Stumbling and Mumbling

Pensions, fairness & ideology

If there’s one intellectual position that seems vindicated by today’s public sector strikes, it is that of Alasdair MacIntyre:

We have - very largely, if not entirely - lost our comprehension, both theoretical and practical of morality…we possess no rational way of weighing the claims of one [moral view] against another. (After Virtue, p2, 8)

Let’s be clear. The issue here is not about the “affordability” of public sector pensions; their cost is projected to fall as a share of GDP in coming years.  Nor, really, is it about deficit reduction. Even if this were necessary, there are thousands of ways of cutting spending without touching pensions.
Instead, what we have is a clash of two conceptions of fairness, of justice.
To strikers, the demand that they pay more in pension contributions is unfair because it represents a breach of the implicit contract on which they took the job. To their opponents, the existing generous pensions are unfair because they are much better than most private sector workers get.
But as MacIntyre said, there is no rational way of weighing these competing claims.
This problem is magnified by cognitive biases - leave aside the obvious vested interests - on both sides.
On the strikers’ side, there’s the mix of loss aversion and status quo bias. I suspect that, if we were designing pension schemes from scratch, the government’s proposals would seem acceptable to public sector workers - being, as they are, better than many private sector workers get. But this is not the point of comparison. The proposals are framed relative to what they already have, and so appear as big losses.
On the anti-strikers’ side, there’s a different bias - what might be called a resentment effect. Experiments show that people who feel ill-treated in one context are more likely to be ill-disposed to other, separate, people. So, people who have poor pension rights themselves are apt to resent generous public sector pensions, even though the latter don’t explain the former: the demise of private sector pensions has very little to do with teachers’ pensions.
There’s no rational way of adjudicating these competing claims. It’s a matter of simple tribalism.
In this context, the ConDems’ claim that public pensions are unaffordable - which was ably undermined by Evan Davis - is especially irksome. It is an attempt to disguise what is in fact a tribal position by a claim to some spurious objective “reality”. This, of course, is a standard ideological trick of the ruling class. As MacIntyre put it:

What purport to be objectively-grounded claims function in fact as expressions of arbitrary, but disguised, will and preference (After Virtue, p107)

For years, governments and capitalists have been better able than unions to perform this ideological trick.

Johann Hari: art vs reality

It is a commonplace that so many economists and sociologists are bad writers. The trouble that Johann Hari has gotten into suggests that there might be a reason for this.
Let’s be clear here. His crime is a minor (ish) one. Had he cited his lifted quotes along the lines of “as X said elsewhere”, there would be no scandal. As Tim points out, there are worse things he’s done.
So, why didn’t he do this?
He claims that he preferred “intellectual accuracy” to “reportorial accuracy.” I’m not sure this is the relevant distinction. Instead, the relevant distinction is between a tidy, slightly alternative reality that can be captured by fine writing on the one hand and the messy, ambiguous facts in front of us. Johann was, in effect, choosing the former; had he rightly attributed those quotes his pieces would have been more accurate but less elegant.
In this context, I fear Johann was misled by a common cultural meme - the idea that “truth” can be captured by fine writing and by art. This is not wrong in all contexts. Great novels and films  - works of fiction - can tell important truths.
This meme, though, runs into a problem. Very often, “truth” is messy. People don’t just umm and ahh but say things that are ambiguous, or that don’t truly capture what they really think. And even “hard facts” are subject to multiple interpretations or are only suggestive of some conculsion or other.
What do we do in such cases? Johann’s solution was to try to polish the turds of reality to create an elegant “intellectual accuracy“. The alternative was to acknowledge that people are often inarticulate and that their thoughts are scattered. This would have been inelegant, at best and useless at worst: what if he had written up his interview with Toni Negri along the lines: “I didn’t understand a word the guy said”? 
And this is why so many academics are bad writers. The crooked timber of reality doesn’t fit into the elegant box of fine writing. Something’s got to give. For academics, it’s the writing. For Johann, it was the crooked timber.
But Johann’s choice was not an idiosyncratic one, but quite common in journalism.
I don’t mean by this outright lies or the harmless removal of umms and aahs from quotes. I’m thinking of two other things.
One is the over-confidence of columnists generally. It’s a rare columnist who admits that there is conflicting or ambiguous data.
The other is a lack of awareness of statistical inference. How often do you read about confidence intervals or sampling errors even though these are central to any understanding of statistics? What you get in reporting of science and economics is, very often, a neat and tidy but - for that very reason - more or less misleading story.
And nor could it be otherwise. A full and accurate story, even if it were possible to write in a few hundred words, would be ugly and inconclusive. 
Journalism is, by necessity, a simplified, cleansed map of reality. The problem is that we sometimes mistake the map for the terrain.

