Category Archives: Political theory

Herding: Part One

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A few weeks ago I attended the latest F.H. Gruen lecture at ANU by the terrific English economist Andrew Oswald.* He’s one of those economists who, in addition to being formidable in his (many) fields within the profession, is also a great communicator. Though he has a lower international profile than say John Kay who is also an op ed writing academic, he’s also a master of the art of the clearly written op ed as a visit to his website will convince you. Those who choose the F.H. Gruen lecturers – I’m not sure but I presume Bob Gregory and/or Bruce Chapman have never missed in getting people who are talented economists with something to say at the same time as not being crazy – as quite a number of Nobel Prize winners in economics are.

In any event, Oswald’s topic was herding (and here are his presentation slides). As he suggested, you’d think that economics would have a good theory of herding, or at least that it would be a prominent subject within the discipline. Alas, if you thought that, you’d be mistaken. When Oswald looked at the biology of herding, the canonical article was Hamilton, W. D. (1971). “Geometry for the Selfish Herd”. Journal of Theoretical Biology 31 (2): 295–311.

This theory models herding as a ‘rational’ strategy to avoid predators. The ‘game’ that gets selected for is for each animal to try to avoid being on the outside of the herd so that the predator gets to eat the outsider. It’s a powerful theory which fits (ie ‘predicts’ a lot of of biological data).

IIRC Oswald said that this article had acquired thirty thousand references in subsequent academic journals, many in biology of course, but also in some social science disciplines such as psychology and sociology. You know how many times it’s been cited in the economics literature? Well it’s never been cited – at least when Oswald looked it up – it probably has now.  This simple fact is as good an introduction of the theme of this post as you’ll find. As I heard Oswald say this it struck me as itself a dramatic demonstration of herding. At the same time, it’s par for the course. This kind of thing happens all the time in economics. No doubt it happens in other disciplines, but it seems especially the case in economics.

By contrast, the prominent theory of herding in economics is herding as informational learning. Thus for instance people imitate others figuring ‘they must know something I don’t’.  In a cinema, someone yells “Fire!”.  People start running for the exit. Others up the back don’t hear what the yeller yelled, but they figure they could do worse than follow the herd.  The idea is illustrated at the end of this famous scene. This idea can help explain financial bubbles.

But the biological herding idea seems so much more powerful. Because it suggests that a dominant biological mode is one in which each ‘agent’ seeks the local optimum of their own survival, and that this gives the group some holistic coherence, but that no-one is thinking of the group, and the group’s survival and welfare – the global optimum – is therefore the (arbitrary) result of these individual optimisations. The biological theory of herding spells danger for the herd in many situations. Continue reading →

Secrecy by default: How ‘performing government’ is trumping transparency

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A few months ago, Sam Roggeveen from the Lowy Institute asked me to talk at a function the Institute was holding on secrecy. I said I wasn’t particularly well qualified to talk directly on secrecy regarding national security and foreign affairs, but I was happy to speak about the growing benefits of openness and of the power of ‘secrecy by default’.

The event is on Friday but there are a series of blog posts in the run up to it. Here’s my blog post – which is also up on the Lowy blog.  You can read the all the posts leading up to the event here (I recommend Paul Monk’s posts particularly).

‘Soft’ secrecy in the media age

by Nicholas Gruen – 12 March 2012 10:42AM

Nicholas Gruen is CEO of Lateral Economics and was Chair of the Government 2.0 Task Force.

I recently took my son to the stage play of the TV show Yes, Prime Minister. One could predict the kind of plot that would ensue and ensue it did. The Prime Minister and his minions manoeuvre for advantage between each other and navigate a range of dilemmas and eventually a resolution is arrived at. Life goes on happily enough for the characters and we appreciate the bon mot that Wikiquote tells us is wrongly attributed to Bismarck: ‘Laws are like sausages — it is best not to see them being made’.

But the decades have made a huge difference in the sensibility of the new production – which is written by the original authors of the TV series. The series ran through most of the 1980s, a period that contained its share of tumult, from the destruction of union militancy to the Falkland’s War. The series reflected bastardry enough.

But somehow the dramas were genteel, reflecting battles between those privileged enough to be in the system. Waste in government continued, powerful people and time-servers were protected when they should have been exposed and dealt with. But one could be forgiven for thinking, at the end of an episode, ‘it was ever thus’.

