Milton Friedman with a kind word for evidence-based policy

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Playing the man and not the ball in research evaluation

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Karl Popper on the role of consensus in the growth of knowledge

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Popper on the road to hell

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Popper on tolerating intolerence

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The growth of knowledge is through critical discussion, conjecture and refutation

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Ah but the scientific consensus is…

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Conspiracy theories versus unintended consequences

Cass Sunstein defines a conspiracy theory as:

An effort to explain some event or practice by reference to the machinations of powerful people, who have also managed to conceal their role. Of course some conspiracy theories turn out to be true.

He goes on to argue that millions of people hold conspiracy theories: that powerful people work together to withhold the truth about some important practice or terrible event.

Sunstein also argues that many become extremists stem not from irrationality but from having little relevant information and their extremist views are supported by what little they know:

  1. Conspiracy theories generally attribute extraordinary powers to certain agents – to plan, to control others and to maintain secrets.
  2. Conspiracy theories overestimate the competence and discretion of officials and bureaucracies, who are assumed to be able to make and carry out sophisticated secret plans, despite abundant evidence that in open societies that government actions does not usually remain secret for very long.
  3. Conspiracy theories also assume that the nefarious secret plans are easily detected by members of the public such as themselves without the need for special access to the key information or any investigative resources.

Sunstein also argued that a distinctive feature of conspiracy theories is their self-sealing quality. Conspiracy theorists are not likely to be persuaded by an attempt to dispel their theories and look at these attempts as further proof of the conspiracy.

Karl Popper argued that conspiracy theories overlook the pervasive unintended consequences of political and social action. They assume that all consequences must have been intended by someone.

Must everything be the result of a grand plan – a secret conspiracy that ordinary people uncover with little effort? Whatever happened to unintended consequences and stuff-ups?

Jon Elster and Robert Nozick on the economics of Karl Marx

Popper held that Marxism had been initially scientific: Karl Marx postulated a theory which was genuinely predictive.

When these predictions were not in fact borne out, the theory was saved from falsification by adding ad hoc hypotheses to explain away inconvenient facts. By this, a theory which was genuinely scientific became pseudo-scientific dogma.

Popper criticizes theorists like Marx who attempt to accumulate evidence that corroborates their theories and not looking for evidence that would demonstrate that their hypothesis is false.

Popper claimed that falsifiability was an essential feature of any useful scientific theory. If a theory cannot be falsified, neither it nor its predictions can be validated, for everything that happens is by definition consistent with the theory.

As Popper and Kuhn understood it, bold, risky hypotheses are at the heart of great advances in the sciences and scholarship generally.

The vast right wing conspiracy is done so on the cheap when you follow the money

Much is made of how the Cato Institute and the American Enterprise Institute are funded by the Koch Brothers to act as their propagandists. Greenpeace and Right Wing was good enough to follow the money:

  • American Enterprise Institute: $350,000 in total between 2004 and 2011 as compared to an annual income of $25 million.
  • Cato Institute $ 5.35 million over 14 years. Their last  annual donation in excess of $250,000 was in 2001. Its annual income is $12 million.

Chickenfeed – on an annual basis, this financial largess would barely pay for a cheap research assistant in a small office out of the Cato’s 90 staff members and 60-adjunct scholars. An average congressman raises more than this in political donations each year. Romney and Obama each spent $1 billion on their presidential campaigns.

Karl Popper argued that who made an argument is of little value. What matters is critical discussion of what they said. Knowledge grows through critical discussion.

Peter Drucker made similar points about people with great strengths also come with great flaws. (Biography sales would be 1/10th of its size if the great were not flawed).

Drucker championed a business rule of never making a decision until there is disagreement; only then do you know the boundary of what you plan to do. Unless one has considered alternatives, one has a closed mind.  This above all, explains why effective decision-makers deliberately disregard the second major command of the textbooks on decision-making and create dissension and disagreement, rather than consensus.