Squeezed incomes & interest rates

Today’s national accounts numbers show that households’ real disposable incomes have fallen by 3.5% since 2009Q2. This is the biggest squeeze on real living standards since 1977.
This, I suspect, has some under-appreciated implications for interest rates.
The most obvious is simply that the Bank will be loath to raise rates for fear of intensifying the squeeze on incomes and hence consumer spending. Each percentage point rise in interest rates would raise the aggregate net interest payments of households by about £2.7bn over a year - equivalent to a 0.3% cut in disposable income.
There are, though, a couple of less obvious but also important considerations. One is that the squeeze on incomes has made it harder to people to increase savings or pay down debt; the savings ratio actually fell in Q1 and overall borrowing has increased recently. This suggests that insofar as some households have been overly indebted, this problem is continuing. A rise in interest rates could, then, tip them into big trouble.
Of course, the average household is not in massive debt: aggregate household debt, at £1.45 trillion, is equivalent to less than 18 months disposable income, which is manageable; few of you would find a mortgage of 1.5 times your net salary onerous. But debt is not evenly distributed. There’s a tail of households who are in big trouble. The Bank of England’s latest Financial Stability Review (pdf) warned that an increasing proportion of household debt is held by “vulnerable” borrowers - those with low housing equity or having difficulty making payments.
Worse still, it said, exposure to these borrowers is “likely to be concentrated in a few banks”. And, it added, “these vulnerable households’ incomes could be affected by fiscal consolidation.”
In this sense, an interest rate rise exacerbates a particular tail risk. When allied to the squeeze on some debtors’ incomes, and to the danger that public sector job losses could tip some of the indebted into default, the result could be a large increase in bad debts and defaults.  Not only would this give another kick to consumer spending, the resulting banking losses could lead to a reduced availability of credit generally.
Note that in this context, the possibility that public sector job losses might be offset by private sector job creation is not necessarily a relief. If a highly indebted person loses his job whilst a less geared one finds work, the result will be an increase in financial distress.
Through these routes, the squeeze on real incomes reduces the prospects of a rise in Bank rate.
Which brings me to a curious political point. A great many Tory supporters - older, richer folk - would benefit greatly from higher interest rates. However, fiscal restraint - which is contributing to the fall in real incomes - makes such a rise less likely. In this sense, many Tories - millions I suspect - support policies which are not in their direct economic interest.

