A post that I have put significant thought into. Still just an opinion, but a fairly well considered one.
In April this year, William MacAskill published an article describing Saturationism – a proposed modification to Utilitarianism that resolves most of its more unintuitive or unacceptable inferences, including the famous “repugnant conclusion”. This is a great paper that I think that anyone with an interest in moral philosophy should check out…
The UK is in the doldrums at the moment. Domestically, despite creaking infrastructure, we seem unable to build anything; the healthcare system is crumbling due to decades of underinvestment, low pay and poor working conditions; and the government is unable to balance the budget, despite spiralling borrowing rates. This however has all been written about by other people at great length, and isn’t what I want to talk about right now. The UK is also in the doldrums internationally – we have no geopolitical strategy, no guiding principles and no vision. Some might view it as putting the cart before the horse, to discuss this before we’ve resolved our domestic issues, but I disagree. It is precisely because we no longer know who we are, that we can’t agree on how to fix any of the problems…
Conventional wisdom is that dividends are great – for many people they are the main reason why people invest in companies in the first place. A dividend is your share of a company’s profits – when the company does well, they pay a dividend to their shareholders.
Within this context, the idea of “share buybacks” seems shady – rather than paying the shareholders their due, the company instead embarks on some back-room market manipulation, spending the shareholders cash to prop up the share price and net the executives a bigger bonus.
This narrative, that share buybacks are done to enrich insiders at the expense of other shareholders, and that dividends are fundamentally different, better, simpler and more honest, is incorrect and unhelpful. It is an overly divisive way of framing a fairly technical choice, that leads people to favour a more obscure system. In this post I hope to offer a viewpoint that explains the following…
In my last post, I discussed why I think that Capitalism can be a net positive for the world, along with why it shouldn’t be used as a bogeyman that stands synonymous with all of the ills and excesses of modern society. Some of those ideas may come across as echoing the thoughts and words of Milton Friedman, who was famous for his laissez-faire free-market economics. Friedman made some very good arguments, however I cannot agree with his entire worldview.
The issue that I have with Milton Friedman, and the free-market capitalist policies that he championed is not with the fundamental validity of the ideas. It is well established and demonstrable that investment is generally beneficial and free-markets generally allow for higher growth and lower prices. The problem is instead with the extremes that he took these underlying principles to. His philosophy was one of unyielding faith that the free market could do no wrong, and that any and all attempts to regulate the market are harmful…
Even many proponents of capitalism seem to view investments as fundamentally selfish. They just view selfishness itself as a good thing, channelling the fictional Gordon Gecko’s mantra of “Greed is Good”. This is understandably unpalatable to many, and I think this perspective does capitalism a great disservice – twisting and misrepresenting the core concepts into something unrecognisable.
Here, I hope to reframe the discussion, explaining why the underlying concepts of capitalism and investment are good things in their own rights, and why those advocating for consumerism are actually wolves in sheep’s clothing. Let’s not get ahead of ourselves though – it might help to think about some of the basics first…
Allow me to juxtapose two viewpoints for a moment. First – what I perceive to be a fairly common view amongst neo-liberal economists:
The huge improvement in people’s standard of living over the last hundred years has been one of the biggest successes of Capitalism. The ability of capitalists to offer loans allowed entrepreneurs to generate improved growth and employment. With money from investors, companies have been able to achieve enormous technological advances, resulting in leaps in quality of life for many people. The improved efficiencies of competitive industry have lowered prices of many goods, lifting millions out of poverty.
The main thing standing in the way of even greater improvements in people’s happiness and standard of living, is that the markets are still not yet free enough. Government is stifling the markets with regulation that raises the costs of doing business and discourages investment. State benefits discourage workers from finding more enriching jobs, instead encouraging reliance and stagnation.