Decisions of the kind the executive has to make are not made well by acclamation. They are made well only if based on the clash of conflicting views, the dialogue between different points of view, the choice between different judgments. The first rule in decision-making is that one does not make a decision unless there is disagreement

The peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error.  - John Stuart Mill

You’re an ideologue; no, you’re the ideologue!

I find that people who call out other people and opposing analysis as ideological are themselves ideologues. They cannot see political differences as other than ideological cat fights.

This is rather than an honest difference of opinion over the effectiveness of different options to achieve a common end as Milton Friedman explained:

I venture the judgment, however, that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominantly from different predictions about the economic consequences of taking action – differences that in principle can be eliminated by the progress of positive economics – rather than from fundamental differences in basic values, differences about which men can ultimately only fight.

Hayek attributed to his opponents nothing more than intellectual error. Hayek (1948) believed that:

we must recognize that it may be genuine error which leads the well-meaning and intelligent people who occupy those key positions in our society to spread views which to us appear a threat to our civilization. Nothing could be more important than to try to understand the sources of this error in order that we should be able to counter it.

Hayek (1968) continues:

The worst mistake a fighter for our ideals can make is to ascribe to our opponents dishonest or immoral aims. I know it is sometimes difficult not to be irritated into a feeling that most of them are a bunch of irresponsible demagogues who ought to know better…

we ought to realize that their conceptions derive from serious thinkers whose ultimate ideals are not so very different from our own and with whom we differ not so much on ultimate values, but on the effective means of achieving them.

William Baumol and Alan Blinder described the role of economics in policy debates as follows:

While economic science can contribute the best theoretical and factual knowledge there is on a particular issue, the final decision on policy questions often rests either on information that is not currently available or on tastes and ethical opinions about which people differ (the things we call ‘value judgments’), or on both.

Lester Thurow said that differences in the valuation of outcomes is at the basis of most disagreements:

Liberal and conservative economists most frequently disagree on who ought to be hurt and who ought to be helped. Their technical disagreements on who will be hurt and who will be helped are much less frequent.

Karl Popper argued that who made an argument is of little value. He said that the growth of knowledge depended not on the ethics of the individual scientists but on the critical spirit to scientific community as a whole. The critical scrutiny of others polices the truth:

The genuine rationalist does not think that he or anyone else is in possession of the truth; nor does he think that mere criticism as such helps us achieve new ideas.

But he does think that, in the sphere of ideas, only critical discussion can help us sort the wheat from the chaff.

He is well aware that acceptance or rejection of an idea is never a purely rational matter; but he thinks that only critical discussion can give us the maturity to see an idea from more and more sides and to make a correct judgement of it.

Peter Drucker championed a business rule of never making a decision until there is disagreement; only then do you know what you are planning to do:

Unless one has considered alternatives, one has a closed mind.

This above all, explains why effective decision-makers deliberately disregard the second major command of the textbooks on decision-making and create dissension and disagreement, rather than consensus.

Decisions of the kind the executive has to make are not made well by acclamation.

They are made well only if based on the clash of conflicting views, the dialogue between different points of view, the choice between different judgments.

The first rule in decision-making is that one does not make a decision unless there is disagreement

Alfred P. Sloan said at a meeting of one of his top management committees:

“Gentlemen, I take it we are all in complete agreement on the decision here.”  Everyone around the table nodded assent.

“Then,”continued Sloan, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about”.

Paul Krugman, Tom Sargent and Me

Paul Krugman seems to be implying that I am the double-secret ring-leader of a vast right-wing conspiracy.

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Today in his blog at the New York Times, Krugman said:

…why the sudden attention to Sargent’s 2007 speech?

I think it’s fairly obvious: it’s essentially stealth anti-Keynesian propaganda, cloaked in the form of a widely respected and liked economist uttering what sound like eternal truths.

But they aren’t, and the real goal here is to undermine the case for fighting unemployment in the here and now. There are virtues to that 2007 talk, but right now is no time for 2007 Sargent.

In my reply at his blog, I said that I originally posted the link to Sargent’s speech to make a point that most economic analysis is free of politics because the average economist is a moderate Democrat. Tom Sargent is a life-long Democrat.