Ego depletion, pro-sociality & capitalism

Under what circumstances are people more likely to co-operate with others? This new paper by Alexander Wagner and colleagues sheds some fascinating light.
They got subjects to perform some dull jobs and then to play the ultimatum game, in which one player proposes how to split a given sum of money with a partner whilst the other accepts or rejects the offer.
They found that the subjects who had to exercise more self-control in the dull job tended to make lower offers when they became proposers in the ultimatum game, and to reject more offers when they were responders.
In other words, they were less likely to co-operate on either side of the game.
To see what’s going on here we need the concept of ego depletion. This says that we have a fixed amount of self-control. If we therefore have to exercise a lot of it in one context, we’ll have less of it in another. This explains why people in tough jobs let off steam by drinking heavily, or why we hit the biscuit tin after going to the gym, or why folk eat more when they give up smoking.
Having used up self control in the prior dull job, some subjects thus entered the ultimatum game less able to control their impulses - and these impulses are to make low, selfish offers and to reject such offers, even if it is in our self-interest to accept.
In other words, pro-social behaviour requires self-control, but this can be depleted by other things. And one of those other things is the amount of drudge work we have to do. If it takes all our self-discipline to turn up to work and do a routine job, we’ll have less self-discipline with which to act generously.
This has some important implications:
1. To the extent that ego depletion exists, it doesn’t make sense to blame the poverty of the poor upon their lack of self-control. This is because such a lack can be endogenous. If we use up our self-control doing mindless work, we’ll have less of it to curb our drinking, use contraception or save our money. ( I suspect there are other ways in which lack of self-control is endogenous, but let that pass).
2. There’s a trade-off between the monotonous work that characterises so much of capitalism and Cameron’s desire for a Big Society. Insofar as it weakens our self-control and thus diminishes our capacity for pro-social behaviour, grunt work precludes pro-social activity.
3. There’s no point bleating about union militancy. Insofar as workers are irrationally militant - in the sense of rejecting even unfair ultimatum game-type offers - this arises from the ego depletion caused by monotonous or alienating work practices.
If these implications seem quite Marxian, there’s a further implication that is not. Marx thought that alienating, mind-numbing work would engender a sense of class solidarity. These experiments, however, suggest the opposite. The ego depletion which such work generates might lead to increased selfishness and hence to more individualism.

Harold Shipman: typically middle class

In Chavs Owen Jones contrasts the press treatment of Karen Matthews and Harold Shipman. Whereas Ms Matthews was widely regarded as a typical chav, no-one regarded Mr Shipman as typically middle class:

The mass-murdering GP Harold Shipman might have gone down as a monster, but did anyone argue that his case shone a light on life in middle-class Britain? Where were the outraged tabloid headlines and politicians’ soundbites about middle-class communities that “really really have to change”?

Let me rectify this omission. If we must generalize from particular, extreme, cases, the Shipman case does shed light upon middle class Britain.
Insofar as a motive for Shipman’s murders has been discerned, it is that he enjoyed the exercise of power. One coroner says he “enjoyed the feeling of control.” But a desire for power is, of course, a common middle-class trait: be it an ambition to become editor, minister, professor or senior manager, there’s the desire for power.
But not just any power. It was naked, raw power that Shipman wanted. He didn‘t want people to fear him, but to respect and admire him; he worked hard to be regarded as a good family GP. And herein lies another common feature of the middle class. Be it the nanny state pretending that regulations are for our own good, or capitalists denying that workers are exploited, the middle class seeks not just power, but power with the pretence of moral justification.
This combination of a love of control with a desire to be admired can be a feature of narcissistic personality disorder, which some believe characterised Shipman.
But it is also common - perhaps increasingly so - in corporate life. Michael Maccoby has written:

The larger-than-life leaders we are seeing today closely resemble the personality type that Sigmund Freud dubbed narcissistic.

It is in this context that we can understand that doyen of the middle-class, Paul Dacre. It is common to accuse him of hypocrisy for pretending to stand for old-fashioned virtues whilst regularly swearing at his underlings. But this hypocrisy vanishes when we recognize that both behaviours are typical of the narcissist’s urge to control. Perhaps Paul Dacre and Harold Shipman have more in common than generally thought.
There’s one other thing. Shipman had a highly developed love of order. But this same love of order is another feature of the middle class. The boss’s desire to control his staff and the Guardian reader’s (and writer’s) distaste for the anarchy of market forces both display a Shipmanesque urge for order.
So, we should have inferred from the Shipman case that there is a profound and widespread sickness in middle class culture.
So why didn’t we? The legitimate answer is that it is always dangerous to draw general lessons from particular cases. But, as Owen points out, people were quick enough to do this in the Karen Matthews case.
Instead, perhaps this is an example of the out-group homogeneity bias and its obverse, the in-group heterogeneity bias; we believe that other people are all the same whilst “we”  are all different. Journalists and politicians, being middle class, were quick to believe that all/many of the poor were like Ms Matthews. But because they thought that all middle class people different, no-one saw that Harold Shipman might be typical of them.
Now, you might object here that I’m being offensive in likening many innocent middle class people to a serial killer.  But isn’t it also offensive to the poor to presume that they are feckless benefit fraudsters?

