Monday, August 8, 2022

Social production of moral indifference - 1a

(I am a conformist in every sense of the word, but, curiously, I like reading about views that question the status quo. The minority view is more interesting. So I thought of writing a few posts against the prevailing individualistic, grasping, violent view of human nature but it became much longer than I expected. I have divided the posts into sub-sections and numbered them 1(a), 1(b), 2(a), 2(b) etc. But it must be remembered that the divisions between different sub-sections are porous.)

Human nature is not nearly as bad as it has been thought to be. — Abraham Harold Maslow

At the beginning of the movie 2001: A Space Odyssey, a band of prehistoric hominids has been driven from a water hole by another clan. One of them picks up a bone and realizes that he can wield it as a weapon. He and his band use their newfound power to beat one of the other clan members to death. This violent act enables them get their water hole back and marks the Dawn of Man. He throws the bone up into the sky, where it turns into a satellite orbiting the earth.

One should examine the assumptions behind this story instead of accepting them blindly. Are competition and conflict really the only reason for human progress? The story of how we became human is an important one, not just from a scientific point of view but because it informs our beliefs about human nature. The current belief in self-interest  tells us that to behave morally is to invite others to take advantage of us. It shapes what we teach our children, both at home and in the schools. 

The dominant views expressed by people around us, the messages we receive from the news media, etc. shape our patterns of thought. These views influence most of our behaviors but they are rarely questioned. If, during a job or performance interview, we are asked to describe ourselves, our answer will very much reflect the dominant expectations of that time. Our appearance, self-perception, and social behaviour are entirely determined by the messages we receive.  By encouraging us to expect the worst in others, it brings out the worst in us. 

Research has shown that people tend to act according to what they see or hear is the common behaviour. When visitors to a national forest read signs that asked people not to steal petrified wood because a lot of people had stolen wood in the past, theft actually increased. People had concluded that since many had the habit of stealing wood, it was okay for them also to do so. Over 2,500 college students from twenty-three countries, were surveyed and the counties that had higher rates of corruption, tax evasion, and political fraud were also the countries that had higher rates of lying. 

You are no longer surprised by accountants validating the books of fraudulent companies or doctors being little more than marketing agents for the pharmaceutical industry. It is common to hear people who are uneasy about the occasional side effects of economic wheeling and dealing being portrayed as namby-pambies just not up to the rigors of the marketplace. As a result of the self-interest model's influence, our bonds of trust have taken a heavy beating in recent years.

Such negative assumptions have guided most realms of human affairs, from policy making to media portrayals of social life. As our science enters further into the domain of the human heart and mind, we come to see our lives less in terms of joys, virtues, sins, and miseries and more in terms of chemical imbalances, hormones, good moods, and depressions — material problems which can be tackled by technological solutions, not moral challenges with which we must learn to live. As Issac Asimov said, 'The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.'

There are two contrasting views about human behaviour. One school of thought regards humankind as essentially good, and sees it as society’s task to ensure that our benevolent disposition comes to the fore. The other believes humankind to be essentially bad, and wants society to act as a police officer, to curb our evil tendencies as much as possible. One side is highly altruistic, and focused on ‘give and receive’; the other is highly egotistical, and focused on ‘divide and rule'.

The latter view has become dominant today. It results in a mechanistic, fear driven society that can be manipulated.  Politics becomes a place where the strongest groups dominate and the weaker pay the costs of defeat or neglect. There is a definite correlation between what humans think of themselves and what they become. Assuming the worst about people often brings out the worst in them without their realizing it. It's a clear case of the old statement - "The greatest trick the devil ever pulled was convincing the world he didn't exist". 

According to Hobbs, human life in a state of nature was ‘solitary, poor, nasty, brutish, and short’. It resulted in ‘a condition of war of all against all.’ He assumed that anarchy can be tamed and peace established if we all just agree to relinquish our liberty and put ourselves into the hands of a solitary sovereign who he called after a biblical sea monster: the Leviathan. Hobbes’ thinking provided the basic philosophical rationale for directors and dictators, governors and generals down the ages to grab power. You are often told that ‘knowledge is power’ but it is more true to say that ‘power is knowledge’.

