Limits of Models

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Modern economics, with its heavy emphasis on mathematical modeling and quantitative methodology, exhibits a particular affinity with a philosophical tradition called logical positivism.  Crudely speaking, logical positivists posited that there were two kinds of statements: the verifiable and the nonsensical.  As an example, "this pen is red" is a verifiable sentence (though it does presuppose a common acceptance of the meaning of "red" and "pen").  However, a sentence such as "lying is immoral" is not verifiable.  In short, moral judgments are not given credence because they are mere subjective preferences not amenable to empirical verification.
This focus on empirical verification reveals the deep affinities modern science has in relation to logical positivists.  Following the methods underlying observable science, modern economics eschews the notion of "other minds" because we cannot penetrate those minds.  What is must be observable, reality is not interpreted or mediated, but is seen.  By observing human actions we know what they value, and so forth: each person acts in ways that reflect his or her utility function, so to speak.  It is clear that this focus shares a closeness with the micro-foundation view in neoclassical economics that is based on a notion of human beings as rational actors bent on maximizing his or her utility.  However, this view fails to explain problems such as the collective action or prisoner dilemma problem.  Indeed, recent psychological experiments suggest that humans possess some notion of "fairness" and "reciprocity" which, if violated, will lead them to choose an action that is not predicted by the utility maximizing theory alone.
The limits (and also the appeal) of this approach to economics is that it does not address the "other minds" problem.  How can we know the contents of another's mind?  How can we compare satisfactions and utilities?  By focusing solely on observable behavior, and positing that such behavior is emblematic of another's utility function, we have done away with one problem but raised another: why do people act the way they do?  And if we do not know why people act the way they do, are we sure that we are not only positing correlations that stop at the boundaries of the events which we seek to explain?  Of course, to subscribe wholly to the view that reality is interpreted and we constantly mediate our relationship to the world via values and norms invites the criticism of being unverifiable, and hence, only an assertion.
I do not set out to resolve these differences.  Indeed, this is a schism that has existed in social inquiry and policy making.  Recent advancements in science (e.g., fMRI imaging) show correlations between regions in the brain and certain thought processes:  they reveal which questions appeal more to our emotions and which appeal more to our rational consciousness.  There is reason to be skeptical of these studies, however, because of the low signal-to-noise ratio.  Indeed, the measurement of the relaxation rate of the hydrogen caused by the coupling of oxygen to iron is indirect, and in fact, because of a feedback mechanism, more oxygen actually flows to the parts of the brain that supposedly "light up."  However, I would also urge one to consider the premises on which scientific inquiry is based and consider whether such premises are equally applicable to social inquiry.  Indeed, by rejecting that we fill in the contents of a narrative vision of ourselves as we negotiate our place in the world, and insisting that the world is composed of rational beings bent on maximizing his or her own utility function, rather limits the explanatory power of modern economics or a positivist based version of social inquiry.  In fact, many laws in the sciences are not Aristotelian in the sense that they do not start from the behavior of a single atom (or if you want to be really precise, boson) and derive their way to a description of large-scale phenomena.  General relativity works quite well even though it shares no particular affinity with quantum mechanics.  A similar problem appears in language: do we, or can we, ever know anything beyond language?

Yet Another Example ...

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of the importance of framing.  We can conceive of economic activity as one of mutual exchange: we exchange and barter things with one another for the betterment of our respective selves.  In this sense, the exchange is voluntary and, absent overt coercion, free.  This strand of thought may have provided justification for a strand of decisions that emphasized formal voluntarism in entering into contracts, and all but ignores the circumstances of such entry that may entail choices between highly undesirable choices and even more dire options.
Another way of viewing the market and contract making is by focusing not on the act of voluntary bartering for the betterment of our mutual selves, but rather on the act of coercive bartering for survival, or enrichment, or whatnot.  This conception presupposes the premise that we hold what we own (be it goods or services) exclusively and we are coerced into bartering what we own to achieve those aims or we may exclude others from enjoyment in what we own because, for example, we occupy a superior bargaining position and may achieve those aims by obtaining from others services that those others might have to offer.  The idea of reciprocity becomes more apparent in this view of market relations, in the sense that if you own a resource that I need for my survival for example and cannot obtain elsewhere, and I cannot offer you any similar resource, then my bargaining position becomes materially worse than yours.  In this sense the aspect of coercion becomes more stark and prominent, such that a look at the circumstances that surrounds the bartering would be warranted to evaluate the "freedom" embodied by a particular barter or exchange.
There is no a priori justification for privileging one account of the market over another account.  Hence, this just shows the importance of framing the discussion in affecting policy choices.  Conceptions of labor is inextricably tied to two notions: what it means to be a person and how do people interact with one another.  You cannot untie the two but you can influence one and therefore shape the contours of the other.  For example, a more robust notion of personhood surely pushes back the idea that humans can enslave one another even when the enslavement is voluntary.  Therefore, a richer and more fulfilling choice for thinking about labor is perhaps to focus on the relationships among people in their interactions with one another.  What should be warranted and allowed in inducing another person to offer his or her services?  What cannot be violated?  What dictates and justifies the terms of this engagement?
In fact, this conception may move the conversation away from an emphasis on survival and need, and hence seeing people as fungible entities in the churn of market production, to a more equal and enriching conception of people are agents of multifarious capacities who strive to fulfill their potentials.  Rather than strictly adhering to what may be antiquated notions of acceptable aims that labor relations are to preserve and promote, perhaps we should focus on the process itself.  Indeed, we should explore on how our institutions and laws seek to contribute to the shaping of and the discussions about those aims, and in the very process shape and become shaped by those aims.