Despite the US’s historic progress in the direction of free markets, true libertarianism, in which the government is small enough to completely free the market from interference has never truly been attempted. All of the economic and societal failings of the US can be traced back to the government interfering with the free market – whenever a problem arose, the US government attempted to introduce legislation to resolve it, rather than allowing the market to resolve it naturally. This exacerbates the problem rather than resolving it, so we should instead strive to further reduce the size of government, until true free-market libertarianism can be achieved.
Second – an alternative, equally extreme view…
This post is part of a series of posts on Voting Systems.
Now we move out of the simple realm of single offices and single issues. Appointing multiple politicians to represent a population is fundamental to the way in which most modern democracies work, but it is fraught with difficulty.
Proportional Representation (PR) refers to a government whose composition reflects the proportions of the population that support each party. The idea is that if 20% of the population support party A, roughly 20% of the government should be party A, etc.
That proportional representation is a desirable quality in a body of representatives shouldn’t be a controversial statement. Any particular demographic being underrepresented within the government will lead to a feeling of disenfranchisement and a loss of faith in the efficacy of a democracy. Alas, there are still a few arguments that are used to try to convince people that unrepresentative governments are somehow a good thing…
This post is part of a series of posts on Voting Systems.
Leaders usually have a significant amount of power, so it is fairly easy to convince people that such elections are important, giving these elections a higher turnout than other elections (for example US Presidential Elections almost always have higher turnout than Midterm Elections). This means that we didn’t need to worry too much about low turnouts in the previous section.
This is no longer the case for referenda. Voting has a cost – at a bare minimum, it costs voters the time and effort needed to cast their ballot, and it can cost even more time and effort if a voter wants to become well informed about the issue being voted on. There are therefore several reasons why a large number of people might not vote in a particular referendum…
Getting the general public’s input on how a country should be run is a fundamental tenet of democracy. This has to be done in a way that is both systematic and able to be considered fair, which is difficult to achieve without incorporating voting in some way, shape or form.
Perhaps in very small groups, consensus building can be used to bypass the need for voting, but as groups of people get larger, the number of possible disagreements to resolve and compromises required to reach consensus grow rapidly. This is one of the reasons why teams within a company are generally recommended to be smaller than 20 people, with 5-7 often being considered ideal.
Given that no country is this small, the need to implement a system of voting is something of an inevitability. Unfortunately, there are many ways in which voting systems can introduce issues that stand in the way of the democratic process. Issues such as gerrymandering, hyper-partisanship and voter apathy are often a direct result of the system that is used…
This post follows on from In Support of Federalism.
There are many countries around the world that use Federalism as a system of government, and some work better than others. It would be good to improve the standard of democracy around the world, and so if any countries were considering becoming federal, it would be good to know what features get the best results. Given an existing federation, any changes will necessarily take a significant amount of time and effort to make, so again, knowing what features get the best results would be very useful in determining what changes to focus on.
Ideally, it would be good to realise all of the benefits listed in the previous two posts – legibility, antifragility, greater freedom, political incubation, a distributed economy, closer proximity to the government and less conflict. What we need is to isolate any factors that get in the way of these benefits, so that existing federations can pursue reforms, and unitary countries can avoid predictable future issues…
This post follows on from Legibility and Democracy.
Finding the best way to govern a country is an ongoing struggle throughout the world. The introduction of the concept of legibility suggested that federations might be a good middle ground providing both legibility and democracy for the electorate. Widening the scope beyond this, there are many other advantages of federations over unitary states…
Legibility in the context I am using it here refers fundamentally to the understandability of a system.
It might seem obvious that more understandability is better, but understandability also implies simplicity, and simplicity is not necessarily always good. For example, with governmental policy, as addressed in James C. Scott’s book “Seeing Like a State” (Archive), a drive for legibility can result in adverse situations such as city planners neglecting important complexities that are necessary for a healthy society, or agricultural reforms that promote monocultures and deplete the soil. This idea of legibility can be applied more widely, to cover any kind of system, process or theory – there is a balance between a theory being legible enough that it can be understood, and being nuanced enough that it gets the correct answers…
This post is part of the sequence Arguments for a Universal Basic Income.
