Wednesday, July 08, 2015

Information Destruction and Time Distortion

Does economics begin in number or quantity, or only end there? I've told the story of how I flunked out of business school, one reason being Economics. There was Econ 1, followed by Econ 2, and I somehow got past those.

This was followed by Money & Banking, which I literally faked my way through. I think I mentioned that at some point I realized the professor didn't actually read our papers, only mark them. Therefore, I began literally writing stream-of-consciousness nonsense, and would receive it back with a checkmark on top, just like everyone else. Thus, I succeeded in passing (barely) the course without actually learning anything.

This was followed by... whatever comes next, and that is where I hit the Wall. To be precise, I didn't actually flunk out. I just stopped going in the middle of the semester. Phase One of my adventure in higher education had come to an end, nor was there any Phase Two on the immediate horizon. I took it as confirmation that I was ineducable, and I can't say I disagreed with the verdict.

One thing I like about Sowell -- and the Austrians in general -- is that there isn't much math. In this 700 page book, there are almost no numbers except for the pages. The same is true of Hayek or von Mises. Instead of numbers, they deploy common sense, logic, and an understanding of human nature. Take away those three, and you're left with a Paul Krugman.

Put another way, all the math in the world will get one no closer to the truth if one lacks common sense, consistent logic, and a sound anthropology. For example, a Marxist lacks all three; in fact, he lacks all four, being that he has no math either. Keynesians have a great deal of math, and a form of logic that I suppose makes sense given its assumptions. But it lacks all common sense, and applies to a different species than man.

Here is an example of a basic non-economic lesson I learned from Basic Economics: that there are no economic solutions, only trade-offs. This is so because we live in a world of scarce resources with alternative uses. To choose one alternative is to exclude another.

But this is where politics comes in. Remember, the actual cost of something is its foregone alternatives. Take a barrel of oil. Or a cow full of milk. They can be used for gasoline or cheese, plastic or cream, vaseline or yogurt, kerosine or whey powder, fertilizer or butter, etc. Oil and milk have numerous alternative uses, and no person or bureaucracy could ever determine the most efficient way to apportion between them.

Which of course doesn't constrain the left one bit. Why? First, because they only tell us what they plan to "give" us, never what we are trading for it.

Second, remember what we said about time. None of us knows how long we will live, but this doesn't mean we order our lives as if we are going to die today or on some specified future date. Not so the politician, who orders his decisions to the next election and no further.

However, note that this doesn't apply to decisions the politician makes about his own life. For example, a Barack Obama places his own children in a private school, but meanwhile condemns less fortunate children to dysfunctional public schools.

Why? Because Democrats are beholden to the teachers unions on election day. They cannot afford to alienate such a special interest, anymore than they can afford to alienate other selfish and/or low-information groups, from homosexual activists to bitterclittoring feminists.

Thus, we can put forth the axiom that politics shortens the time-horizon, whereas wisdom is generally a consequence of expanding it -- for example, taking care of one's health, or saving for one's retirement, or not pretending one will be 25 forever.

Another point is that prices are simply messengers. Again, an economy is actually a vast information-processing system, with fluctuating prices conveying information about a thing's relative scarcity, and allowing us to plan accordingly.

But what if we don't like the message? In the real world, there's not much one can do about it. For example, I would love to own a pair of speakers costing $100,000, but that's not going to happen. Why? Because the price is prohibitive.

And as Sowell says, all prices are prohibitive in some sense, for this is their very purpose. My actual speakers are more in the range of $5,000. That's not prohibitive for me, but it will be to others. And even if it isn't prohibitive, most people would prefer to spend the money on other things.

I have a note to myself that liberals also pay attention to prices, except that they prefer to shoot the messenger. They especially like to shoot messengers with vital information about the cost of medicine, housing, and higher education; they try to kill the messenger by subsidizing these things, which, in the long run, inevitably results in more Bad News in the form of higher prices.