To add to my reply at Krugman’s blog, Krugman said earlier in his blog that:

It’s not so much that what Sargent said is wrong, although some of his principles are by no means universally agreed upon, even in normal times.

What’s so striking about Sargent’s points is that it’s hard to think of a worse time to cite them.

And the people citing that old speech clearly have ulterior motives.

I live in New Zealand. Not everything is about U.S. domestic politics.

I rather prophetical said on Marginal Revolution on the 20th that “Too many on social media such as Reddit responded by smearing Sargent as a right-winger and neo-liberal. He is a life-long Democrat.”

My conspiratorial minions span the globe to include initially Newmark’s Door and then Marginal Revolution,  Stephen WilliamsonVox.com, the American Enterprise Institute, Catallaxyfiles and the Business Insider to name but a few. There are other unindicted co-conspirators.

Karl Popper argued that conspiracy theories overlook the pervasive unintended consequences of political and social action; conspiracy theorists assume that all consequences must have been intended by someone.

Krugman agrees that Sargent’s 12-points are not that controversial in themselves. Krugman then plays the man rather than the ball:

“How to discredit an unwelcome report:

… Stage Four: Discredit the person who produced the report. Explain (off the record) that
1. He is harbouring a grudge against the Department.
2. He is a publicity seeker.
3. He is trying to get a Knighthood/Chair/Vice Chancellorship.
4. He used to be a consultant to a multinational.
5. He wants to be a consultant to a multinational.

Sir Humphrey, The Greasy Pole

Is the Blogosphere an Infotopia or an Echo Chamber – the Daily Me?

Cass Sunstein made some astute observations in Republic.com 2.0 about how the blogosphere forms into information cocoons and echo chambers. People can avoid the news and opinions they don’t want to hear.

This is not all that surprising. Many do not read the newspaper, or read those newspapers that fuel their initial beliefs. London is famous for its partisan newspapers each pandering to their own slice of the political spectrum.

The standard J.S. Mill view of deliberation is that group discussion is likely to lead to better outcomes, if only because competing views are stated and exchanged.

Sunstein has argued that there are limitless news and information options and, more significantly, there are limitless options for avoiding what you do not want to hear:

  • Those in search of affirmation will find it in abundance on the Internet in those newspapers, blogs, podcasts and other media that reinforce their views.
  • People can filter out opposing or alternative viewpoints to create a "Daily Me."
  • The sense of personal empowerment that consumers gain from filtering out news to create their Daily Me creates an echo chamber effect and accelerates political polarisation.

A common risk of debate is group polarisation. Members of the deliberating group move toward a more extreme position relative to their initial tendencies!

How many blogs are populated by those that denounce those who disagree? This is the role of the mind guard in group-think.

Debate is over-rated as compared to brute experience. Milton Friedman said this in his Nobel price lecture:

Government policy about inflation and unemployment has been at the centre of political controversy. Ideological war has raged over these matters.

Yet the drastic  change that has occurred in economic theory has not been a result of ideological warfare.

It has not resulted from divergent political beliefs or aims.

It has responded almost  entirely to the force of events: brute experience proved far more potent than the  strongest of political or ideological preferences

The market process succeeds because it relies on a bare minimum of knowledge and hardly any deliberation but a lot of learning from experience.

A purpose of voting through secret ballots is both to bring the debate to a close and to clip the wings of those that shout the loudest and longest.

Sunstein in Infotopia wrote about how people use the Internet to spend too much time talking to those that agree with them and not enough time looking to be challenged:

In an age of information overload, it is easy to fall back on our own prejudices and insulate ourselves with comforting opinions that reaffirm our core beliefs. Crowds quickly become mobs.

The justification for the Iraq war, the collapse of Enron, the explosion of the space shuttle Columbia–all of these resulted from decisions made by leaders and groups trapped in "information cocoons," shielded from information at odds with their preconceptions. How can leaders and ordinary people challenge insular decision making and gain access to the sum of human knowledge?

Conspiracy theories had enough momentum of their own before the information cocoons and echo chambers of the blogosphere gained ground.

