And I won't cook with dairy or eggs at all or eat it if there is a reasonable option. I'm conscious of not making life difficult for my community. When I have been vegan before I found that I inevitably had a large impact on the behaviour of people I lived and ate with. I don't think the strength of my feelings warrant changing people's life that much.

Fortunately most of the things I cook are vegan anyway. Dairy is mostly for garnishing, snacks and treats. I will definitely miss the snacks and treats. Luckily all the best garnishes can be replaced by a virtually perfect vegan substitute - salt.

## Things I will miss most

  1. Camembert with mum
  2. Camembert generally
  3. Cakes and croissants
  4. Butter
  5. Eggs on toast and vegie stacks
  6. Danish fetta
  7. Butter

I'm just thankful that I don't like chocolate very much. Oddly enough, after reading the book I'd be happy to eat mussels and oysters. I don't imagine I'll ever want to, but if I did want to eat them I would.

One of the good things about this is that I'm no longer a vegan fraud.

15 February 2006

Occam

Occam's Razor annoys me a lot. Or not the razor itself, but the way people use it so willy nilly. I was sure there must be some clever logical reasoning behind it that explained why people used it to justify so much of their thinking. But there's no logic behind it - just the idea that simple explanations are more likely than others. Which is entirely sensible, but that shouldn't give you any extra confidence in one explanation just because it's simple.

15 November 2005

Grassroots Politics

With the amount of violence our governments get us involved with, you can make a case that terrorism is really just grassroots politics. The same people in charge of a pro-market government would be applauded by most of the world.

I know it's politically incorrect to equate government-sanctioned violence with terrorism outside vegie coop sorts of circles. But I really do think that sometimes it's that simple. It's not that terrorism is necessarily acceptable or justifiable, but that government-sanctioned violence is so unbelievably bollocks. Whether or not terrorism is acceptable or justifiable is a whole other, much uglier conversation.

24 June 2004

Karl Popper

Karl PopperKarl Popper is the bomb I reckon. Everyone bags him because they say he's just a positivist. From what I've read he isn't at all, and he's happy with a small, very sensible sort of proposition. If I've read it right, he basically said that instead of saying "facts" are things we know to be true, let's call facts things that could be proven wrong, but no one has been able to prove wrong.

So a theory makes some claim. It describes ways in which that claim is predictive and describes events that would prove the theory wrong were they to occur. Then everyone runs off to their laboratories and telescopes and does their best to prove it wrong. If no one can, then you can tentatively call it a fact. It doesn't mean that something is right, only that so far no one has shown that it's wrong. Which seems very good sort of assumption to make.

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