Twenty years on, as the moral dilemmas piled up in the stage-play, the governors conspired against the governed.

Continue reading →

The global conspiracy to miss the point

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ScreenHunter_16 Feb. 25 01.47I see there’s a US nationwide campaign against private for-profit prisons. Maybe the campaigners are right. It’s certainly easy to imagine ways in which the profit motive would work against the interests of prison inmates and the public interest in lower recidivism rates and so on. Yet at least judging by the sign, it’s notable how the campaign is based not around either of these things but how the idea of private prisons makes us feel. How does it make us feel?  Well yucky. But that’s at least in part because prisons make us feel yucky.

Then again in some senses private anything sounds somehow worse than publicly supplied something. Who’d want those greedy private business people selling us bread? Wouldn’t they be tempted to cut corners, put in lousy flour and charge us too much?  Public providers of bread wouldn’t do that would they? Well we all know (I think) that those things that the private providers would like to do, they can’t do in a competitive industry.  So on reflection we’d rather take our chances against the pathologies of private sector misbehaviour than public sector misbehaviour.

And if private prisons are bad, the trouble is, we know that state run prisons are horrible too.

Then we all go into our corners with the people with the signs to your left arguing that privately owned prisons are Bad and economic rationalists arguing “what’s wrong with private ownership?” and assuming that all objections to private prisons are irrational and that the real issue is always and everywhere the adequacy of contracting.

It seems to me that the emotions around the campaign are reasonable enough. We want some kind of fiduciary relation – between the prison and the public interest and the prison and the prisoners’ interest. And profit seeking makes us uneasy about this. But like I said, however this is done it needs to be brought within some kind of organisational logic and there are likely to be some nasty things about that – whether you go public or private.

I made the same kind of point when offering a sympathetic critique of Ken Harvey’s opposition of ads in medical prescription software. Yes ads are tacky – indeed they’re ethically dubious. But while we squabble about that we seem to spend almost no time on a much more compelling question which is how could we use things like medical prescription software as decision support technology and in so doing hugely improve the quality of prescribing.

And I’ve suggested the same thing regarding regulation of financial advisors and other professionals. “We regulate them within an inch of their lives, and there’s disclosure regulation all over them, but no-one troubles them to (for instance) keep sample portfolios to demonstrate how capable or not at what they are advising others to do.”

We won’t get far while stuck in the ‘regulation as morality play’ rut. But how does one get out of it? Any suggestions?

Democracy and the art of motorcycle maintenance

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A tough-talking, motorcycle-riding Texan, sociologist C Wright Mills is about as far from today’s stereotype of the latte-sipping left-wing intellectual as you’re likely to find. But even though he’s been dead for 50 years, you can still see his influence in the intellectual left today.

Fiercely independent, Mills wasn’t about to turn his life over to the system. If something affected him he wanted to be able to control it. On his first trip to Europe in 1956 he spend two weeks in the BMW factory in Munich earning a certificate in motorcycle repair. According to Dan Wakefield, he told his students they should build their own houses.

Mills had much the same attitude to democracy. The rise of corporations, centralised government and the mass media cut intellectuals off from their publics. Outside the family and the small community, communication had become top-down. Individual citizens no longer participate in the decisions that affect their lives and intellectuals are no longer able to lead and facilitate deliberations.

In his 1951 book White Collar Mills described the resulting sense of alienation: "On every hand the individual is confronted with seemingly remote organizations; he feels dwarfed and helpless before the managerial cadres and their manipulated and manipulative minions."

Mills saw intellectuals being absorbed into the system as minions. Taken up into government, the corporations and the universities, they became unable to think and act independently. Yet he would later argue that it was up to intellectuals — particularly young intellectuals — to change society. "Who is it that is getting disgusted with what Marx called all the old crap’?" he asked in 1960. "Who is it that is thinking and acting in radical ways? All over the world — in the bloc, outside the bloc and in between — the answer’s the same: it is the young intelligentsia."

Continue reading →

Complexity, context dependency and the (difficult) ascent of man

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I read an article with an attractive title recently. “Complexity and Context-Dependency“.  It’s not very good, but it raises an important point that is important to what I call the psycho-pathology of disciplines and it puts me in mind of something I’ve thought for a long time about policy and politics. I don’t have time to do this subject justice in this post, but thought I’d try to put down a marker.