Often the left will personify the message, attributing it to "greed" or "corporations," or globalization, or what not.

Which they then sell to the low-information crowd, again, in the context of that shortened two- or four-year time horizon. As such, we could say that the left is an organized conspiracy to 1) destroy information, 2) distort time, 3) deny tradeoffs, and 4) put in place a system of perverse incentives which will redound to the very conditions from which the left will promise to save us come the next election.

Now, one mark of civilization is the gap between now and then; to diminish this gap is to reduce us to barbarism. In order to call ourselves civilized, we must be capable of impulse control, delayed gratification, self-discipline, awareness of trade-offs, and acknowledgment of unintended consequences. The left works at cross-purposes to all these things, which is why it is ultimately an anti-human project of re-barbarization. The best evidence for this is found in any city run by Democrats.

11 Comments:

Blogger Gagdad Bob said...

Related.

7/08/2015 10:09:00 AM  
Blogger julie said...

To be precise, I didn't actually flunk out. I just stopped going in the middle of the semester.

Office Space comes to mind...

Put another way, all the math in the world will get one no closer to the truth if one lacks common sense, consistent logic, and a sound anthropology.

Yes, just so. This is also why arguing with a leftist by presenting facts and data will get you no closer to "winning." They often have their own data - just think of the infamous hockey stick graph - which they will defend against any attacks from reality.

7/08/2015 10:11:00 AM  
Blogger mushroom said...

Again, an economy is actually a vast information-processing system, with fluctuating prices conveying information about a thing's relative scarcity, and allowing us to plan accordingly.

The market is kind of like a quantum computer, isn't it? Maybe they will invent that some day. :)

7/08/2015 10:14:00 AM  
Blogger Gagdad Bob said...

Yes it is. You could say that the economy as a whole is like the quantum field, and that prices are like the transient particles ceaselessly tossed out of the roiling matrix.

7/08/2015 10:25:00 AM  
Blogger John Lien said...

Now, one mark of civilization is the gap between now and then; to diminish this gap is to reduce us to barbarism.

I like that. Never really thought about it in that dimension but, yeah, civilized behaviors are those that look to the future.

I'll toss out that behaviors that honor the past would also count.

7/08/2015 01:03:00 PM  
Blogger USS Ben USN (Ret) said...

"Which they then sell to the low-information crowd, again, in the context of that shortened two- or four-year time horizon. As such, we could say that the left is an organized conspiracy to 1) destroy information, 2) distort time, 3) deny tradeoffs, and 4) put in place a system of perverse incentives which will redound to the very conditions from which the left will promise to save us come the next election."

I'm convinced that not only are lofo voters low on info, but they have very, very short memories as well.

7/09/2015 04:44:00 AM  
Blogger USS Ben USN (Ret) said...

It was only a matter of time before China became bad for business. Again.

7/09/2015 04:48:00 AM  
Blogger julie said...

Yeah. An economy built as much on theft as on honest work - who would have thought? As I understand it, Chinese students who come here for college are starting to get a reputation as cheaters, as well. It seems like there isn't anything in their culture to indicate that it is intrinsically wrong to lie, cheat and steal, especially if they are lying to, cheating, and stealing from foreigners.

7/09/2015 05:30:00 AM  
Blogger julie said...

Plus the whole government-mandated brutal infanticide thing. It's almost like basing your entire civilization on the utopian ideals of a murderous thug has negative repercussions that last for generations.

7/09/2015 05:33:00 AM  
Blogger julie said...

But we should totally put ourselves in a position to be dependent on them. What could go wrong?

7/09/2015 05:34:00 AM  
Blogger USS Ben USN (Ret) said...

Good point, Julie.
At least now we don't hafta listen to lefties say (without a hint that they see the irony in it) how free trade (semi-free actually) has democracized China, and we don't need to worry about communism anymore.
Well, we probably still do, but it will be easier to laugh when they do.

7/09/2015 07:30:00 AM  

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