Can I just interrupt my own schedule of events this week and do an addendum to my post from last week on fake distributional indifference? I thought of a fun way to say it without reference to economics and wanted to quickly share that before moving on. I meant to do the final installment, part three, of the shortest, simplest explanation of the main elements of bad economics in the conservative style you’ll likely ever see, but maybe I can hold that back until next week? It’s not like bad economics is going anywhere soon, is it? I suppose some may be thinking, “Why is Hansel always banging on about fake distributional indifference? He’s like a broken record out there.” Why? Because apparently there’s some confusion about it. Everyone understands it’s wrong, but one sees it everywhere. Because it’s a big part of bad economics. Because it’s annoying as heck. One minute one is talking about the theory of neoclassical welfare economics, with distributional indifference. Everything is fine, everyone knows what everyone else is talking about, everything is clear, then ... Bam! Fake distributional indifference shows up and everyone falls over.
So let’s do fake indifference in general, without the reference to economic theory. Say there are two possible outcomes under consideration, A and B, and some people have ethics that support A, call them Team A, and some people have ethics that support B, call them Team B. Makes sense, right? However, in addition there are wonky versions of A and B that are nearly but not quite as good, call them Wonky A and Wonky B. Team A thinks both A and Wonky A beat anything on the B side. Team B thinks both B and Wonky B beat anything on the A side. Still with me? Both teams agree as far as the minor issue of wonkiness is concerned. Everyone agrees A beats Wonky A, and B beats Wonky B, no matter what team he or she is on. If you've got all that, you should be all set to see how fake indifference works generally, and in bad economics.
Say we’re currently at Wonky B and we have two policy proposals on the table, two possible things we might do: move to B, move to Wonky A. Joe, the local purveyor of sometimes dubious philosophy, says, “Well, I recommend we avoid ethical controversy and choose to move to B.” Team A gets a tad annoyed. “Hello, we’re standing right here. We’re saying we prefer Wonky A to B. How is choosing B over Wonky A avoiding ethical controversy? Let’s just try to hash out the essential, substantive issues between A and B in good faith and get on with it.”
Joe then begins to adduce all manner of arguments about how moving to B avoids ethical controversy. He explains, “I’m indifferent to A and B. I’m just opposed to wonkiness, as are most of us. Yes, I’m a proud member of the uncontroversial, bipartisan League Against Wonkiness.” Team A responds heatedly, “Yes, that’s fine, but here, in choosing B over Wonky A, you’re not simply delivering an opinion on wonkiness, the relative position of Wonky B and B, you’re also delivering an opinion on the much more controversial ethical issue of Wonky A versus B.”
But Joe’s got plenty more where that came from. “No, I disagree. As soon as we fix the wonkiness problem, the uncontroversial problem I’m concerned with, you’re still free to move from B to A if you like. You will have lost nothing, and you’ll be in a better position than now. In that sense, although it may appear I’m choosing the policy that leads to B over the one that leads to Wonky A, that’s incorrect. What I’m actually saying is that that particular policy question or choice is, or should be considered, irrelevant right now.” Joe continues, “And, honestly, I don’t really understand how you could possibly be in favor of wonkiness, the rejection of which is not very controversial at all. I really think you need to slow down and think about things a bit more carefully.”
Team A responds, “Joe, your reasoning is all wet. We find the policy question relevant and important to address now, and since you’re not suggesting moving toward anything in the A family, which is our main concern, your policy suggestion is, in fact, ethically controversial. Also, we find the idea of postponing discussing serious ethical issues until we attain B peculiar. Will you even ever acknowledge arriving at B? Or will we be forever in the state of trying to move from some Wonky B to B? Chasing an ideal that doesn’t actually exist?” Team A goes on. “And, for the sake of argument, if ever we actually arrived at B, is there really a mechanism to move from B to A without wonkiness? As your argument works now, as soon as we revise B in any way we have Wonky B, which you oppose, or is it Wonky A? We’d basically be stuck at B, forever. And even if you revised your arguments to make it logically possible to revise B, it may well be easier to go from B to A via wonkiness than via whatever specially approved non-wonky route you have in mind, which may be practically infeasible, difficult, costly.”
Joe rejects all such arguments and continues his support for policies leading to B. Team B, which actually has substantive ethical arguments ready about why people should prefer B to A, finds its arguments unnecessary while Joe is around. It kicks up its heels, takes it easy. Jane, from Team A, growing increasingly irate at Joe for sidelining and essentially blocking discussion of A and B, gets tough with him one day. “Joe, didn’t I see you emerging from the Team B clubhouse the other day, laughing, giving everyone high fives, and counting a big wad of cash?” Joe, offended to his core, snaps back angrily, “How dare you, Madam! How dare you! Are you insinuating I secretly support B for filthy lucre? Why don’t you prove it? I’ve only ever had the best interests of all of humanity in mind.” Joe, in fact, considers himself a very ethical person indeed, who thinks about the ethics of everything he says and does. It’s really rather remarkable he has no ethical opinion on A or B, the great ethical issue of the day that divides Team A and Team B. He prides himself on being always true to his own ethical motto: do no harm.
Team B rejoices. Their ethics prevail. Team A despairs. They feel their ethical views are not even being heard and great harm is being done. They look for ways to get around the stultifying influence of Joe, the local purveyor of sometimes dubious philosophy, but it isn’t easy. Joe and Jane stop working together, but they do sometimes exchange snarky comments on social media sites, where Joe marvels at length on Jane’s supposed inability to grasp the obvious while Jane marvels at length on Joe’s inability to perceive real and significant ethical issues. Confusion and conflict ensue. The calm and reasoned public discussion of ethics, and support for an always temporary and contingent resolution of subjective ethical views through democratic government, begin to lose their appeal. Other ideas appear more compelling to the people. Support for the ethos of democracy begins to wane, democratic society begins to wobble. Anger, emotion, unreason, insults, calls to violence are the order of the day.
And that, my friend, is fake indifference, in general, without economics. It’s a simplified, playful version of fake distributional indifference, and the disputes about it, one can find playing out in discussions of conservative bad economics any day of the week. Did you find it useful? Or not really? So difficult to think exactly how to say things in a way that seems sensible to others. Makes one really appreciate the fascination in the old fairy tales with the idea of “magic words” and “incantations” and so on.
You want the translation to neoclassical welfare economics? Really? Oh, come on. Fine. A and B are (economically) efficient, Pareto optimal, perfectly competitive market outcomes that differ along the dimension of the distribution of economic power. A Pareto dominates (economically) inefficient, non-Pareto optimal, non-perfectly competitive market outcome Wonky A but not Wonky B. B Pareto dominates (economically) inefficient, non-Pareto optimal, non-perfectly competitive market outcome Wonky B but not Wonky A. Team A and Team B are two groups of people with different ethical beliefs relating to the distribution of economic power. Joe is the stereotypical purveyor of bad economics. Jane is a person of generally liberal disposition.
What should Joe be doing? Explaining that the policy choice between B and Wonky A really requires Team A and Team B to discuss the ethical issues involved between A and B and reach some temporary agreement via democratic government on which way to go.
Next time: The delayed final part of the shortest, simplest three part presentation of the essentials of bad economics in the conservative style one is ever likely to find, addressing the ethical issue of the extent of the market, and false factual premises in ethical arguments.