The condition we face is much like that described in Bertolt Brecht's play, The Exception and the Rule. On Brecht's stage a handful of characters wander through a pattern of actions that show a moral universe turned upside down. What is good is made to appear evil; justice and injustice trade places. A coolie attempts to do a good deed. He is killed by his employer who sees the coolie's gesture as a threat from a class enemy. The murderer is placed on trial but is acquitted in a judgment that finds his behavior perfectly reasonable under the circumstances. In his poem The Second Coming, Yeats describes such a situation:

The blood-dimmed tide is loosed, and everywhere   

The ceremony of innocence is drowned;

The best lack all conviction, while the worst   

Are full of passionate intensity.

What matters more than the model of human nature that you choose to use is to realize that you have one in the first place, because then you have the power to question and change it. As Keynes once admitted, it was ‘a struggle of escape from habitual modes of thought and expression … The difficulty lies not in the new ideas, but in the old ones which ramify. . . into every corner of our minds.’ Conceptual locks are far more powerful than factual locks. 

In the posts that follow, it would appear that I have over-emphasized human cooperation and under-emphasized the competitive and self-aggrandizing aspect of human nature. But the assertions about the negative aspects of human nature have become so common that it was necessary to indicate the overwhelming importance which sociable habits play in Nature and human society. Individual self-assertion is something quite different from the petty, unintelligent narrow-mindedness which goes for “individualism” and “self-assertion.” 

Thursday, July 28, 2022

An award for gaffes

Have you heard of the 'Foot in Mouth Award'? It is awarded by the Plain English Campaign for "a baffling comment by a public figure." The award was first made in 1993, when it was given to Ted Dexter, the chairman of selectors for the England cricket team.  Politicians have been recipients of the award more times than any other group of people. The list includes some familiar names. Here is a sample:

Alicia Silverstone - The American actress, star of Clueless, was awarded in 2000 for her comment: "I think that Clueless was very deep. I think it was deep in the way that it was very light. I think lightness has to come from a very deep place if it's true lightness."

Richard Gere - The American actor was presented with the award in 2002 for his philosophical comment: "I know who I am. No one else knows who I am. If I was a giraffe and somebody said I was a snake, I'd think 'No, actually I am a giraffe."

Boris Johnson - He is a regular contender for the prize. He won in 2004 for his comment: "I could not fail to disagree with you less." His second win in 2016 was secured by the unsinkable: "Brexit means Brexit and we’re going to make a Titanic success of it."

Naomi Campbell - The English supermodel picked up the award in 2006 for saying, "I love England, especially the food. There's nothing I like more than a lovely bowl of pasta."

George W. Bush - Bush's award was made during his final year in office as President of the United States (2008). Entitled a "Lifetime Achievement Award", it was given not for a single quote, but for his continued "services to gobbledygook". His gaffes were described as covering a large number of topics, and included comments such as "I know what I believe. I will continue to articulate what I believe and what I believe – I believe what I believe is right", and, "I hope you leave here and walk out and say, 'what did he say?'"

Silvio Berlusconi - The former Italian Prime Minister received the award in 2011 for comments such as "I am pretty often faithful", when talking about fidelity in 2006, and describing Barack Obama in 2008 as being "Handsome, young and also suntanned".

Mitt Romney - U.S. Presidential candidate Mitt Romney received the award in 2012 for making gaffes like: "I like being able to fire people who provide services to me" and "I believe in an America where millions of Americans believe in an America that's the America millions of Americans believe in. That's the America I love."

Donald Trump - He was at the time of the award (2015) campaigning for the Republican nomination in the 2016 US presidential election. The Plain English Campaign said that Trump was "unrivalled". In particular the campaign cited his remarks on Mexican immigrants: "They're bringing drugs. They're bringing crime. They're rapists. And some, I assume, are good people." It also cited his remarks on John McCain: "He’s not a war hero. He was a war hero because he was captured. I like people who weren’t captured."