Must everything be the result of a grand plan? As Karl Popper explains:

…a theory which is widely held but which assumes what I consider the very opposite of the true aim of the social sciences; I call it the "conspiracy theory of society."

It is the view that an explanation of a social phenomenon consists in the discovery of the men or groups who are interested in the occurrence of this phenomenon (sometimes it is a hidden interest which has first to be revealed), and who have planned and conspired to bring it about.

This view of the aims of the social sciences arises, of course, from the mistaken theory that, whatever happens in society – especially happenings such as war, unemployment, poverty, shortages, which people as a rule dislike – is the result of direct design by some powerful individuals and groups.

Cass Sunstein in another book defines a conspiracy theory as:

An effort to explain some event or practice by reference to the machinations of powerful people, who have also managed to conceal their role.

He goes on to argue that millions hold conspiracy theories – that powerful people work together to withhold the truth about some important practice or terrible event.

Conspiracy theories attribute extraordinary powers to political leaders and bureaucracies to plan, to control others, and to maintain secrets. Conspiracy theories overestimate the competence and discretion of these political leaders and bureaucracies, who are assumed to be able to make and carry out sophisticated secret plans, despite ample evidence that most government actions do not remain secret for long.

Conspiracy theories also assume that these nefarious secret plans are easily detected by members of the public without the need for special access to the key information or any investigative resources.

Sunstein also argued that a distinctive feature of conspiracy theories is their self-sealing quality. Conspiracy theorists are not persuaded by an attempt to dispel their theories and look at these attempts as further proof of the conspiracy.

Karl Popper argued that conspiracy theories overlook the pervasive unintended consequences of political and social action; they assume that all consequences must have been intended by someone.

Most people lack direct or personal information about the explanations for terrible events, and they are often tempted to attribute such events to some nefarious actor as a way of coping with an uncertain world. More than a few blogs help them round-up the usual suspects.

A taxonomy of political disagreement

It is just too comforting to think that those you disagree with are ignorant or steeped in moral turpitude, preferably both.

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Milton Friedman argued that people agree on most social objectives, but they differ often on the predicted outcomes of different policies and institutions.

This leads us to Robert and Zeckhauser’s taxonomy of disagreement:

Positive disagreements can be over questions of:
1. Scope: what elements of the world one is trying to understand?
2. Model: what mechanisms explain the behaviour of the world?
3. Estimate: what estimates of the model’s parameters are thought to obtain in particular contexts?

Values disagreements can be over questions of:
1. Standing: who counts?
2. Criteria: what counts?
3. Weights: how much different individuals and criteria count?

Any positive analysis tends to include elements of scope, model, and estimation, though often these elements intertwine; they frequently feature in debates in an implicit or undifferentiated manner.

Likewise, normative analysis will also include elements of standing, criteria, and weights, whether or not these distinctions are recognised.

The origin of political disagreement is a broad church indeed in a liberal democracy. Those you disagree with are not evil, they just disagree with you. As Karl Popper observed:

There are many difficulties impeding the rapid spread of reasonableness. One of the main difficulties is that it always takes two to make a discussion reasonable. Each of the parties must be ready to learn from the other.

A nice case against the notion of the ignorance and moral turpitude of your opponents is the obituary by Brad DeLong for Milton Friedman which was as good as any written saying:

His wits were smart, his perceptions acute, his arguments strong, his reasoning powers clear, coherent, and terrifyingly quick. You tangled with him at your peril. And you left not necessarily convinced, but well aware of the weak points in your own argument

AND

Milton Friedman’s thought is, I believe, best seen as the fusion of two strongly American currents: libertarianism and pragmatism. Friedman was a pragmatic libertarian. He believed that–as an empirical matter–giving individuals freedom and letting them coordinate their actions by buying and selling on markets would produce the best results… For right-of-center American libertarian economists, Milton Friedman was a powerful leader. For left-of-center American liberal economists, Milton Friedman was an enlightened adversary. We are all the stronger for his work. We will miss him.

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