Libertarians & capital punishment

Alex Massie scorns Guido’s call for the reintroduction of the death penalty. He’s certainly right to point to the absurdity of Guido citing majority opinion. Libertarians cannot be majoritarians, simply because majority opinion is often hostile to freedom. I’d add that it’s also absurd for a libertarian to support capital punishment only for some murders - those of kids and cops as Guido advocates. Murder is a crime because it deprives us of the right to life, but libertarians must surely believe the right to life is equally valuable for all people.
But does this mean there is no libertarian case for capital punishment?
Some libertarians say “no” on the grounds that criminal justice shouldn’t be a function of the state. But let’s assume that the state does have a right to punish. Can libertarians then support the death penalty? Three things suggest yes:
1. To a libertarian, crimes are wrong because and only because they violate others’ rights. What matters, then, is the victim and the victim alone; state and society have no interest other than those of the victim. If the victim would have wanted the death penalty enforced, then it should be. This was Murray Rothbard’s position.
2. Libertarians are libertarians because they believe that freedom is colossally valuable. A lifetime in prison, without hope of freedom, is therefore a crueller punishment than death. Capital punishment, then, is more humane than imprisonment, as John Stuart Mill argued.
3. History suggests that the death penalty can be consistent with a libertarian society.  It was routinely applied in 18th and 19th century England, at a time when the state otherwise intervened barely at all in everyday life. As incarceration came to supplant capital punishment, so the state’s tentacles spread. As Foucault wrote:

By operating at every level of the social body and by mingling ceaselessly the art of rectifying and the right to punish, the universality of the carceral lowers the level from which it becomes natural and acceptable to be punished.

Of course, just because state power has widened as capital punishment has retreated does not guarantee that reintroducing capital punishment will force back the limits of the state; if a man’s been hit by a bus, you don’t restore him to life by reversing the bus. But it could do. The sight of the state killing people in cold blood might increase people’s fear of state power and so embolden them to push back its use. If there is a choice between state power being rare but horrible or common but mild, libertarians might prefer the former.
Against all this stands one other argument, which for me and others trumps other thoughts. It’s that libertarians - even more than others - must never trust the honesty or competence of the state and its officials. They must therefore be alert to the possibility - inevitability - that the state will wrongly kill someone. And to the extent that libertarians cannot be utilitarians the cost of such an horrific and irreparable denial of rights can never be offset by any other benefits that capital punishment might, very arguably, provide.

Effectiveness vs rationality

This post by David Wearing raises an awkward trade-off. He says, reasonably I suspect, that successful political activism requires huge and sustained effort:

To defeat whatever form of injustice we face requires us to exert ourselves in a sustained way over a substantial period of time. Notwithstanding the demands of our professional and personal commitments, activism cannot be somewhere to visit for an occasional holiday.