(I heard that every Republican president makes you nostalgic about the previous Republican president. Trump made you feel that Bush was a wise, compassionate guy with a nice sense of humor. Can you imagine a time when you will be nostalgic about Trump? Maybe Trump II?)


Friday, July 15, 2022

Tocqueville on Religion - II

Tocqueville’s Democracy in America also offers a philosophic account of why a free society necessarily requires a religious foundation. A free society depends on freedom of thought and discussion, it certainly includes a right to question conventional opinion. But it would be a mistake to think that this freedom requires an unfettered skepticism about all things or a willingness to treat all ideas as open to question. On the contrary, all societies depend in some degree or another on shared beliefs or “opinions men receive on trust.” 

It is not possible for societies or even for individuals to arrive at all beliefs on the basis of the unguided, independent thinking of each individual. This, Tocqueville claims, is an “inflexible law” of the human condition. “If man were forced to prove to himself all the truths he makes use of every day, he would never finish; he would exhaust himself in preliminary demonstrations without advancing.” Having neither “the time because of the short span of life, nor the ability because of the limits of his mind,” man cannot establish by his own efforts all of the convictions that he needs; those that claim to have done so are dishonest or deluded.

Accordingly, an individual is “reduced to accepting as given a host of facts and opinions that he has neither the leisure nor the power to examine and verify by himself.” The functioning and prosperity of society therefore require “that all the minds of the citizens be brought and held together by some principal ideas; and that cannot happen unless each of them sometimes comes to draw his opinions from one and the same source and unless each consents to receive a certain number of ready-made beliefs.” All societies, and especially free ones, require some intellectual unity, which in turn supports a unity of the citizens’ sentiments.

The limited power of the individual human mind makes it impossible for common ideas on moral and religious questions to arise from the spontaneous and unregulated thought of each individual. Religion, Tocqueville thinks, is the most important source of common beliefs for citizens. Here he is careful to note that his defense of society’s religious consensus is undertaken not with a view to what is good for religion, but instead with a view to what is good for society. Such religious beliefs are evidently useful “even if one wants to pay attention only to the interests of this world.” Tocqueville is concerned not with the salvation of souls but with the preservation of a decent political order. Such an order depends, however, on the preservation of commonly held religious beliefs. 

Tocqueville argues that human beings desire freedom but not an unlimited freedom. When they have firm moral convictions rooted in firmly held religious beliefs, they can be confident that they know how to exercise power justly, but what if they lose their religion and therefore become uncertain about what is morally right while nevertheless retaining a certain decency? In that case, they will no longer want to govern themselves, because they will find the responsibility frightening and oppressive. At this point, they will come to think that they can solve their problem by simply submitting themselves to the state, letting their rulers decide all things for them. He writes in Democracy in America

There are religions which are very false and very absurd ; but it may be affirmed, that any religion which remains within the circle I have just traced, without aspiring to go beyond it (as many religions have attempted to do, for the purpose of enclosing on every side the free progress of the human mind), imposes a salutary restraint on the intellect; and it must be admitted that, if it do not save men in another world, such religion is at least very conducive to their happiness and their greatness in this. 

This is more especially true of men living in free countries. When the religion of a people is destroyed, doubt gets hold of the highest portions of the intellect, and half paralyzes all the rest of its powers. Every man accustoms himself to entertain none but confused and changing notions on the subjects most interesting to his fellow creatures and himself.

His opinions are ill-defended and easily abandoned: and, despairing of ever resolving by himself the hardest problems of the destiny of man, he ignobly submits to think no more about them. Such a condition cannot but enervate the soul, relax the springs of the will, and prepare a people for servitude. 

Nor does it only happen, in such a case, that they allow their freedom to be wrested from them; they frequently themselves surrender it. When there is no longer any principle of authority in religion any more than in politics, men are speedily frightened at the aspect of this unbounded independence. The constant agitation of all surrounding things alarms and exhausts them. 

