Pages

Wednesday, 15 August 2018

Your Economic School

Introduction

How often have you entered a political discussion online and seen the conversation swing towards "schools of economics"? Perhaps that was the entire point of the discussion in the first place. Did it make you feel like an idiot? Did you feel like a god because you knew yours?

Here are some quizzes with my results:

Which economic school do you belong to?


Which School Of Economic Thought Do You Side With Most?

I was actually expecting to be able to find some more quizzes like this but I didn't really. I did find the usual "mixed economy" type ones though. Or, at least one, but these aren't really the same thing.

This difference between reality and expectation is important. The argument that I was going present was very stridently opposed to economic schools partially because I see them in political contexts being linked to the sort of ideas and questions that aren't out of place in things like the Political Context. The bent of, particularly the latter quiz, is much more what I'd term introspective. It might be said that its interest is more microeconomic than macroeconomic. Just like me. Even the former has some epistemological questions:
Relating to the theory of knowledge, especially with regard to its methods, validity, and scope, and the distinction between justified belief and opinion.
I maintain that the political economy (in a naive sense*) is the usage of the question "What's your economic school?" when I've seen it deployed in politics contexts. Mind you, I just dismiss the question as a subject of relevance so I don't pay too much attention. It doesn't take much to articulate the problem with this point so we'll deal with that first (even if it does turn out to be a strawman). Once that's done I'll turn my attention to the epistemological critique.

The Politician's School of Economic Thought

As you might recall, I have a degree in economics. I also have three levels of NCEA in economics. I don't have a particularly good mathematical treatment of economics. I'm not very good at maths, you might recall. I have two econometrics papers and a bunch of stats ones, but the specific maths used in microeconomic theories? It gets away from me even what I've encountered. And I never did get 311 done so I'm missing a big perspective on macroeconomics. However, this is a vastly better education in economics than the vast majority of people out there. Including most politicians and most business leaders.

The schools of thought that people present just don't appear in an educational context. They're not relevant. Except when you're bothering to look at the history of economic thought.

In the real world, economists teach a particular approach to economics (we have not yet dismissed the epistemological critique so we mustn't use its falseness as an argument yet), which does not vary based on the economist, the university or the country. How can I tell? Because economists all try and write the same economics textbook. And they all try and put everything in it. And the reason for this is because economics is sufficiently complex and sufficiently new that we don't really know much about it. Not in the same way we do with, say, physics. At one point physics was thought to be solved/completed... since then the field has exploded... no-one has ever thought we've been remotely close to that with economics (and may I remind you that Wittgenstein once thought he'd solved philosophy. Philosophy!).

That economics is a field in expansion is really obvious when you're half in and half out of it (as the thinking undergraduate student or recent graduate of economics is). It's not really so obvious to the layman who doesn't know that economists teach themselves the same truth. They don't understand that economists don't worry about Mercantilism or Keynes or Marx or Friedman or the Austrian School. That's for business majors. (Who steal all the funding from Economics departments.) It's for dweebs. These are developments which have been synthesised. And they might influence the particular take a lecturer has on why we should laugh at the assumptions of perfect competition (Economists, but not business majors, understand what models are) or approaches to "open questions". And that's because this is how academic subjects work. All of them. Economics is not special.

So that's the problem with the Politician's view of Schools of Economics. To them the fact that Economics is taught as a coherent subject is completely mind-boggling. They have never encountered that. Many of them come from much less self aware backgrounds (law, chemistry, geography or business). And they're interested in using old ideas which are convenient to political stances they exogenously prefer to gain votes. So, yes, politicians & voters have a distinct interest in getting people to believe there is such a thing as a different school of economics (to whatever someone else is saying). It gives them credibility. So they go trawling through the history of economic thought to find whatever ideas they want. And they can find them. And they can find them packaged up into non-mathematical statements of theory.