The paper argues this.

We may look down on other animals, perceiving that they have a biased and limited understanding of the world, but somehow assume that we don’t have analogous biases or limitations that we cannot somehow overcome. Surely this is merely another example of anthropocentric arrogance. That we have had some notable successes at understanding our world and even a systematic set of approaches that has been shown to be useful is not sufficient evidence to assume a lack of limitations and biases.

This astonishing assumption takes many forms in philosophy and discussions about the scientific method. One such is that somehow simplicity is a guide to truth. That is, that simplicity in a model or theory has advantages other than the obvious pragmatic ones (pragmatic virtues are such as: being able to analyze/solve it; being able to have good analogies with which to think about it; needing less data in order to parameterize it; and being able to compute it).

Another version is that everything somehow must be simple if only we can find the right way of looking at it, or formalizing it. It is true that frameworks such as Newtonian Physics are relatively simple (though I doubt many in Newton’s time would have thought so), and using this, many useful models and reliable predictions can be obtained. . . .

I am not going to spend time arguing the above points here. Rather I will consider the case under the anti-anthropocentric assumption, that much of the world around us is organized in a way that is beyond adequate modeling in a sufficiently simple and general manner for us to cope with. . . . Under this, admittedly pessimistic, view the phenomena that are simple enough for us to understand in a scientific manner are the exception – the exception to be sought and struggled for. Under this view, we should make the greatest use of the strengths we have, and seek to acknowledge and mitigate our limitations. Under this view a “Science of Complexity” makes no more sense than a “Science of Non-Red Things”, since both red objects and simple systems are the exception rather than the rule.

Why is it that we can see political benefits from the hyper-connected world produced by Web 2.0 in undemocratic countries but no big apparent improvements in democratic countries? Continue reading →

Thomas Paine

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Thomas Paine was a remarkable fellow who lived at a time of, and helped bring about two great revolutions of the modern age – the American and French ones. His time discovered political pamphleteering in a way that’s quite similar to blogging today. People wrote pamphlets and then others responded – with subsequent editions of the original pamphlet going out with responses to later pamphlets.

Letters, the tongue of the world, have in some measure brought all mankind acquainted, and, by an extension of their uses, are every day promoting some new friendship. Through them distant nations became capable of conversation, and losing by degrees the awkwardness of strangers, and the moroseness of suspicion, they learn to know and understand each other. Science, the partizan of no country, but the beneficent patroness of all, has liberally opened a temple where all may meet. Her influence on the mind, like the sun on the chilled earth, has long been preparing it for higher cultivation and further improvement. The philosopher of one country sees not an enemy in the philosopher of another: he takes his seat in the temple of science, and asks not who sits beside him.

Yet even at the height of his fame and after the American revolutionaries’ success in breaking away from the mother country, he was already  disillusioned by how little his own public achievements and spiritedness had served his own interests. He was a man of great generosity – and some impetuousness. He had given away what wealth and security he might have had in support of the revolution and felt unacknowledged by his adopted United States while others had profited mightily from the revolution, either financially or in acquiring high office. Against the extension of civilization being worked by letters and the spirit of science there was a counterforce:

The principal and almost only remaining enemy it now has to encounter, is prejudice. . . . [P]rejudice, like the spider, makes every where its home. It has neither taste nor choice of place, and all that it requires is room. There is scarcely a situation, except fire or water, in which a spider will not live. So, let the mind be as naked as the walls of an empty and forsaken tenement, gloomy as a dungeon, or ornamented with the richest abilities of thinking; let it be hot, cold, dark, or light, lonely or inhabited, still prejudice, if undisturbed, will fill it with cobwebs, and live, like the spider, where there seems nothing to live on. If the one prepares her food by poisoning it to her palate and her use, the other does the same; and as several of our passions are strongly charactered by the animal world, prejudice may be denominated the spider of the mind.

Paine would come to despair of both revolutions he had helped set in place. Paine was elected to the French National Assembly (I think that’s what it was called at the time, it kept changing and changing its name). He defended the King with energy, decency, courage and ultimately naiveté - arguing in a debate after the sentence of death had been passed that it carried the stain of revenge rather than justice. “My language has always been that of liberty and humanity, and I know by experience that nothing so exalts a nation as the union of these two principles, under all circumstances. . . . My anxiety for the cause of France has become for the moment concern for its honour.”