As everything is at sea in the sphere of the intellect, they determine at least that the mechanism of society should be firm and fixed; and as they cannot resume their ancient belief, they assume a master. 

For my own part, I doubt whether man can ever support at the same time complete religious independence and entire public freedom. And I am inclined to think, that if faith be wanting in him, he must serve; and if he be free, he must believe. 


Wednesday, June 29, 2022

Tocqueville on Religion - I

Alexis de Tocqueville’s four-volume Democracy in America (1835-1840) is commonly said to be among the greatest works of nineteenth-century political writing. It is regarded as the first-ever analysis of democracy to dissect its pathologies. Many of his observations were both astute and prescient (which is remarkable considering that he was only in his 30s). 

He was a liberal, but, as he once said, a “new kind of liberal.” “One of the noblest enterprises of our time,” he added, would be to show that “morality, religion and order” do not need to be opposed to “liberty and the equality of men before the law.” Tocqueville stood out as a friend of religion who was also a friend of freedom. The remarkable feature of his thought was that he believed religion was essential to preserve liberty contrary to what hard core secularists thought. 

Thus although he emphasized that the separation of church and state is necessary to political liberty, he could say in Democracy in America  that religion “should be considered the first of [the Americans’] political institutions”. Probably the most important reason for his support of religion was that Tocqueville thought that organized religion was the only possible long-term counterweight to some of the main threats democracy faced. Democracy fosters intellectual and moral habits that can be deadly to freedom: the tyranny of the majority, individualism, materialism, and democratic despotism.

Rather than attempting to push religion out of the public sphere, he welcomed it, provided that its influence was indirect and it did not try to dominate the public sphere. For Tocqueville, the only way for either freedom or religion to prosper in the long run was by recognizing that they were mutually necessary, and mutually beneficial. He wrote not as a religious teacher aiming to propagate a particular faith, but instead as a political analyst interested in the kind of religious beliefs necessary to uphold freedom and democracy. He wrote not with a view to preserving completely intact a particular religion, but instead to discover the religious essentials of the free society and to explain how and to what extent they can be preserved. 

“Most religions,” he contends, “are only general, simple, and practical means of teaching men the immortality of the soul.” This teaching “is the greatest advantage that a democratic people derives" from religious beliefs and is what makes these beliefs “more necessary to such a people than to all others.” Religion is “only a particular form of hope,” one that is “as natural to the human heart as hope itself.” He reminds us that as responsible citizens of a democracy, we must take care to preserve the country’s inherited religious traditions. This is a difficult task because democratic conditions tend to undermine religion.

According to Tocqueville, democracy presents a new form of freedom that displaced the servitude of the ancient and medieval world. But, he thinks that this democracy carries within it the possibility of new forms of servitude. Democratic freedom is also a form of power: the power of the people to rule. This power carries with it new possibilities for abuse, and Tocqueville accordingly emphasizes the importance of religion’s ability to impose a necessary limit on the majority’s power. He sees the danger of majority tyranny. He sees that human nature is flawed and that human beings in any form of government are prone to do injustice to each other if they are not restrained in some way.

What “is a majority taken collectively,” Tocqueville asks, “if not an individual who has opinions and most often interests contrary to another individual that one names the minority?” If we can “accept that one man vested with omnipotence can abuse it against his adversaries, why not accept the same thing for a majority?” Men do not change their “character by being united,” nor do they “become more patient before obstacles by becoming stronger.” Accordingly, Tocqueville concludes that the vast power held by the democratic majority carries “consequences” that are “dire and dangerous for the future.”

I take the example of a future time, in the 20th century, when ruthless ideologies like Nazism and Communism arose and took hold of certain countries. These atheistic ideologies held that everything was permitted in society’s interests, even to the extent of destroying certain categories of citizens that were held to be socially undesirable. Tocqueville sees religious belief providing people with a sense of immovable moral limits which he viewed as necessary because of the protection it provides for the rights of those outside the majority, who are subject to the majority’s power. 