The Epistemological Critique of a "Single" Economics

You might not find my argument above particularly compelling. I've basically just said: "There aren't Schools of Economics because it's not taught like that." The only reason I didn't say that was because I wanted to say it here. You might have found that I touched on some ideas which rather undercut my point. You might have been thinking, "Woah, hold on, that's just what they say is the case, which isn't the same as what is the case". If that last person is you, you might have even been  trying to find that quote from the start of The Big Short:

Source
Man... that's a good film. I just now realise it was what I wanted to watch before. When I decided that I didn't feel like watching Harry Potter. Anyway, I digress... here's a quote from someone who stridently argues for different schools:
These schools are not irreconcilable enemies, however; the boundaries between schools are actually fuzzy. But it is important to recognise that there are distinctive ways of conceptualising and explaining the economy, or ‘doing’ economics, if you like. And none of these schools can claim superiority over others and still less a monopoly over truth.
The moment he (who has a much greater education in Economics than me) says the first thing, you know what's happening, don't you? You know that whatever else he's got to say he's ultimately able to see that it is still all one thing. Or, possibly, it's not.

You might remember that I was also a statistics student. In statistics, as I have mentioned before, one of the key things you have to learn to do is see nothing. We don't want to see anything in a residual plot (usually). But, as humans, all we do is see patterns. I'm bad at describing them. But I see them. So, you've got to learn when no signal is really no signal. It's not incredibly hard, but it's not easy either. And the relevant lesson here is that maybe I'm looking at a plot and saying it's nothing and he's looking at a plot and saying it's something. That the clustering of points is a cluster of schools. The tree has just enough branches.

And maybe one of us is right.

Or, maybe, we can be both right.

Or wrong.

What is for sure is that he's got a table... I'll quote the spiel attached to where I found the table after this paragraph because I think it contrasts. I don't think the sentiment is quite equivalent. Which might make you wonder if maybe I just exist to say things aren't so. And maybe you'd be right. I've never managed to understand why an insignificant p-value isn't worth publishing. But that's probably a digression too...
Despite what the experts want you to believe, there is more than one way of 'doing' economics
People have been led to believe that, like physics or chemistry, economics is a 'science', in which there is only one correct answer to everything; thus non-experts should simply accept the 'professional consensus' and stop thinking about it.
Contrary to what most economists would have you believe, there isn't just one kind of economics - Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.
I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, the simple table below should help you overcome your initial fear.
I will show you the table very soon. But I'd like to just articulate what you should have learnt so far... the basic logic of different approaches doesn't validate the idea that there isn't one way of doing Economics, doesn't validate the idea that there are several competing schools of Economics. It is possible for similarities to exist without being real. In practice we don't rely on ourselves to detect things in statistics (we apply mathematical theories via models) but in lieu of running some kind of genetic study on the taxonomy of the social sciences, I'll stop short at having demonstrated the naivety of the apparent logic.


It should be obvious that I don't believe Chang's arguments rest on what I have quoted. The idea that I might actually offends me. But I know that people like to quote mine. And even though I have no readers, I protect myself just in case. Which I mention because if you are looking at this table you might be looking at this table and thinking, "Well, Harry, this looks pretty bloody divergent to me". And because my response to that is to look at this other bit of Chang's first quote. Namely the idea of a monopoly on truth. In other words, I'm not going to move much further from what I've already shown you. I am certainly not going to move away from the Changian conception of what I am calling the epistemological critique.

Chang attempts to pull the veil from his reader's eyes. Well, let me pull the veil he left behind from your eyes. If Chang is correct, then there are no disciplines. Not as we think about them. No physics. No chemistry. Even science itself. Not a Thing, Chang leaves only a bunch of essentially disjoint, rivalrous and insufficient abstractions. The Changian belief that there are schools of economics is to take evidence that in any other subject would be used to infer methodological debate or the existence of an unanswered question (like the Poincare Conjecture** or the Riemann Hypothesis in maths) and conclude that the whole affair is bunk. Economics is not special.
Moreover, unlike the natural sciences, economics involves value judgements, even though many Neoclassical economists would tell you that what they do is value-free science. As I will show in the following chapters, behind technical concepts and dry numbers lie all sorts of value judgements: what is the good life; how minority views should be treated; how social improvements should be defined; and what are morally acceptable ways of achieving the ‘greater good’, however it is defined. Even if one theory is more ‘correct’ from some political or ethical points of view, it may not be so from another
The Truth is that we're always having to make decisions about the world. What Chang calls value judgements in this paragraph is typically definitional. Define the parameters. Judge the outcome. Formulate hypotheses. Draw predictions. Compare with outcomes. That's the scientific method. Which, by the way, is a very rough and ready abstraction of how science advances.