The Individual Mandate: An Example of the Importance of Framing the Debate

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Most of the objections to the "individual mandate" provision of the Affordable Care Act has been cast in libertarian terms.  Its critics frequently invoke somewhat Romantic notions of "individual freedom" and "liberty" as means of rallying their troops.  What these critics fail to recognize, however, is that the problems sought to be solved by the Affordable Care Act is a collective action problem that spills over state borders.  Indeed, the problems of free riding and adverse selection are not confined to any one state alone; indeed, as states offer versions of healthcare that differ in generosity, people from less generous states can and may move to other states to benefit from more favorable healthcare provisions.  Therefore, the healthcare question should not be framed as whether the Commerce Clause may reach "inaction" or should strictly be confined to "action."  Indeed, the healthcare question should be framed as whether the government may be empowered to act in instances of market failures that span across state lines.  The answer is surely yes, since the problems that the Affordable Care Act seeks to address are economic in nature, and they do cross state lines.  As such, they should be covered by the Commerce Act.

This little example illustrates the importance of framing a debate.  The supporters of the Affordable Care Act ignore the federalism dimension to the healthcare problem to their detriment, and focus too narrowly on the libertarian arguments that draw deeply on people's emotional and visceral reaction to anything that smacks of a deprivation of their freedom.  Perhaps this example also shows how libertarian arguments have hijacked most of our debates that concern economic matters, and how perhaps we need to invoke other notions -- such as individual obligations in a well functioning and just society -- to pave the basis for a richer conversation.
This may be a bit invidious, but much of the libertarian arguments that rests of some version of substantive due process -- contractual rights equals freedom -- actually privileges the freedoms of some people over the freedoms of others.  This runs against the vein of utilitarianism, on which many libertarians purport to cite as foundations for their beliefs, which presupposes the equality of all.
Okay, I promise the next post will involve food.

The Importance of Moving in the Public Discourse

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I think people often ignore (or forget) how important it is to try to get ideas into the public discourse.  We have seen the power of ideas once they are embedded in the public conscience: for example, while nobody seemed much bothered by growing inequality, the Occupy Movement worked it into the public discourse and for a while we had staunchly conservative politicians paying attention to it.  Indeed, ideas, or the language with which we use to discuss social issues, can change the entire paradigm according to which we evaluate those issues.
Take climate change for example.  Much of the discussion on policies affecting the climate (or the environment) focuses on cost-benefit analysis.  For instance, commentators frequently talk about imposing pollution costs on coal-based technologies so that coal generated electricity reflects its "true" value as opposed to "subsidized" cost.  Such discourse is essentially economic in nature.  The premise is that as rational beings, humans behave to maximize individual well-being.  Hence the difficulty in enacting some kind of policy that extracts costs today and locally while providing benefits that are at best diffuse and potentially far into the future.  This framing of the environmental debate ignores the power of normative narratives -- in short, it ignores that a person also embraces a normative narrative of himself or herself that encodes his or her values and beliefs.  For example, although people like to reduce altruistic behavior to some probabilistic analysis of the likely future (and perhaps intangible) benefits of such behavior, a person is partially motivated to act in certain way by his or her preferences and beliefs about himself or herself as a person.
This is where raising certain ideas and normative goals into the national conscience comes into play.  Perhaps we should borrow a page from other disciplines that ask us to set ideals and goals for ourselves.  The Romantics viewed nature as a force that remains at the same time awe-inspiring (think sublimity and the terror that it inspires), while other movements regarded nature as a goal in itself, whose preservation should be aspired to without any regard for utilitarian arguments.  Regardless of the merits of such rationales, I think a good way to try to change the way environmental discourse is mediated is by trying to bring ideas into the language concerning environmental issues.  Once we do that, we can move away from the purely economic way of talking about environmental issues, which can camouflage the issue as one whose harms are potentially abstract while whose costs are immediately concrete.