This, though means there’s (sometimes? often?) a trade-off between successful political activism and rationality. I mean this in two senses:
1. The costs of protesting for a week - to take Brian Haw’s example cited by David - are high; the inconvenience and loss of wages. But the gains from changing policy - even if this happens - are spread over everyone. Narrow instrumental rationality will only very rarely tell us to be a sustained activist.
2. To undertake such a sacrifice, one must have a huge belief not only in the rightness of one’s cause, and in the chances of its success, but also in its importance. Such beliefs will very often owe more to over-confidence and fanaticism than to pure rationality. Whether Brian Haw was right or wrong, he was not an exemplar of conventional standards of rationality.
If David is right, then, many of the political campaigns that succeed will be motivated to a great extent by irrationality*. In this sense, there’s a trade-off between effective political action on the one hand and rational belief on the other; if it weren‘t such a horrible cliché I‘d cite Yeats**.
Whether this tells us something about the limits of rationality or the nature of politics, I’m not sure.
Such a trade-off, however, is not confined to politics. A similar thing is true in business. If entrepreneurs knew the risks of failure and the effort required for success, we’d probably have fewer of them; it is only because overconfidence triumphs over objectivity that we have as many entrepreneurs as we do.
Although politics and entrepreneurship share the trade-off between effectiveness and rationality, there is a difference between them. To the entrepreneur, the costs of irrationality - if they are incurred at all - are private. In politics, however, the costs are externalized; the noise of fanatics (and, remember, professional politicians can be fanatics too) can drown out more sober voices.
* I say “many” rather than “all” because the Arab spring seems an exception. But this is because the regimes were so repressive - and youth unemployment so high - that point (1) did not hold.
** No mention of Yeats should pass without reference to this astounding brilliance.

Preferences and the original position

Norm writes:

Maybe top executive pay and other very lavish remuneration can't be justified as what fair-minded and reasonable people would agree to in an Original Position.

This invites the retort: so what? Our preferences change with circumstances. What I wanted as a 25-year-old is different from what I want now. It would be silly to live my life according to what I wanted then. So why should we organize our collective lives according to what we’d want in a different situation?
Let’s say Norm is right and in the Rawlsian original position we’d all agree that CEOs should only get 2-3 times average earnings.
But when we shift from the original position to the real world, our preferences change. The guy who in the OP thought a 2-3x multiple of average earnings was a good wage might decide that it’s not so handsome after all now that he‘s CEO; the more we have, the more we want. And non-CEOs might want to pay him more, to bribe him not to mismanage the firms.
Why should our preferences in the OP dominate these preferences?
For that matter, would our preferences in the OP actually be for a multiple of 2-3x? Mightn’t we instead anticipate the combination of adaptive preferences and efficiency wage motives we would have in the real world, and agree upon a greater inequality?
What I’m asking here is not the old question: why should we agree to a hypothetical social contract? Instead, it’s about preferences: why should preferences in one situation have any relevance to a different situation?
The standard answer is that our preferences in the OP are rational and disinterested. But, in my example, they are also rational in the real world - and, for all but CEOs, disinterested too.
One could also reply that OP preferences are “clean” in the sense that they exclude the preferences that result from adaptation to our actually-existing institutions.
But this invites the question: how can we tell what such cleansed preferences look like? Does a context-free preference even make sense?
Another answer here is that in the OP, we wouldn’t content ourselves with merely asking what sort of salary to pay CEOs. We would also ask: should we really consent to the existence of institutions which generate such inequalities? 
But how could we answer this question? The most natural thing to do is to import into the OP our knowledge of capitalist history - that hierarchical firms, tempered by market forces, have generated wealth but also crises and inequality - and ask whether we‘d want this.
This, however, entails two questions. One is: in doing this, are we guilty of sampling bias? Maybe there‘s an alternative possible world of a viable market socialist/cooperative world that we haven‘t experienced because of bad luck or historical accident - one of the accidents being that it just hasn‘t come about yet.
If we under-sample this alternative, we might - in the OP - be more generous towards hierarchical capitalism than we would otherwise be. How can we tell whether we’re making this mistake or not?
The other question is: if we import our experience of hierarchical capitalism into the OP, mightn’t we also import at least some trace of the preferences (eg instrumentally rational self-interest) such capitalism has generated? If so, the OP isn’t truly O.
We are, then, left with the question: what does OP-type thinking do that other forms of political thinking not do?