I'm not a physicist or even well read about it. I do, however, know enough about it to say that James Clerk Maxwell was more important than Einstein and not be completely laughed out of the room. And I know enough about it to say that Einstein's work is more far-reaching than I once appreciated. But are any physicists actually worth name-dropping when all we care about is knowing what physics as a discipline thinks? Not really. Even mentioning a big problem with Einstein is that he never really grasped the implications of all the big ideas of his time is usually irrelevant. But when we're talking about Chang it's important to note that Einstein, today, would be called heterodox for disagreeing with the quantum revolution.

Source.
Does that quote remind you of anything? If it doesn't, you probably need to read Chang's table. Economics can get very probabilistic. But, apparently, it's an important distinguishing feature.  There are many examples, from many disciplines, which possess similar properties. The co-existence of divergent or opposing viewpoints is how the field of knowledge expands... until such a time it collapses into one outcome. And then it all begins again.

My economics is a very simple discipline. It begins with the issue of scarcity. That's where I started and it's where I believe the discipline starts. And it ends with a final understanding of the implications of scarcity for the human condition. Will we ever get there? I don't know.

Economics is highly dependent on advances in mathematics, ethics, statistics and psychology in its personal quest to understand the world. I could convince myself into believing we have reached the end of our knowledge in maths. I have convinced myself that just because we know we don't know if the Riemann Hypothesis is True that doesn't mean we'll ever be able to know either way. But disagreement over these points doesn't change what we're doing in any particular way. Either we're still investigating what economics is, or we're investigating within economics. And if we're within economics, then we can't be doing it differently... because whether we're using experiments, maths or shower thoughts we're still buying into the same purpose.

Let's recap. I see the epistemological critique as saying:
  • There are different ways of doing economics.
  • Therefore, there different schools of economics.
I just don't accept that the first line is enough to justify discerning different schools. Knowledge is an ever advancing wave. It can't go backwards: unknowing is not possible. It can't go in one particular direction: knowledge is everywhere. It doesn't have any destination: it's merely observed when it runs into a beach, as it were. What it can do is collapse. And when that happens new waves form from the same water. If we'd put it in one wave, then it is one wave only that exists.

Which begs two questions:
  • Under what circumstances would I accept the idea of different schools of thought?
  • What if Chang and I have different conceptions of what economics actually is, then what?
To a certain extent, the first question is answered by the second. A different school of thought exists when people have different ideas about the same thing. Not in the sense that they have a difference of opinion about how to find out information about an agreed thing or in the sense that they disagree about what something means or how it works, but strictly in the sense that they disagree about what it actually is. And you'd be right to say that Chang's schools disagree about what the economy is... whether it's individuals or classes, two take the simplest ones to type. But you'd also be right to say that I'm taking a higher level position, that I've zoomed too far out for this to matter. And that's why the second question doesn't answer the first one.

Source
The idea that everything I've been talking about is irrelevant concerns me. I accept the idea of schools of thought as being relevant in historical discussion. I mean, the disagreement of Einstein and his contemporaries helped move physics along. But we're able to see what happened to that wave: we know how it collapsed. To have a school of thought, we must know what it is... and if you've been paying attention, you'll notice that I take a "what it is, is what it does" approach to definitions. And these things? Well, we can't know what they do until it's been done... we rely on the distance of time to discern schools in an Eastian sense. To the Changian sensibility it is enough that they disagree. To the Eastian it only matters if the disagreement mattered. And that's a much stronger test.

Notice that choice of language there... Eastian and Changian... am I not setting up two schools of thought on what schools of thought are? But I need these kinds of terms because I need these kinds of referents... in trying to have a discussion about the way people think about something, I need people to have ways of thinking (and it is easier still if they can be grouped). In other words, the world is what we thought we'd see.

