Bloody shovel

Don't call it a spade


Watch this post at Robin Hanson’s. I swear I don’t go there often, I dislike that typically American brand of autistic economism. Still Hanson is a bright fella and occasionally it shows.

In that post he talks about the incoherence of arguing for regulation of healthcare, but not arguing for, say, regulating car mechanics. Inevitably the commenters split in two bands, those that argue that a) the incoherence should be solved by regulating car mechanics too (who we would call leftist or socialists), and those who argue that b) medical care should be deregulated too (libertarians/free market American conservative).

The leader of camp a) is this fella called Stephen R. Diamond, which starts the brawl by these remarks:

And the argument that consumers can’t evaluate the product is stronger for doctors than auto mechanics, though it’s only a difference of degree. (When you think about it, it’s pretty outrageous that patients should be forced to choose their own doctors; and laughable that American patients want this dubious privilege.)


Incentives mean much less than the economists have taught us, as both the scientific demonstration of huge irrationalities in decisionmaking and the experience of huge market failures has proven. Conduct is primarily a function of habit, not of belief and desire.

Basically he is saying people are stupid, so the Government is right to regulate access to services, because the government is smart and people aren’t.  Of course the b) camp commenters answer outraged, saying that they can choose much better than the government could for them. Mr Diamond then responds in the most eloquent defence of socialism since Hayek.

You recommend using reputation to choose an auto mechanic, but then you disparage selection without competitive pressure. Where’s the competition or other strong incentive motivating contributors to the reputational stream to evaluate the mechanic objectively? Many will be merely rationalizing their own habits and choices. Others will be influenced primarily by their personal relationship with the mechanic. Doesn’t it seem awfully crude, once you clear your mind of economists’ conventional wisdom, that people seeking services in civilized countries still must seek out hearsay information to try to piece together who’s good?

I would tend to trust the decisions of a skilled and accountable civil servant more than hearsay opinion. But this is a bit glib; much depends on the moral and morals of the government agency. The Soviet Union plunged from setting historical records for industrialization to a basket case because of internal demoralization. But China still exceeds everyone else in economic growth, a major factor being that major investment decisions are made by Communist functionaries rather than self-interested entrepreneurs.

With some given a free choice, the consequence is unpredictable, which is the problem. What I’d want is an allocation of patients to physicians that matches the talents and expertise of the physician to the patient’s needs. What would happen if parents could choose their kids’ teachers? Does a parent know whether a particular teacher is best suited to gifted children, retardates, or unusual learning styles? What I’d expect from “free choice” is the same as I’d expect with physicians: the physician or teacher would be evaluated largely based on personal imperssions emphasizing affability, disrupting rational assignment of pupil or patient to the most appropriate personnel.

Of course, motivation is required to do a good job in these administrative tasks. But the value of high motivation is highly over-rated. High motivation brings self-serving biases into play, and these wreck everything.

Wow. What an outstanding pile of bullshit. Of course he hasn’t read The Fatal Conceit. The fact remains that Soviet Russia industrialized itself with the help of friendly USA industrialists. And bureaucrats cannot, by definition, be motivated to help the people. At least not for long. Stephen Diamond thinks that incentives don’t work because people are too stupid to know what is good for them, but bureaucrats are smart so they know. Well there is a point to his, even if stupid people can get pretty proficient at things they really care about. Still, the real problem is that bureaucrats tend to be so smart that they also notice that there’s no incentive for them to care for the common good, so they will just care for themselves. The best of example of this is precisely China, which is unfathomably corrupt.

But see how the commenters at Overcoming Bias don’t make this argument; instead they just argue that people should have freedom to act for themselves, because they know enough. Which of course is not true. They, Overcoming Bias readers are certainly a pretty smart bunch, and they naturally feel entitled to freedom from government control. They can make their own choices. But that doesn’t mean everyone can. If everyone could, there’d be no need for regulation at all. But them libertarians can’t even think that not everyone has the same intelligence. Stephen the leftist also thinks that everyone is equally stupid.

The underlying assumption of Human Neurological Uniformity makes a good argument devolve into two different monologues talking across each other.

See how this relates with my point on Leftism and Rightism having the same problem. In this examples, the libertarians would be the Left (arguing for freedom), and the socialist would be the Right (arguing for authority). Of course that libertarians are just egoist liberals has been obvious for some time. But seeing socialists use the arguments of the Right is, well, unsettling.


6 responses to “Misunderstanding

  1. aretae January 11, 2012 at 10:15

    You’re supposed to use the word Fascist when you talk about the right-socialists, ya know.

    Another in a sequence of excellent posts.
    I’ve been tinkering with the idea of a crazy Coasian regime, where one can buy one’s way out of regulations that are meant to protect the stupid.

    • spandrell January 11, 2012 at 12:41

      Thanks! appreciated.

      As I see it fascism was more about glory for the nation than just helping the poor proles. Not this patronizing utilitarianism you see these days. If a neocon is a liberal who has been mugged, what to call a socialist who has lost faith on the proletariat?

      I remember reading about Indian corruption being a great thing, as it frees enterprising people from the socialist regulations. Guess you could say that about half the world. Hey that’s a post that really needs writing.

      • Leonard January 11, 2012 at 21:39

        A socialist is a communist who has lost faith in the proles. The socialist’s faith is in the state (in practice: scholars and bureaucrats); Stephen R. Diamond is exemplary. Also see modern USG, EU, etc.

      • spandrell January 11, 2012 at 22:19

        Good way of putting it.

        Although that would make the USSR a socialist, not a communist state.

  2. Joseph Hertzlinger January 13, 2012 at 07:33

    I thought Human Neurological Uniformity would mean we can’t trust the regulators … unless the regulators are from another planet.

    • spandrell January 13, 2012 at 08:56

      Officially its not that regulators are smarter in a biological sense.
      They are more ‘educated’.
      That resolves the contradiction. Ain’t it bright?

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