Three Pine Mysteries and Mixed Nuts

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Fruits & Nut Mix

Have you read Louise Penny's Three Pines series?  They are mystery novels interwoven with delicious details of gourmet fare.  Seriously, DO. GO. READ. THEM. if you like good food and good mysteries.  Anyway, I decided to mix up fruits and nuts partly because I was inspired by the cuisine featured in those books, and since I was too lazy to whip up any French Toast with Maple Syrup or Rack of Lamb with Beans and Fingerling Potatoes myself, mixed nuts were the easiest way to go!

The books take place in the Eastern Townships, on the border with Vermont.  I've never been there, but the books make them seem very bucolic and peaceful.  The place must be stunning in the fall, with all the vibrant red from all the maple trees.  If anyone has ever been and can recommend where/when to go and what to do, that would be great!

Now there's nothing better than indulging on summer fruits!  I certainly have my share of indulgences ....  Did I tell you that one day I ate 4 apricots?  And they were large ones, like the ones below.

Apricot & Peaches

Plus a bowl of chocolate covered fruits.  I could't quite figure out what the dried fruits were ... perhaps plums?  Or some sort of large berries?  Regardless, they were delicious.  I think they infused the chocolate with some type of liquor to lend it a deeper richer taste, smoother texture too.

Chocolate Covered Mystery Fruit

More regular fruits.  The weather has been inching towards the triple digits ... all appetites have fallen by the wayside ....

More Sone Fruits

I love stone fruits!  Though the peaches this season leave something to be desired, and the apricots are practically tasteless despite their nice coloring ....

Should we Worry about Super PACs?

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Should we worry about the effects of super PACs on the election?  I think we all know that super PACs skew heavily towards one side of the political spectrum (certainly not ameliorating the phenomenon of heavy polarization among the electorate), and make a farce of the once rather legitimate principle of "one person one vote."
Citizens United opened the floodgates to campaign contributions.  The basis is rather odd though.  It's not as though contributions are "speech" pure and simple, but rather contributions are another form of influence buying.  I don't think anyone really believes that a contribution of $1 million won't buy you some favors, perhaps in terms of favorable laws in the future.  It seems that freedom of speech becomes used as justifications in and therefore entangled with numerous other things, such as commercial privileges and commercial speech.  Meanwhile, commercial speech has never been accorded inviolate status.
In any case, I'm sure the President will be able to weather the effects of super PACs in his campaign.  But the Congressional races are more worrisome.  A half a million donation in a Congressional race speaks loudly, and can potentially tilt the playing field towards the candidate with the most money.  And there's plenty of outside money in some high stakes elections.  You might query whether someone should be able to donate to a candidate in a district in which he or she has no vote.  There's a rule that prohibits any personnel at an investment advisory firm from making contributions to state pension fund officials if the personnel cannot vote for the official.  So, perhaps there is something insidious about making donations to candidates for whom one cannot vote.

Mumbles about Inflation and Unemployment

Pin It Now! Since this blog is supposed to have random thoughts and not just food recipes or descriptions, I will try not to disappoint.  If you have been following the news at all, you know that no action is being done to help lower unemployment.  Mostly the justification is something along the lines of inflation prevention.  Now of course, if more people get jobs the consumption will rise, and if the consumption rises things will naturally become costlier.  But compared to the current situation that should be a GOOD thing, not something to avoid.  We are suffering from extraordinarily low productivity in the US right now and a bit of inflation targeting should encourage people to go out and spend and invest, and hence hire workers.  Now, of course we can do things on the fiscal end but we've all seen how difficult it is to get anything done on the fiscal end.  And actually the private sector probably wouldn't borrow much because people are afraid of the fiscal cliff come January 2013.  The only weapons we have left are on the monetary end.  Of course, if you are retired and no longer working, you naturally wouldn't want your savings to erode in value.  But the 8.2% unemployed surely don't see things that way.  I guess the dual mandate isn't so dual at all, but perhaps 1 1/2 one way and only 1/2 the other way.