The second begged question is irrelevant. If Chang and I disagree about what economics is then, well, maybe we need to wonder if Economics as a subject even makes sense. But that question is never what is being talked about by "economic schools" so it can't be what I set out to disagree with (remember that previous paragraph?!).

Conclusion

What I've said might be enormously unsatisfying. It basically boils down to four points:

  • People assert that there are different, valid approaches to thinking economically, which is wrong.
  • There is one way that economics' knowledge is actually taught and that's because who came up with an idea is never as relevant as what the idea is.
  • It's not enough to notice that people disagree about stuff because these disagreements are how knowledge works.
  • Economics is not special: disagreements in this one particular discipline are treated uniquely (typically because of political expediency).
Which is basically saying that I am comfortable saying economic schools don't exist mostly because there is a synthesised body of work that is taught... and that I am still okay with saying that despite epistemological criticisms. And it's leaving implied the idea that I have some ego-defensive motive here.

Look, I guess the best way of putting it is this. I know I disagree with what I see. There are not schools of economics in the same way that you're a Republican, he's a National voter, they're a Conservative and she's an Australian Liberal. There aren't even schools of economics in the way that Jacinda Ardern is Labour (populist, xenophobic leftism), David Seymour ACT (liberalism) and Winston Peters NZ First (big government conservatism). As much as I disagree with all these mentioned philosophies, they are all equally valid lines of argument in politics. Economics is different.

You don't get to say that the so-called Keynesian school is just as valid as the Classical School or the Neo-Classical school (which is really a synthesis of both). You don't get to say that because in the academic world, when you want to take a different angle or even the orthodox one, you sign up apply transparently, fairly, carefully and honestly apply the world to brainpower. In politics it is the other way around. Furthermore, when you sign up to be an economist, what you're saying you're going to do is that you'll look out the window using this filter, not sociology's, not physics', not history's, not political science's, not whatever's. In embracing this "filter" you accept all sorts of premises about how the world ought to interact with brainpower, including what those interactions look like, the shape they take.

I am perfectly comfortable saying that the so-called schools of economics are epistemologically consistent. I am even perfectly comfortable saying that the competing conclusions floating around don't justify different schools. This is because they all share the same ambitions, because they can't be pigeonholed and because rival ideas are necessary and expected. But this way of thinking about the schools economics isn't what I thought I was signing up to write about. And I want to make my strong views about what I set out to talk about public. And this matters.

The day economists start doing different things, for different reasons and stop agreeing about what the properties serious analysis should possess (if not the specific methods to be included), then I'll start thinking there are different schools that matter. But, we're not there yet. And I doubt we ever will. All that there is are patterns in the gradual process of synthesis.



*Meaning not the article (let alone the subject) but rather just this opening sentence: "Political economy is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth." Or, in other words, the literal meanings of the two words.

**This is actually solved. Like, they figured it out. A lot of similar problems (such as the Riemann Hypothesis, and by similar what I mean is "things people think might be true or right") are not. They may, in fact, be intractable. Or they might not be. But right now? We don't know.

Saturday, 14 July 2018

The Rule of Law

It's been said that there are as many definitions of the rule of law as there are lawyers, or, at least, constitutional lawyers. But everyone agrees it is a really important thing to have.

As I understand it, the principle of the rule of law is that everyone and anyone is subject to the same framework of justice and expected to live up to the same set of rules. That framework and those rules, obviously, are the Law. And because everyone and anyone is subject to the Law, we can say it rules.

So what about some other definitions of the rule of law? Being a layman, I shall compare my idea with Wikipedia:
The rule of law is the "authority and influence of law in society, especially when viewed as a constraint on individual and institutional behaviour; (hence) the principle whereby all members of a society (including those in government) are considered equally subject to publicly disclosed legal codes and processes".[2]
That seems... pretty much the same. It's got a very important bit in it about "publicly disclosed" (which I take to mean no secret courts and secret laws) and that's what I mean by "same," but it's probably important to explicitly state that transparency is part of the rule of law.

