Philosophy and economics

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Diane Coyle writes,

Yesterday, an undergraduate emailed me to ask for book recommendations about the overlap between economics and philosophy. I recommended:

Amartya Sen The Idea of Justice
Michael Sandel What Money Can’t Buy: The Moral Limits of Markets
Agnar Sandmo Economics Evolving
and
D M Hausman and M S McPherson and D Satz Economic analysis, moral philosophy, and public policy
Then I asked Twitter, and here is the resulting, much longer, list. [snipped]

Pointer from Tyler Cowen.

I have not read any of these. I have read some on the longer list. Thinking of the most lively reads, and trying to include left, right, and center, I would recommend:

The Worldly Philosophers, by Robert Heilbroner.
Radicals for Capitalism, by Brian Doherty.
Capitalism and the Jews, by Jerry Muller.

If I were teaching an undergraduate course in philosophy and economics, I would include as articles

Hayek’s “The Pretense of Knowledge”
McCloskey’s “Why I am no longer a Positivist”
Leamer’s “Let’s take the Con out of Econometrics”
my own “How Effective is Economic Theory?”

In my view, there are two issues at the center of the overlap between economics and philosophy.

1. What methods best serve economics? In particular, what are the pros and cons of treating economics as a science?

2. How do markets fit in to the moral universe? What problems do they address? What problems do they cause?

The essays on my list deal primarily with the epistemological issue. The books on my list deal mostly with the moral issue.

Not with their own money

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Politico reports,

In their 2018 return, [Sen. Kamala] Harris and her husband, attorney Doug Emhoff, listed an adjusted gross income of $1.89 million, including Harris’ Senate salary and $320,000 she made from writing a book, “The Truths We Hold.” Harris and Emhoff married in 2014, then began filing jointly. In 2018, they paid $563,426 in federal taxes and donated $27,000 to charity.

Like many progressives, they are not very generous with their own money. If a couple with an income of $63,000 were to donate the same percentage of their income to charity, it would amount to just $900.

Yet, because of their generosity with other people’s money, these sorts of politicians can be heroes.

Preston McAfee on big firms

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He says,

The thing that shocked me the most was how inefficient large firms can be. Sure, there is government waste, but it is commensurate with size and clarity of mission. In one sense, I already knew that large firms could be inefficient — the failure of Kodak and Blockbuster are examples — but it is another thing to live through it.

I have a much deeper appreciation that slow optimization is a better model of human behavior than full optimization, and indeed, I’ve often used evolutionary models rather than optimization models in my work. People do respond to incentives, and they respond faster to stronger incentives, but along the way there are lots of mistakes and bad choices and hysteresis.

I like to say that anyone who is scared of a giant firm has never worked for one. Learning that lesson is one of the reasons that economics programs should require internships in business. Having experience in business would lead you to be less committed to theories of optimization and more likely to regard the market as what I call The Great Miscalculator. That latter essay is a powerful indictment of the entire paradigm policy analysis that permeates academic economics.

Preston McAfee on tech firms doing venture capital

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In this interview, he says,

It’s unsurprising that Silicon Valley’s version of the multidivisional firm is to say we’re going to run a venture capital firm inside.

. . .Venture capital does a great job, and it’s a competitive market. So the idea of trying to replicate venture capital inside the company is usually misguided.

A tech firm may have an upside to funding failed start-ups that a venture capital fund does not have. That is, the tech firm probably can retain the best employees from the start-up.

Cuba and hipsters

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Chris Vazquez writes,

Cuba is a beautiful place filled with amazingly incredible people, my people. But these people deserve so much more. Cuba was the pearl of the Antilles, the preferred island for the Spanish, and the envy of Latin America. Havana was beautiful the way San Francisco and Barcelona are today, not the way ancient Aztec temples or Egyptian pyramids are; but what was once the vibrant home of my abuelos and their contemporaries is now a pretty, boho chic relic for American visitors.

I have friends on the left who eagerly visited Cuba and came back saying how wonderful it is. Socialism is that hip.

Downward mobility?

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Joel Kotkin writes,

by 2016, home ownership among older millennials (25-34) had dropped by 18 percent from 45.4 percent in 2000 to 37 percent in 2016.

That is in the U.S., but he goes on to cite similar data for Australia.