As France descended into chaos and horror his naturally sunny and disposition turned to another cause – that of deism.  He wrote The Age of Reason to promote deist views. As he began the book “I believe in one God, and no more; and I hope for happiness beyond this life.” Deism was very common amongst enlightenment intellectuals and men in high places. But they had always understood that it was polite not to be too trenchant about them publicly or to promote deism in competition with Christianity further down the social order. It was typical of Paine that his deism was democratic and generous of spirit.

I believe in the equality of man; and I believe that religious duties consist in doing justice, loving mercy, and endeavouring to make our fellow-creatures happy.

And it was also typical that his deism was simple and combative.

But, lest it should be supposed that I believe many other things in addition to these, I shall, in the progress of this work, declare the things I do not believe, and my reasons for not believing them.

I do not believe in the creed professed by the Jewish Church, by the Roman Church, by the Greek Church, by the Turkish Church, by the Protestant Church, nor by any church that I know of. My own mind is my own church.

All national institutions of churches, whether Jewish, Christian or Turkish, appear to me no other than human inventions, set up to terrify and enslave mankind, and monopolize power and profit.I do not mean by this declaration to condemn those who believe otherwise; they have the same right to their belief as I have to mine.

But it is necessary to the happiness of man that he be mentally faithful to himself. Infidelity does not consist in believing, or in disbelieving; it consists in professing to believe what he does not believe.

This ruined his reputation in polite society for the rest of his life.

Meanwhile in Paris he stuck around as things went from bad to worse, helping others to leave but not leaving himself – perhaps out of vanity and/or naiveté believing that he would be OK. Paine’s heart and health were broken awaiting execution in a Paris jail though he survived long enough to outlive Robespierre’s and so the terror. He lived many more years, but he nevertheless emerged a changed man.

Memory, like a beauty that is always present to hear itself flattered, is flattered by everyone. But the absent and silent goddess, Forgetfulness, has no votaries, and is never thought of; yet we owe her much. She is the goddess of ease, though not of pleasure.

When the mind is like a room hung with black, and every corner of it crowded with the most horrid images imagination can create, this kind, speechless goddess of a maid, Forgetfulness, is following us night and day with her opium wand, and gently touching first one and then another, benumbs them into rest, and at last glides them away with the silence of a departing shadow. It is thus the tortured mind is restored to the calm condition of ease, and fitted for happiness.

Sen, social inclusion & Treasury’s wellbeing framework

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Treasury’s mission is broad — to improve the wellbeing of the Australian people. And according to Peter Martin its wellbeing framework empowers it "to fight homelessness just as much as it empowers it to fight inflation". As Martin explained back in 2008 the framework goes well beyond purely monetary or material ideas of wellbeing.

If Treasury’s framework is broad enough to include issues like homelessness, perhaps it’s broad enough to absorb the idea of social inclusion. Integrating social inclusion into the wellbeing framework might give the idea a more definite meaning and a useful theoretical base.

Continue reading →

Why is there no liberal party?

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At the Economist’s Democracy in America blog, Erica Grieder suspects that "the biggest untapped constituency is people who are fiscally conservative and socially moderate or liberal." Grieder links to a post by former Cato research fellow Will Wilkinson where he explains why he is not a libertarian:

Here are some not-standardly-libertarian things I believe: Non-coercion fails to capture all, maybe even most, of what it means to be free. Taxation is often necessary and legitimate. The modern nation-state has been, on the whole, good for humanity. (See Steven Pinker’s new book.) Democracy is about as good as it gets. The institutions of modern capitalism are contingent arrangements that cannot be justified by an appeal to the value of liberty construed as non-interference. The specification of the legal rights that structure real-world markets have profound distributive consequences, and those are far from irrelevant to the justification of those rights. I could go on.

Wilkinson now identifies as a liberal. He writes: "I am interested in what it means to be free, and the role of freedom in flourishing or meaningful or valuable lives."

In the US, no major political party or movement stands for this kind of liberalism. The same is true in Australia. According to Greg Barns: "The Liberal Party, in the Howard and Abbott incarnation, is a socially conservative force which also believes that the state should play a paternalist role in steering the economic direction of the nation." Oddly, the most enthusiastic supporter of "the the role of freedom in flourishing or meaningful or valuable lives" seems to be the Australian Treasury.