Against (feminist) ambition

The Times yesterday ran some features on what it means to be a 21st century woman, which highlighted one of my gripes against a particular form of feminism - its elevation of ambition.
For example, Kathy Lette complained about the glass ceiling, Mary Beard decried the fact that it was not a compliment to call a woman ambitious, and Noreena Hertz advised young women: “Don’t feel guilty about striving for power.”
What all this omits is that ambition - in men and women - is a bad thing.
Now, to be clear, I do not mean ambition in pursuit of excellence. It’s admirable to want to be the best musician, athlete, economist or street-sweeper.
Instead, the problem is with ambition in the pursuit of what MacIntyre called the goods of effectiveness - power and wealth, the sort that Noreena advocates.
Such ambition can be corrosive for an organization. It encourages workers to invest in general skills - the sort that can be assessed by one’s superiors - rather than technical ones, with the result that average productivity declines. It causes us to regard our fellow workers as rivals rather than colleagues and so impedes the cooperation and open communication that is necessary for corporate success. It diverts effort away from productive effort towards zero- or negative-sum office politics.  And it leads to the Peter Principle and its modern variant, Putt’s law.
Let’s put this another way. The skills you need to be a good senior manager are extremely - vanishingly - rare. You need to be good with people, a good decision theorist free from cognitive biases, able to process vast amounts of fragmentary and diverse information, and have some kind of grasp of a wide range of technical skills. Very few of us, if any, have such abilities. It follows that most people who aspire to top management jobs are ill-equipped to do them*. They are, therefore, guilty either of a lack of self-knowledge and over-confidence, or of appalling selfishness - they want the job even though it would damage the organization.
So, far from applauding ambition we should, in most cases, oppose it.
Of course, everything I’ve said applies to men’s ambition as well as women’s. So why pick on feminism? In one big sense we shouldn’t. But there are two things that worry me.
One is that this particular form of feminism helps to legitimate ambition. And people are never more ruthless than when they believe they have right on their side.
The other is that feminism - in this sense - is a diversion. In encouraging women to climb up hierarchies, it deflects attention from the question: should our economic and political life be structured hierarchically at all?
In this sense, one form of equality, equality of striving, displaces another more valuable form of it.
 * I suppose you could defend an ambition of the sort “I’m not as bad as the other people who want the top job”, but I suspect very little of it takes this form.

The meaning of life

In Obliquity, John Kay writes that “happiness is not achieved through the pursuit of happiness”. It is instead, he says, a by-product, something we achieve by focusing on other things. Some new research corroborates his view.
Lois Duff and Artjoms Ivlevs show that there’s a significant and negative correlation between thinking about the meaning or purpose of life and happiness; people who spend more time thinking about the meaning of life tend to be less happy than people who don’t.
Of course, this correlation, in itself, does not establish that thinking about the meaning of life causes unhappiness. It might instead be that things that make us unhappy also cause us to question the purpose of life.
Two facts, however, suggest this is not what’s happening.
First, the authors control for the observable things that might make us unhappy: being unhealthy, middle-aged, unemployed, irreligious or divorced, among other things. The relationship between thinking about the meaning of life and unhappiness exists even allowing for these.
Secondly, they show that this relationship only exists in rich countries. In poor nations, the opposite is the case; people there tend to be happier, ceteris paribus, the more they think about the meaning of life.
So, here’s a theory. Thinking about the meaning of life serves opposite functions in rich and poor countries.
In poor countries, it acts as a comfort. People reckon: “sure, we’re poor. But when you think about the true purpose of life, money doesn’t much matter.”
In rich countries, however, it acts as an irritant. Having attained moderate wealth, we think “there must be more to life than this” and get depressed when we can’t figure out what it is or how to get it, or discover we‘re no happier when we‘ve got it. The only people who benefit are psychoanalysts and pharmaceutical suppliers.
The obvious message here is that we should shut up thinking about the meaning of life and just get on with living it.
But there might be another implication. Could it be that Cameron’s proposal to measure national well-being will in fact tend to reduce that well-being, insofar as it invites us to spend more time thinking about happiness?