On the basis of these arguments, Tocqueville seeks to correct the anti-religious thinkers of his day — and those of our own day - who think of  religion as nothing but a source of oppression, and promote public atheism as a guarantee of freedom. For such men, “the freedom and happiness of the human species” require us to believe that human beings can be understood as nothing more than an accidental aggregation of matter and not as beings with souls. When such thinkers “attack religious beliefs,” Tocqueville argues, “they follow their passions and not their interests.” That is, they neglect the interests of society while following their anti-religious feelings instead.

In reality, Tocqueville argues, religion “is much more necessary” in a “republic” than in a “monarchy,” and “in democratic republics more than all others.” It is safe to give the people power to rule only if they believe that there are moral limits on their power that they must respect and their belief in such limits is sustained by their belief in religion.

Many people think of individualism as opposed to despotism. But in Democracy in America, Alexis de  Tocqueville warns that naked individualism may lead to democratic despotism. Excessive forms of individualism and materialism make citizens indifferent to their public duties and therefore undermines their ability to sustain the spirit of cooperative citizenship on which self-government depends. He says that “it constantly leads him back toward himself alone and threatens finally to confine him wholly in the solitude of his own heart.” 

The despot, Tocqueville observes, “readily pardons the governed for not loving him, provided they do not love each other. He does not ask them to aid him in leading the state; it is enough that they do not aspire to direct it themselves.” This will make people as a whole surrender their right to govern themselves, handing themselves over to the rule of an all-powerful government directed by one man or perhaps a small elite.

There are some activities which can be undertaken only if you have a belief in after-life. By teaching the existence of an afterlife with rewards for virtuous living, religion gives men the confidence to undertake certain community activities that the self-interest of individualism prevents. Without such beliefs, doubts would inevitably stifle men’s public-spiritedness. The religious belief in rewards and punishments after death sustains such sacrifices by making their rewards certain. David Sloan Wilson writes in Evolution for Everyone 

A given religion adapts its members to their local environment, enabling them to achieve by collective action what they cannot achieve alone or even together in the absence of religion. The primary benefits of religion take place in this world, not the next. 

Reaching a similar conclusion by a different route, Hannah Arendt felt that  totalitarian elements dominate modernity, and that in a mass society there would always be a majority of people whose dedication to their own social and private interests would make them easy prey for party machines and demagogues (The Portable Arendt). "For the really horrific discovery of totalitarian regimes had been that mass conformists - "job holders and good family men" - were much more pliant, dedicated, loyal, and abundant agents of extermination than the criminals, "fanatics, adventurers, sex maniacs, crackpots" and social failures of the mob. She writes:

The mass man whom Himmler organized for the greatest mass crimes ever committed in history bore the features of the philistine rather than of the mob man, and was the bourgeois who in the midst of the ruins of his world worried about nothing so much as his private security, was ready to sacrifice everything - belief, honor, dignity - on the slightest provocation. Nothing proved easier to destroy than the privacy and private morality of people who thought of nothing but safeguarding their private lives. 


Monday, June 13, 2022

Social limits of growth – IV

Positional goods were once free, taken for granted and seemingly plentiful, and thus social relations were rarely mentioned by classical economists. Hirsch shows that they were implicitly assumed. Taking Adam Smith’s economic analysis in The Wealth of Nations and  his social analysis in The Theory of Moral Sentiments, Hirsch summarizes his views as follows: “[Men] could safely be trusted to pursue their own self-interest without undue harm to the community not only because of the restrictions imposed by the law, but also because they were subject to built-in restraint derived from morals, religion, custom, and education.” Smith’s position is a far cry from the celebrations of the dominance of self-interest that one finds today.

In Republican Paradoxes and Liberal Anxieties, Ronald Terchek says that people rely on fragments of his work to understand Smithian metaphors or assumptions about rationality and economic markets. They omit critical parts of Smith's theory and, in the process, give us not merely an incomplete Smith but also a distorted Smith. Even though Smith believes that the pursuit of self-interests in economic markets generates social benefits, he warns that such interests are too often driven by deceits that serve our vanities and lead to our own unhappiness.