In the depths of pre-history, before all of the land in the world was parcelled up and owned by individuals and organisations, the human population was quite low, and it was possible for a stone-age human to hunt, forage and maybe even subsistence farm on some land to eke out a meagre existence. Life was hard, the margin of error was thin, a bad winter or a poor harvest could be fatal; yet in this anarchist’s dream world, unless another marauding tribe came to drive you away, you could live on and extract as much wealth from this land as you were able or inclined to…
This post is part of the sequence Arguments for a Universal Basic Income.
One of the problems with the economy as it stands is the positive feedback loop of recessions. When times are good, things work well: people spend money, which allows businesses to pay their staff, who can then spend their money and so on. Every pound or dollar spent flows around the economy several times, facilitating growth and prosperity. When the economy slows however, people see hard times ahead, and will try to save money, reducing their expenditure, which in turn reduces businesses’ income. These businesses feel the squeeze and may lay off staff, who then have even less money to spare, exacerbating the problem, reducing the flow of money and making a recession more likely. The concept of a stimulus is an idea originally thought up by the economist John Maynard Keynes: the government can inject money into the system, often by funding large infrastructure programmes, or more recently by giving it to banks to lend out. This has the effect of increasing the flow of money again, with the hope that this will kick-start the economy, improve employment, and get things back to normal…
This post is part of the sequence Arguments for a Universal Basic Income.
Entrepreneurialism is a risky business – most start-ups fail, losing the entrepreneur money, and yet as a whole, it is a process that is hugely beneficial for the economy, as it generates significant employment and innovation. Unfortunately, this tendency to fail makes entrepreneurialism something that most people cannot risk. If you are not already fairly wealthy, leaving a job to pursue an idea that may or may not generate any income is unaffordable right from the start. Even for people with some money behind them, it can be difficult to make ends meet in the period between the initial capital outlay and when the company becomes revenue generating…
This post is part of the sequence Arguments for a Universal Basic Income.
It is a frequently made argument, that minimum wages distort the market. Either forcing companies to pay more for a certain activity than it is really worth to them, or rendering someone unemployable if their skills are not worth the minimum wage that a company is allowed to pay. This is an unavoidable negative consequence of a minimum wage law, yet without it, companies would be allowed to pay many people so little that they would struggle to survive. After all, what is their alternative – if no-one is willing to pay them any more money, their only other option is to not work, and either live off state benefits, or starve. The provision of Universal Basic Income would mean that everyone was able to survive, and could then augment their earnings with additional employment income. This would remove the requirement for a minimum wage, as everyone would have enough income to survive, which would then free up the companies to pay the market rate for the work they required…
This post is part of the sequence Arguments for a Universal Basic Income.
One of the main issues with social safety nets as they stand currently is known as the “Poverty Trap”. This is the phenomenon whereby benefits are curtailed when someone finds a job, in such a way that they are worse off than before. This can happen in several different ways – either the reduction in benefits occurs at the same rate or faster than the increase in job related income, meaning that the additional time (and opportunity cost) spent working has either zero or negative net effect on income. Alternatively, some benefits are removed entirely when a job is found, which is detrimental when that job is part time or a “zero-hours contract”, again resulting in a lower income than before. This kind of benefit structure actively discourages people to find jobs, as unless they are able to walk into a reasonably paid, full time position, they are better off unemployed. This then means that unless they can weather a period of even lower financial security, they are not able to gain work experience to enable them to seek better jobs…
This post is part of the sequence Arguments for a Universal Basic Income.
A common attack levied against people at the lower end of the income spectrum, ultimately used to justify cutting state benefits, is that of benefit fraud. People affording lavish lifestyles funded entirely by the state, or people sneakily augmenting this income by working a few hours cash-in-hand. This spectre serves to drive wedges between the rich and the poor, and to tarnish all people down on their luck as lazy, scheming and probably criminal to boot. The argument that your hard-earned taxes are going towards buying a family of nine a second widescreen TV can be both emotive and hard to refute. Despite the fact that this kind of occurrence is very rare, there will always be someone that manages to do it somehow, and when they are caught, it will spur yet another wave of anti-poor vitriol…
This post is part of the sequence Arguments for a Universal Basic Income.
