Preferences and Morality

I was prompted to this particular area by reading this post on a friend’s blog. At the risk of misunderstanding part of that post, what I mainly seek to comment on is the relationship between preferences we have as individuals and the judgments of morality.

I would think that expressed moral judgment would indeed require or rely upon expressed or latent preference, whether that preference is indeed for something that we judge good for ourselves or bad for ourselves. We can easily have a preference for something that “hurts” us in a sense if we feel that it is the more “moral” choice–in the most extreme case, take the example of an aged invalid who kills himself in order to free up more resources for the community. If he prefers for his community to prosper, and regards himself as too-heavily a net consumer of resources, then his preference would dictate that the moral judgment is not to go on living. On the other side of the coin, we may certainly reject what  can be perceived as “good for us” as immoral based on preference–one only needs to look at people who choose to vote in favor of increasing their own taxes. The individual would benefit from having more money, but his preference for society to provide more services requires him to reject such a benefit as too self-serving.

In the absence of any preferences, I’d think that it would be impossible to form a moral judgment–how could one express what should be done without having a perception of, and desire for, the results of whatever it is that should be done? The very concept of normative argumentation, or arguing for what should be, requires expressing a preference for or against a proposition.

Certainly not all preferences lead to moral considerations: my preference for mint-chocolate-chip ice cream really does not lead me to make any moral judgment of other ice creams or other people. That, however, argues from the wrong direction: not all preferences must lead to moral considerations, but all moral considerations would seem to have their roots in expressed or latent preferences, even (and especially) those preferences wherein the individual in question “loses” but others have the opportunity to gain.

Been a long time…

Yeah, so, this is kind of what happens to most things I start…they linger, unused, for some time. But, I thought I’d give a little update on me and some brief commentary on an issue that makes no real difference.

I’ve left the DC area for a bit to get some things taken care of. I plan to return in the fall, after getting said things done, and should be more capable of dealing with the world at that point. Unfortunately, this will be the cause of a short delay in my graduation, but I’ve come to accept that as a necessary evil.

As for the issue that makes no real difference: will people please, please, please stop talking about Arlen Specter’s party-swap as if it mattered? It doesn’t. Not in the least. Jim Jeffords’ swap mattered because it changed the leadership–Specter’s swap only changes where he runs in the Pennsylvania elections. So please, let the topic die.

D.C. Voting Rights

As promised, here is a non-economics-related post. The Congress is remarkably close to granting voting rights in the House to the D.C. delegate, effectively ending the situation emblazoned on virtually all of the license plates one sees from the District. Now, of course, this bill will certainly be heard before the Supreme Court, as its constitutionality is in question.

To state the problem briefly, the Constitution declares that voting rights in Congress shall be granted to representatives  “of the several States.” D.C., of course, is not a state but a federal district. Strict interpretation of the Constitution as it stands would require that D.C. never receive voting rights in Congress, and numerous people have argued this to be the case.

In the 1970s, an amendment to grant D.C. voting representation was proposed. It passed Congress but failed to garner the approval of 38 state legislatures, and thus expired after 7 years in limbo. Often it is argued that, if D.C. wants voting representation, then another amendment should be proposed. Anything less, it is declared, would violate the dicta of the Constitution.

Of course, I must agree that, literally, the Constitution only allows for voting rights in Congress to go to the representatives of the several states. In this sense, I do tend to agree that one way to resolve the problem would be to pass an amendment. However, I feel that I have to point out something I find rather interesting with the literalism espoused by those who declare that the D.C. Voting Rights Act is unconstitutional.

The First Amendment says, and I quote, “Congress shall make no law…abridging the freedom of speech…”. Look at that phrasing again: shall make no law. That is as absolute a statement of legal restriction as can be made. However, we abridge free speech all the time. Incitements to imminent lawless action? Criminal. Libel and slander? Criminal. Various kinds of obscene or pornographic material? Criminal. These laws are all violations of the Constitution when read literally. There is no wiggle room with a literal interpretation of “shall make no law.”

This is why I do not read the Constitution literally. I think incitements to imminent lawless action should be criminal; libel and slander should be criminal, etc. Allowing D.C. a voting representative, while in a  literal sense unconstitutional, is certainly at least as reasonable an action as criminalizing slander. So, literalists, which way do you want it: D.C. gets voting rights and we keep laws I’m sure most of you want to keep, or we continue with your literalist fetish and, along with denying D.C. a vote, strike down every single law which abridges the freedom of speech (and that is just for a start).

Pick one.

Quick link

There will be some non-economics-based posts soon, but I had to post this link since it matches up well with my recent postings…this is essentially exactly what I would be arguing for, given the opportunity to shape policy.

The only bad thing about it is the name…Maverecon is too much after nearly 2 years of the original maverick…

A Metaphor

So, I’m going to keep rolling on the same track of some previous posts and offer some more thoughts on economics and the crisis…

As was previously indicated, much debate now centers on two linked areas: first, what specific regulations should be implement; and second, what assumptions should underlie that scheme. Obviously, the latter should be decided before the former. Unfortunately, I think the wrong assumptions are still being made.