He argues that although the rise of commerce introduces freedom, it provides no guarantee of a happy, moral life. For Smith, there is nothing about freedom that assures its wise and prudential use. Rather, he sees that free societies have many temptations that, if pursued, invite unhappiness. Therefore he promotes freedom as well as the moral development of agents and sounds both a celebration and a warning about liberty. 

The prominence Smith gives to self-interest is widely known. He repeatedly argues that people have an interest in their own well-being  and that they engage in activities that they think will promote it. But in addition to self-interests, Smith credits people with carrying moral sentiments. Smith claims that we come with natural endowments that enable us to make elementary moral judgments, to rejoice with the happiness of others, and to grieve at their misfortune. Such sentiments "superintend" our passions and desires and prompt us to be attentive to others. 

Also, Smith finds that when one person or a few people hold the preponderance of power and wealth in society, they can be counted on to use these goods to serve their interests, not the interests of those dependent on them for a living and security. Smith repeatedly argues that when wealth and power are combined, the greatest social cost comes from the loss of independence of those who are excluded. Dependencies cause honesty to be routinely penalized. He holds "Nothing tends so much to corrupt and enervate and debase the mind as dependency, and nothing gives such noble and generous notions of probity and freedom as independency."

He warns of the deception of wealth which makes people believe that more personal wealth and power will bring them happiness. He sees wealth giving us the ability to make choices to do things we could not have made without it. However, he finds wealth becomes dangerous to us when we allow it to define our character. He emphasizes individuals who marginally improve and do not make quantum jumps in fortune or rank. When Smith introduces us to those who have earned vast fortunes, we encounter people who find that tranquility has eluded them. 

Usually seen as a champion of increasing national income, Smith nevertheless fears that when national wealth passes a critical point and luxury becomes widespread, the consequences are usually disastrous. He fears that during prosperous times, individuals lose a sense of their limits and refuse to do what is necessary to retain their freedom. In pressing their own immediate interests, they do not secure their long-term welfare but rather buy a little time for their current enjoyment only, in the end, to become dependent on those who care little about them. 

He worries that excessive individualism undermines itself. He holds that self-restraint remains necessary for people who wish to retain their freedom. He acknowledges that background makes the most profound difference in the chances and choices available to people and restricts the autonomy of many in commercial society. He fears that the accumulative, unsettling effects of economic growth serve to demythologize the very restraints that he thinks are necessary for a flourishing, autonomous life and for political legitimacy.

Smith warns about the deception of deference, namely the widely held notion that those who possess great wealth and honor deserve our admiration and respect. According to him, this deception is "the great and most universal cause of the corruption of our moral sentiments." When we are deferential, we excuse our "superiors," even when our moral sense would direct otherwise. Standing in awe of wealth and power, we not only ignore the wise and virtuous, but we also despise and "neglect persons of poor and mean condition.'  Moreover, Smith finds that deference contributes to the legitimization of a regime, its practices, and the inequalities it protects and exonerates.

His good society is characterized by more than markets, diffused power, and freedom. It is a place where politics is not instrumental, and where culture promotes a sense of limits and deference. He is also concerned about the concentration of private power and the pattern of hierarchy and subordination that evolves within civil society, knowing that people can be dependent on private concentrations of power as well as public ones. If any of these latter characteristics are weak or missing it is not at all clear that Smith would automatically approve. 

(Adam Smith's capitalists were all small fry - shop owners, merchants and small scale industrialists. In his time, a 'manufactory' with a dozen workers was a big concern. The market was highly fragmented and wealth and power was not concentrated in a few hands.)

PS: The Theory of Moral Sentiments was Adam Smith’s attempt to explain where morality comes from and why people can act with decency and virtue even when it conflicts with their own self-interest. The book is heavy reading and I gave up mid-way. An accessible account of the work is How Adam Smith Can Change Your Life.

