DYSPEPSIA GENERATION

We have seen the future, and it sucks.

The Applied Theory of Bossing People Around

11th February 2018

Deirdre McClosky fisks Richard Thaler’s Nobel Prize in Economics.

Adam Smith spoke of “the man of system” who “seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board.” Thaler and his benevolent friends are men, and some few women, of system. They hate the Chicago School, have never heard of the Austrian School, dismiss spontaneous order, and favor bossing people around—for their own good, understand. Employing the third most unbelievable sentence in English (the other two are “The check is in the mail” and “Of course I’ll respect you in the morning”), they declare cheerily, “We’re from the government and we’re here to help.”

We humans face a choice of treating people as children or as adults. A liberal society, Smith’s “liberal plan of [social] equality, [economic] liberty, and [legal] justice,” treats adults as adults. The principle of an illiberal society, from Thaler’s to the much worse kind, is that you are to be corrected not through respectful dialog that treats you as an equal, but by compulsion or trickery, which treats you like a toddler about to walk into traffic.

What some on the alt-right call ‘Cloud People’ versus ‘Mud People’. In case you’re in doubt, you and I are Mud People.

Wikipedia lists fully 257 cognitive biases. In the category of decision-making biases alone there are anchoring, the availability heuristic, the bandwagon effect, the baseline fallacy, choice-supportive bias, confirmation bias, belief-revision conservatism, courtesy bias, and on and on. According to the psychologists, it’s a miracle you can get across the street.

For Thaler, every one of the biases is a reason not to trust people to make their own choices about money. It’s an old routine in economics.

And politics.

The Progressive economists believed they saw monopolies, spillovers, informational asymmetry, consumer ignorance, producer ignorance—in short, everyone’s folly and ignorance except the nudging government’s—to the number of over one hundred imperfections. They imagined a new one every year or so, and lately have been getting Nobels for discovering allegedly fresh market failures. Paul Krugman, for example, received the prize in 2008, supposedly for reinventing monopolistic competition for international trade. He deserved it eventually, though he got it embarrassingly prematurely (compare Obama’s for peace) because the social democratic Swedes wanted to buck up a left-of-center columnist. Krugman tweeted about Thaler: “Yes! Behavioral econ is the best thing to happen to the field in generations.” He would say that.

Lenin would have agreed, had he still been around.

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