So why has home ownership fallen? Largely due to regulations that have placed new affordable housing beyond the reach of younger Australians, something we also see in major cities in Great Britain, the United States, and Canada. In all these places, the main culprit has been “smart growth,” a notion that encourages the reluctant to move closer to dense urban cores and give up the dream of owning a home.

. . .In Sydney, planning regulations, according to a recent Reserve Bank study, now add 55 percent to the price of a home. In Perth, Melbourne, and Brisbane the impact is also well over $100,000 per house.

Another dispatch from the IDW

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Alex Mackiel writes,

a recent study published in Developmental Cognitive Neuroscience found evidence for sex differences in brain functional connectivity in utero and therefore presumably before socialization could possibly have been at play

Later in the essay:

I believe that most of the resistance to evolutionary psychology both then and now stems from two fallacies: (1) that the nasty aspects of our human nature, such as tendencies for violence, are natural and therefore, good. This is known as the naturalistic fallacy; and (2) that an evolved human nature necessarily implies genetic determinism and inflexibility

The naturalistic fallacy is that what is natural is good. What I might call the converse of the naturalistic fallacy is that what is good must be natural. So if it is good to be nonviolent, it must be natural to be nonviolent. I think that this converse of the naturalistic fallacy is what underlies some of the opposition to evolutionary psychology.

Everyone agrees that human behavior reflects both natural instincts and social constraints, with the latter coming from traditional norms and institutions. One might say that the inclination on the left is to see the natural instincts as good and the social constraints as causing problems. And the inclination on the right is to see the natural instincts as causing problems and the social constraints as good.

Later in the essay:

It is my contention that sociocultural factors that have been proposed in place of evolutionary factors as causal influences on mind and behavior have been overstated, while the importance of evolutionary factors have been understated.

That correlates with the predominance of the ideological left in academia.

Mackiel’s essay refers to a paper by David M. Buss and William von Hippel. The authors write

We conclude with the irony that our evolved psychology may interfere with the scientific understanding of our evolved psychology.

A dispatch from the IDW

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Larry Cahill writes,

Imagine your response to picking up a copy of the leading scientific journal Nature and reading the headline: “The myth that evolution applies to humans.” Anyone even vaguely familiar with the advances in neuroscience over the past 15–20 years regarding sex influences on brain function might have a similar response to a recent headline in Nature: “Neurosexism: the myth that men and women have different brains” subtitled “the hunt for male and female distinctions inside the skull is a lesson in bad research practice.”

It’s like seeing Democracy in Chains put up for a prestigious award.

I want to give a big plug to Quillette. It is now the must trustworthy brand in journalism.

Peter Zeihan on Venezuela

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He writes,

This isn’t socialism, or even mismanagement—this is kleptocracy. (Yes yes yes there’s an argument to be made that most socialism-flavored governments concentrate so much decision-making into government hands that such cronyism is a constant danger, but that’s a debate for another time.) Suffice to say, since roughly the middle of the Chavez era in the late 2000s, the only thing socialist about the Venezuelan system has been the propaganda.

But maybe propaganda is, in fact, the true essence of socialism.

Zeihan warns,

That is what decivilizational means: a cascade of reinforcing breakdowns that do not simply damage, but destroy, the bedrock of what makes the modern world work. And that’s just one example in one sector.

What is going on in Venezuela is horrible by any measure, and in a world of Order Venezuela is the very definition of outlier. But a world of Order is not the natural state of things. Pay attention: Some shade of what the Venezuelans are going through is what many of us will need to deal with. Soon, the only thing that will truly make Venezuela stand apart is that its pain is self-inflicted.

He expresses his views effectively. I’m not saying you should accept them. But he is worth following. Check out zeihan.com, or listen to this podcast from last month. At the end of the podcast, he makes the interesting point that the number of reliable news sources has shriveled in recent years. Instead of on-the-spot reporting grounded in local knowledge, we get a deluge of opinion from talking heads and twits.

Too little, too late?

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In the WSJ, David Pierce writes,

For $10 a month, you get access to what Apple says is more than 300 titles. I counted 251 magazines in the library, from “ABC Soaps in Depth” to “Zoomer.” Every popular magazine I looked for was available in some form. Besides Wall Street Journal articles, the rest of News+ includes content from the Los Angeles Times plus digital publications like Vox and theSkimm.

This sounds like what I argued for 18 years ago.

Pierce concludes,

As it is now, though, News+ feels like a product several years too late.