Monday, May 30, 2022

Social limits of growth – III

In Social Limits to Growth, Fred Hirsch illustrates the psychological problem created by growth using the example of Education. Education has usually been associated with external benefits, based on the assumptions that educated people make better citizens, they are more productive, and all the resulting benefits are not captured in their own higher earnings. For example, they pay more taxes and enhance the productivity of those with whom they work. But education also has a role as a signaling device in the modern economy which may negate these external benefits. 

Education's function as a screening device helps the employer sort out those who can best survive and master an educational obstacle course.  The “quality” of schooling has a relative dimension in which quality consists of the differential over the educational level attained by others. Adding layers to the level to which the competition for credentials is pushed merely absorbs educational resources without adding to the productivity of the winners in the competition.  

When education expands faster than the number of jobs requiring those educational credentials, employers  intensify the screening process. Jobs for which a high school diploma was previously sufficient will then require some college education. Individuals who decline to join the educational upgrading will suffer a devaluation of their credentials in the job market. This means, as the average level of educational qualifications in the labor force rises, a kind of penalty is imposed on those lacking such qualifications

Additional education becomes a good investment, not because it would generate additional income but because you will not be able to maintain the current level of income if others receive more education and you do not. Thus, the utility of expenditure on a given level of education as a means of access to the most sought after jobs will decline as more people attain that level of education. ‘The race gets longer for the same prize.‘

Because ever more people reach higher levels of education (due to well meant “inclusionary” state policies), but at the same time the amount of high-level jobs remains more or less stable, both sides – the employers and the potential employees – face increasing costs of screening. The former are forced to introduce additional barriers, tests and other screening efforts to find the people who fit their needs. Meanwhile, the latter are faced with an ever longer “obstacle course” (i.e., longer education + more intense screening by employers) to get the desired high-level jobs. This clearly makes both sides worse off.

The increase in capacity of the educational sector also has probably increased the attention paid to the quality of education provided. Existing institutions that have many years track record are valued more by employers than new colleges. Not only do they convey information the employers can trust but, in addition, it enables them to buy the elite contacts of the employee. Thus, establishing new colleges end up increasing the demand for an education at existing colleges.  

Even if the absolute quality of education in a particular institution is fully preserved, the previous incumbents of the superior schools would still lose their edge. This loss will force them to demonstrate their proficiency in a tougher or longer course of study. Education enjoyed in its own right is capable of indefinite extension; as an instrument for entree into top jobs, it is not. When you consider education as a screening device, the possibility of general advance is an illusion.

An “inflation” of educational credentials of this kind involves social waste in two dimensions. First, it absorbs excess real resources into the screening process by increasing the length of the obstacle course that employees require for testing for the qualities desired . Second, social waste will result from disappointed expectations of individuals and from the frustration they experience in having to settle for employment in jobs in which they cannot make full use of their acquired skills. 

Considered in isolation, the individual’s demand for education as a job entree can be taken as genuinely individual wants. But satisfaction of these individual preferences itself alters the situation that faces others seeking to satisfy similar wants. Competition among isolated individuals in the free market entails hidden costs for others and ultimately for themselves. What is possible for the single individual is not possible for all individuals. This is true for all higher levels of selection: What is possible for an individual state or an individual country is not possible for all units. Hirsch writes:

‘Once again, it is a case of everyone in the crowd standing on tiptoe and no one getting a better view. Yet at the start of the process some individuals gain a better view by standing on tiptoe, and others are forced to follow if they are to keep their position. If all do follow, whether in the sightseeing crowd or among the job-seeking students, everyone expends more resources and ends up with the same position.

Hirsh is not saying that more educational resources should not be provided. The way the system is structured at present, politicians are forced to make such promises and are under pressure to keep them. As he writes, ‘If theorists of human capital fell into this trap, why expect acquirers of human capital to avoid it?’ But the investments will be a social waste that will just force you to run faster to stay in the same place. Although individuals benefit from isolated action, the sum of benefits of all the actions taken together is zero. 


