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October 13, 2023



Steve Levitt and Stephen Dubner visited then-PM David Cameron to suggest reforming the NHS:

'We suggested to Mr. Cameron that he consider a similar policy in a different arena. What if, for instance... everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model, free of charge, and drive it home.” '

Cameron, in a rare display of wisdom, showed them the door....

[ Brilliant illustration of the idiocy of libertarian economics. I love this entire essay. ]


«the process whereby we go back and forth between high theory and our everyday judgments, revising either or both until they are consonant [...] why is it so easy for politicians (of all parties) to sometimes be "operating in purely imaginary worlds," to use Kenneth Boulding's phrase?»

I admire our blogger for his loyalty to the ideal of rule by philosopher-kings (ideally of course wykehamists, but other enlightened subgroups of the elite could do), who would carefully ponder/test their theories to see if they would be optimal in the real world, so finding optimal policies for "the national interest" instead of just for their sordid factional interests:

«Few political partisans, however, care about such questions: all that matters to them is that their side wins. Which is part of the problem.»

But I continue to regard politics as the continuation of war with other means, as a way to resolve at least in part conflicting interests without resorting to physical violence, so I reckon that what seems our blogger's favourite idea has at least these problem:

* It conflates the idea that politicians pursue partisan interests with the idea that they pursue them stupidly, by «sometimes be "operating in purely imaginary worlds,"», and sort of implying that if they did not act stupidly, they would end up being non-"partisans" and do the "national interest". If we look at the record for example the thatcherites have performed very well, far from stupidly, in advancing the interests of their "sponsors", for decades, even if here and there they have made mistakes, which are not simply proof of their «sometimes be "operating in purely imaginary worlds,"», but just of their occasional fallibility.

* It is a favourite point of right-wing propaganda in two opposite ways that are used at different times:
** Since all politicians are corrupted by partisan self-interest politics is irredeemably corrupt and thus the dominant elite has every right to be so too, "dog-eat-dog".
** That there are non-partisan sections of the elites who are disinterested problem-solvers ("technocrats", "experts") and agreed on what is feasible and fair (“There Is No Alternative”, “in the urgent need to remove rigidities and incorporate flexibility in capital, product and labour markets, we are all Thatcherites now”).

«What must change to enable politics to be more like fulfilling, progressive and successful disciplines?»

I spot here the beautiful assumption that the "technocratic" "experts" of those disciplines are fair and just wikehamists that pursue truth regardless of their own interests, instead of being often sordid careerists.

Regardless I reckon that a domain devoted to resolving (one way or another) conflicts of interests cannot be even remotely compared to those devoted to the study of nature and other subjects.


«“We suggested to Mr. Cameron that he consider a similar policy in a different arena. What if, for instance... everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model, free of charge, and drive it home.”»

Cameron, in a rare display of wisdom, showed them the door. What Levitt and Dubner failed to do was engage in reflective equilibrium, to ask: if the NHS is so theoretically absurd, why is it so popular and why so effective (before the Tories did their worst)?»

This is an amusingly stupid argument: their claim was not that it is "theoretically absurd", but that it was working all too well for "scroungers": of course a system would be popular if really were like a “car dealership whenever they wanted and pick out any new model, free of charge, and drive it home”, and it would be effective too at delivering more cars to people.

What Levitt, Dubner and our blogger (pretend?) to fail to see is that there are "unpleasant goods", like having surgery for a stroke or a cavity, which are quite unlike "pleasant goods" like a better car.

It is a classic trope of (usually deliberately malicious) right-wing propaganda: "scroungers" are depicted as getting such a thrill from being unemployed, sick, old, homeless, hungry, that they want such thrills to be paid for by those who are employed, healthy, young, propertied, sated. It is like a similar argument for insurance: "scroungers" enjoy it when their houses burn down or their cars are wrecked in accidents, and therefore risk pooling as in fire or accident insurance is a bad idea.

The main point is that "unpleasant goods" are "consumed" as little as possible, that the NHS etc. are insurances against adverse events, not suppliers of "pleasant goods" that some people, want to consume as much as possible, such as better, news car models.

The "mark to reality" bit seems to me the vice-versa: that there is a small minority of hypocondriacs as there is a (less) small minority of insurance fraudsters, who think they like or benefit from what for others are "adverse events", so there must be some mechanism to reduce that.


Your post very much coincides with these quotes from Einstein:

Education is what remains after one has forgotten what one has learned in school.

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.

The only source of knowledge is experience.

The only thing that interferes with my learning is my education.


«A more absurd example of such a failure was the Truss-Kwarteng Budget. Their enthusiasm for tax cuts was not challenged by facts: what's the evidence that tax cuts boost growth? How long does it take for them to do so? Should we be loosening fiscal policy at a time when bond markets are worrying about inflation? Again, no back-and-forth, no equilibrium.»

Our blogger seems to me to be continuing to be loyal to the parliamentary convention that good faith cannot be questioned, so one has to take propaganda as authentic beliefs.

My impression is that whatever they say for some interest groups tax cuts are good in themselves, whatever their effects on growth, and bankrupting final salary pensions is also something that at least should not be an issue, or even desirable.

«Should we be loosening fiscal policy at a time when bond markets are worrying about inflation?»

But "inflation" is really just a policy to make wages more "competitive" in real terms, and is supposed to revert to under 2% "soon".

After all in China inflation is negative or nugatory, and most of the manufactures we buy are from China, and most of the foodstuff and materials we buy are from the same exporters that sell to China, and UK wages are not exactly booming, so it it is difficult to argue that it is either supply-driven or wage-driven "inflation".


Notice that real earnings in 2023 in the UK are just about where they were in 2007:


January 30, 2018

Real Weekly Earnings for United Kingdom, 1980-2023

(Indexed to 1980)


Also, UK investment has been remarkably low as a share of GDP since 2007. Tax cutting has not seemed to spur investment.



«UK investment has been remarkably low as a share of GDP since 2007.»

Been here before: investment in the UK has been booming, just not investment in unprofitable activities like industry; far more profitable ones like trading property deeds have attracted enormous flows of investments, including from abroad. Property deeds have been a big export.

«Tax cutting has not seemed to spur investment»

Considering that for so many people the tax rate on property deed gains is zero, while earned incomes from industry is taxes, I guess investment in property deeds has been driven by rationality.

Davis Landes, "The Wealth and poverty of nation", 1999
“The annals of competition show entire national branches dragging and withering -- not this and that enterprise, but the whole industry. Sometimes, having learned their lesson, the last members of the branch move away, generally to cheaper labor; that is smart, but also easy, and evidence more of rationality than enterprise. And sometimes, as in Britain and Holland earlier, entrepreneurs retire to a life of interest, dividends, rents, and ease.”


Can I agree with Blissex for a change?

May I also point out that Feynman's statement would support epicycles over the contemporaneous heliocentric theory of Aristarchus, because predicted parallax motion of the stars was not observed due to blunt measurements?


Also, is anyone else reminded of the Flatland problem?

"Only yesterday, when the Chief Circle (in other words our High Priest) came to inspect the State Prison and paid me his seventh annual visit, and when for the seventh time he put me the question, ‘Was I any better?’ I tried to prove to him that he was ‘high,’ as well as long and broad, although he did not know it. But what was his reply? ‘You say I am “high”; measure my “high-ness” and I will believe you.’ What could I do? How could I meet his challenge? I was crushed; and he left the room triumphant."

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