How about the misinterpretation of Magna Carta? The Rule of Law is often traced back to Magna Carta you see..
XXIX. NO Freeman shall be taken or imprisoned, or be disseised of his Freehold, or Liberties, or free Customs, or be outlawed, or exiled, or any other wise destroyed; nor will We not pass upon him, nor condemn him, but by lawful judgment of his Peers, or by the Law of the land. We will sell to no man, we will not deny or defer to any man either Justice or Right.[228]
The problem with taking this to mean a rule of law was established by Magna Carta is that "freeman" had a very specific meaning in the 13th Century and the meaning was quite different to that we have now where it basically just refers to anyone. This is a generally important point, though. The way the Law works is that it is written and produced by a legislative body, it is followed by agents and the executive (part of government) and it is enforced by a judiciary. The process of enforcement generally means having to decide what a law means... and there is a fair amount of scope there. In New Zealand these interpretations are meant to follow what is termed the purposive approach:
5 Ascertaining meaning of legislation
  • (1) The meaning of an enactment must be ascertained from its text and in the light of its purpose.
  • (2) The matters that may be considered in ascertaining the meaning of an enactment include the indications provided in the enactment.
  • (3) Examples of those indications are preambles, the analysis, a table of contents, headings to Parts and sections, marginal notes, diagrams, graphics, examples and explanatory material, and the organisation and format of the enactment.
I say meant but I really have absolutely no reason to imagine that statutory interpretation doesn't follow this process in practice. Except, I was never really able to figure out how a person could be said to get off on a technicality. If you're reading with the purposive approach, the plain meaning of the text above is saying that the Spirit of the law is, in fact, the Law. Hence, no such thing as a technicality. But I'm probably confused on this point because I did just the one Comlaw paper and this seems rather more appropriate to the questions surely treated in an actual Law education. The real problem (with laws having to be read/interpreted to exist), therefore, is this bit (handy dandy quote from a PDF I've read basically none of that I found literally five minutes ago):
The constitutional importance of individuals being able to understand the law, and order their affairs accordingly, is a key tenet of any legitimate legal system. Lord Bingham relates it to the rule of law which he says requires, among other things, that the law be accessible and so far as possible, intelligible, clear and predictable.8
Unlike a lot of people I really don't think footnotes are optional, so I'll quote that too:
Thomas Bingham “The Rule of Law” (2007) 66 CLJ 67. Professor Lon Fuller, an American jurist, went so far to say that “law” would not be law if it was so unclear that it was impossible to understand: Lon Fuller Morality of Law (New Haven, Yale University Press, 1969). There is an extended discussion of Fuller’s eight criteria of law at 46–91.
Only lawyers could actually say these sorts of things. I think I'm a pretty smart dude but I really couldn't make head nor tail out of British citizenship law. And, similarly, the whole reason why lawyers exist is because the Law requires its own education. And that happens because the Law is its own (very narrow, if you ask me) way of thinking. That's been obvious for hundreds of years. I suppose, charitably speaking, what they mean is that you've got to be able to get a sense of what it says... which is certainly the case with our quote from Magna Carta (which, to be clear, is to a Medievalist a contract not a constitution, to a lawyer  a constitution and to the historians of Early Modern England it's something in between). But it must be said that the purposive approach ought to make the plain meaning of our quote from Magna Carta mean something actually opposed to the legal meaning. Do we have, therefore, the Rule of Law when we've got old laws sitting around?

This is where I think I will move from a half-arsed attempt at legal theorising to making an equally half-arsed attempt at legal-political theorising.

In New Zealand we have a government (the executive) which is part of parliament (the legislature) that we hold to be sovereign. That is to say that there is nothing one parliament can do to permanently bind another parliament and there is nothing the courts can do strike down legislation, at least laws that have been enacted correctly.

To my mind, if parliamentary proceedings have not been followed it is a nonsense to say that parliament exists and hence anything that such a "parliament" did isn't really a law (because it wasn't a parliament at all). Beyond this, though, I am completely comfortable with parliamentary supremacy. Indeed, I would argue that the alternative is forcing the highest judicial bodies to confront political questions. As an example, Brown v Board of Education over in the States was not a legal matter, but a political confrontation framed in "legalese." That's a gross violation of the principles of democracy (although, technically speaking, in the US their supreme court justices don't have to be judges/lawyers, but since they always are they don't get a pass).