Price gouging is a specific type of market failure that occurs when someone’s life is at stake. As an example, in drought conditions, even though water may quite legitimately be expensive, it is possible for a water seller to make even higher profits than this, due to the desperation of the people in question. If they had the time to shop around, they might be able to buy water at the (albeit expensive, due to the shortage) market rate, but they do not have time – they are dying of thirst, so would give the water seller the deeds to their house if it meant not dying. There is a similar problem with money – ultimately in modern society we need money to survive. It is essential for food, water and shelter, and without it your life is at risk. People in desperate need of money are willing to do all sorts of things that they ordinarily wouldn’t even consider…
This post is part of the sequence Arguments for a Universal Basic Income.
In modern times, there seems to be a consensus in economically developed countries, that some form of social safety net is called for. The extent of it may be a matter of significant debate, with conservatives preferring minimal intervention and others desiring more, but it is uncontroversial to say that at some level, one is needed. From the fact that it can take time to find a new job if one finds oneself unemployed, to the fact that industries change, and people need to update their skill-sets to remain employable, there is a well-accepted need to balance “survival of the fittest” with compassion and dignity. The intention of this section is not to convince anyone that some level of state assistance is required, as those believing that this is not the case are likely very few in number; but instead to extol the virtues of a Universal Basic Income from a “small government” conservative perspective, over other more mainstream forms of state assistance programs…
The concept of a Universal Basic Income is one that goes beyond the more general idea of “Benefits” or “Welfare”. Payments from the government to the poorest in society have long been the norm in developed economies; indeed, whilst it was a novel concept when Sir Thomas More published his “Utopia” in 1516, the following half millennium has seen his arguments become quite mainstream. He writes:
“Petty larceny isn’t bad enough to deserve the death penalty. And no penalty on earth will stop people from stealing, if it’s their only way of getting food.”
However, most of these payment systems come with some sort of limitation, usually quite reasonable sounding: they may be means tested, so that the less poor you are, the less you get; they may be dependent on how much you have paid into them previously, more like a savings plan or employment insurance; they may not pay anyone that has a job, as these people need it less; or they may require you to spend all of your savings before you receive any payments, as if you have savings, you do not need assistance…
Reading things like this article make me understand why Taleb comes across as so abrasive and frustrated in his books. Anyone saying “we’ve had X for decades, DECADES, and nothing bad has happened, surely this is evidence that it is fine” has completely and absolutely missed the entire reason that heavy tailed distributions are problematic. Say it with me one more time –
Sampling from heavy tailed distributions looks just like sampling from thin tailed distributions until an event in the tail occurs.
We have had the internet for decades, and everyone thought it would usher in a new era of knowledge sharing and democracy. Few predicted that it would so effectively facilitate the death of quality journalism and the rise of populism and fake news…
I have recently been rather vexed by intelligent people making arguments against participating in the democratic process. After having several conversations, and reading several articles espousing the benefits of voter apathy, I can contain myself no longer, and must write down my counter argument for the benefit of my own sanity. For those who already agree that voting is important, hopefully this serves as a useful range of perspectives, but for anyone that disagrees, I hope that my frustration with the arguments against voting does not seep through too much, and put people off…
The Rationalist Movement, embodied by communities such as LessWrong and SlateStarCodex uses the term Rationality in a very particular way. As such, it is useful to be able to express this meaning to people, when trying to describe what the movement is, and what it is trying to accomplish. On a personal level, I have struggled greatly to adequately explain to other people not already familiar with the community and its values, the core of what Rationality is, and why they should care. There are several places trying to explain this but all are quite long-winded…