Tuesday, May 17, 2022

Social limits of growth – II

For his analysis in Social Limits to Growth, Fred Hirsch divided goods into two primary types. The first type was material goods: These are, in a sense, goods as commonly defined in economics. Their consumption generates utility because of the intrinsic characteristics of the good in question. These will generally be called FMCG (Fast Moving Consumer Goods like soaps, shoes, refrigerators etc.). The supply of material goods could be, and was, increased in response to the public’s rising demand for them. 

The second category was called positional goods. There were certain amenities whose supply cannot be increased. Economic growth increases their utilization which increases their relative scarcity. The ozone layer, clean air, drinkable water, natural beauty, land for infrastructure (e.g. roads, sewers) and growing food, antiques etc. are examples. (‘Buy land. They are not making it anymore.’ – Mark Twain). Positional goods have no equivalent in standard economic theory. The focus of Hirch’s analysis was on the interplay between these two divisions of the economy. 

Within the realm of material  goods, all the   accomplishments economists attribute to the invisible hand of the competitive market economy holds true. Economic growth understood as a continuous increase in affluence means that ever more people have their needs in the material sector satisfied – and turn ever more attention to the positional sector. What happens when the material pie grows while the positional economy remains confined to a fixed size? 

Classical economists focused their attention narrowly on mankind’s bodily needs and thereby managed drastically to simplify the economic problem. That made demand and increases in demand always into a good thing, it showed competition to be a beneficent force that diminished monopoly profits and caused market prices to reflect costs and preferences; and it made quantification possible by rendering GDP estimates a simple measure of the economy’s contribution to welfare.

But when positional goods enter the picture, the situation is muddied. So long as material privation is widespread, conquest of material scarcity is the dominant concern. As demand for material goods are increasingly satisfied, demand for goods and facilities with a public (social) character become increasingly active. The limited demand for things with augmentable supply  (material goods) and the unlimited demand for those whose supply is limited (positional goods), have created a great number of peculiarities and problems in our society.

The consumption of positional goods is valued at least partly by comparison with the consumption of these goods by others – e.g., having a manager’s job makes me better off not only because of its intrinsic characteristic (salary, power, freedom etc.), but also because others are not managers. In a further sense, positional goods define our position within the society and are thus socially scarce.

Social scarcity can have differing visible effects. One is physical congestion: the more people acquire the material good “car”, the more frequent are traffic jams. The other is social congestion: this is the case in the area of jobs, where there is limited scope for “leaders”, “bosses” and the like. Furthermore, some positional goods are socially scarce because they generate utility by being physically scarce – for instance, there is limited amount of “picturesque” natural landscapes. Another area where such “direct” social scarcity prevails is in arts: a Picasso is seen as valuable mainly because there is only one of its kind.

The scarcity of a positional good renders different people’s enjoyment of it interdependent, so that one person’s increased consumption  or use of it reduces its availability for other people’s enjoyment. This causes numerous problems. Smog, traffic jams, the deterioration of cities, the spoiling of much natural beauty by overcrowding and too many tourists, the poisoning of the soil and ground water by the burying of toxic waste products are a few examples. 

While the economy as a whole keeps growing, the positional sector gets ever smaller (i.e more scarce) in relation to the rest. This makes positional goods relatively more expensive and/or their quality deteriorates (e.g., due to congestion effects). Also, while any individual has the possibility to attain positional goods, it is impossible for everyone to attain them making an increasing fraction of the population frustrated. Therefore, economic growth is continuously aggravating the problems arising from social scarcity. 

Demands for positional goods tend to grow as general standards rise, a demand that can be satisfied for some only by frustrating demand by others. For most people,  they become objects of desire that the most intensive effort cannot reach.  This creates situations in which individually rational behaviour leads to socially irrational outcomes. Positional competition that is promoted by growth leads to ever more frustration within the allegedly ever better off society.