Why do I mention this? Well, because I make the political argument that if a parliament has not repealed a piece of legislation that this is a tacit endorsement* of that legislation and, hence, the judiciary must continually understand legislation as it makes sense now. If parliaments are truly to be sovereign and the rule of law is truly to exist, every parliament accepts laws or gets rid of them... and if they accept laws they have a purpose to doing so.

The astute reader is probably thinking that the "sense" of a statute which has already been used in a court case is going to be affected by the way it was interpreted in that court case. Such a reader might also wonder if this means that the judiciary always has some kind of legislative (as in, law making) role... even without the common law. I agree (thus why I call such a reader astute).

The simple fact of one person having decided and stated a meaning of a text colours all subsequent thinking about the same text. From the strongest of disagreements to the most forceful affirmations. Every. Subsequent. Thought. The important bit is that parliament's interpretation is the interpretation (regarding purpose). And because parliament is the people and the people are the parliament old laws are thus not a barrier to the rule of law. So what if it is affected by the judicial interpretations of the past? This is simply the mechanism by which consistent meaning is achieved. No more. No less.

All this swings on that bit about predictability. I have some quite sharp criticisms of the Law and Justice systems, including its opaqueness, so the readability of the footnote is not something I want to bring on board. We cannot predict meaning and hence laws/legalness when we're meant to be reading from some quite alien experiences (i.e. those of the past): meaning is socially constituted (i.e. it's a product of the present moment and continually updating at that). This is simply how reading and understanding work.

When I was younger I was quite sympathetic to the flag change cause and also to the other view... to my understanding, I have presented a "living" statute/constitution argument so the other view would be originalism. These days, obviously, I disagree with both; holding them to be immature and childish... the former motivated by that childish concern with what others think and originalism the classic "but teacher said" immaturity. Hopefully it should be clear that I have implicitly suggested that a problem with originalism is that it is inconsistent with the rule of law, creating caprice and unfairness instead of justice through the availability of unpredictable meanings. It might likewise be said to rely on naive ideas about reading (ignoring the every. subsequent. thought. point quite entirely).

The thing is that as far as I can tell Originalism is an American thing. Which is appropriate because what has motivated this post is the question of whether or not the rule of law can be said to exist in the United States at all. Not because Originalist interpretations occur there (that is, as it were, something I discovered in the course of developing the ideal segue) but because no-one is sure if a sitting US president can be charged with a crime and subjected to prosecution.
It is undisputed, according to legal experts, that litigation over obstruction of justice or defamation could proceed after Trump leaves office. But the question of whether the president can be sued or prosecuted while in office is murkier.
I'm afraid this is just incompatible with the rule of law. If the rule of law truly was a feature of American society it would not be a question but a known fact that the US president could be charged and prosecuted. This is what the rule of law means... and it is what I cam to talk about. The Rule of Law does not exist in United States of America... and they might appoint a dude to SCOTUS who actively argues against it). Mental.

The rule of law should exist. The idea that everyone is subject to the Law is immensely reassuring, it's what lets us know that if we managed to get the coin together we might be able to go to a court and get a just outcome. The rule of law is a fundamental assumption we make in predicting human behaviour, without confidence that it exists it's hard to see the Law as a tool.. a means of getting things done. The rule of law lets is a fundamental presumption about society, and an eminently defensible one. The USA's ambivalence to it is another nail in a coffin that, these days, is surely mostly metal.


* In the common law it is actually assumed that silence cannot mean anything other than silence (there was a case about a horse, I think). This is generally more sensible and you might have seen one of the issues that arises with using silence to infer meaning. Notice how I seemingly want it two ways. Laws can be invalid if they are made by invalid parliaments, but if they aren't subsequently repealed by later parliaments then these parliaments are saying that the laws are, in fact, real. The reconciliation is simply that these were never laws at all. The later parliaments might want to have these laws around but they can't without actually making the Law in the first place. I have started from the premise that a parliament is also the way it says it will make laws; never actually making a law is not one of the ways any parliament has ever said it will make laws. This gives room for a court to come along years later and say, "Woah, hold on guys, that's not a real law, you didn't have a parliament there".