Allow me to explain with the metaphor which I cleverly suggested would be in this post by titling it “A Metaphor.” Construction projects, like bridges and skyscrapers, are built with factor of safety. Basically, they are overbuilt, intentionally, because of the disastrous results which would follow a collapse. No one in their right mind builds a bridge expecting it never to be hit with a hurricane-force wind, for example. Indeed, one assumes such a possibility will occur and then one over-compensates for it, even though it is bound to be a rare scenario (if your bridge isn’t in Florida, say). I assume you can guess where I’m going with this…

I am of the impression that irrationality is far more common in economic decisionmaking than most people would like to believe. Of course, rational decisions are made and they have led to great developments, but the potential for irrationality is seemingly heavily denied. Indeed, the idea that the economy had entered into an irrational phase was virtually rejected, what with the housing bubble at the center of the current crisis being largely ignored until after the fact. However, one does not even have to agree with me on the commonality of irrationality for the following logic to hold—one can believe that irrationality is as rare as the hurricane-force wind for which the aforementioned bridge is overbuilt.

The regulatory schemes supporting the economy need to be overbuilt because of the disastrous consequences which result from collapses. Going into the current crisis, our bridge was apparently designed to stand up to little more than a light breeze—so long as the weather was pleasant, all the joints which had been perilously constructed would hold together. However, once the wind started to blow, the whole construction came tumbling down due to the way in which we let it be built.

Now, I’m not going to deny that overbuilding is costly and resource-intensive. Instead of being able to build three bridges of dubious stability with one’s resources, one is only able to make one (much more resilient) bridge. Translated to the economy, overbuilding our regulatory schemes will restrict certain paths of growth and prevent certain actions which could result in moneymaking opportunities. However, if our economy is more resilient, I would suggest that it is a worthwhile trade to consider. Of course, a balance should be struck—one does not build a bridge with a safety factor of 20—but our current regulatory framework was evidently so weak that a significant amount of augmentation is required.

Quality article

The Wall Street Journal has a good interview piece (shocking, I know) with Nouriel Roubini, aka Dr. Doom…very much worth the time to read.

A follow-up to the previous post…

So, I realized that I didn’t include a pontentially useful tidbit in my previous post. This has to do with recognition of market failures, such as those which result from incomplete information. Neoclassical economists–at least, the serious ones—acknowledge that markets do have failures, but they tend to believe that markets will tend to sort themselves and that rational decisionmaking will dominate irrational decisionmaking. Unfortunately, there is no good evidence that this is the case, making it another belief. I don’t think anyone would claim that the present crisis is the result of rationality, or that the S&L crisis, particular sub-crises of the Asian financial crisis of 1997-1998 (Hong Kong in particular)…I could keep listing them, but I think the point is evident.

Of course, government is more than capable of failure, as it is another collection of people just like a market. Just to pre-empt people, I certainly do not advocate a centralized, dirigiste economy. Rather, I’m looking for reasonable controls to protect people from our collective ability to be completely irrational…

Self-restraint, Greenspan, and Beliefs

There are several issues which I tend to have with Alan Greenspan’s economic ideology, most of which center around his strong tendency to believe in things. Now, I have nothing against believing in things per se, but, when it comes to believing in things against all available evidence, then I begin to have a problem. I could write several posts about different aspects of this—which I reserve the right still to do—but for now I’ll just have a brief comment on this observation of his:

“We need not rush to reform. Private markets are imposing far greater restraint at the moment than would any of the current sets of new regulatory proposals.”

So, the justification for not rushing to reform anything is that private markets are “imposing far greater restraint” than any regulatory proposal? Okay, we should not be too hasty in assembling new regulatory schemes—I can agree with that—but is not this “far greater restraint” which the private markets are exercising simply the flip side of what got us here in the first place? We have gone from the irrational exuberance of the tail end of the Greenspan era/beginning of Bernanke and into a  time of irrational suspicion and doubt. Even though he admits that heightened regulatory rules will be necessary, Greenspan still believes that restraints on the market should be based on the assumption of a rational market controlling its own urges—this is precisely contradictory to all available evidence. Markets do not function rationally as a norm; indeed, it seems that irrationality predominates and has throughout history.

Markets are collections of people, all of whom are acting without coordination, with incomplete information, and with a distinct preference for maximizing personal gain. None of the preceeding is meant as a value judgment. Rather, it is a simple definiton which leads to some distinct conclusions. The orthodox/neoclassical economics to which Greenspan subscribes requires that rational decisions be the result of this mix—I would question why anyone would come to such a conclusion. Without complete information, one is at best approximating rationality when one makes a decision—one cannot know that it is rational without knowing the entirety of the situation. Without coordination, people can make individually rational decisions but are unable to control the actions of others. To use a basic example, you may have the perfect information required to know that your bank is illiquid but solvent, but you cannot stop everyone else from engaging in a run which breaks the bank. In the neoclassical world, bank runs on solvent institutions would never occur—but they have in our world (in order to pre-empt such irrational actions, the FDIC was created, because it was understood that people would not tend towards rationality).

If irrational behavior is present in even very simple situations like the one just illustrated, it boggles the mind to imagine that highly educated, intelligent people can believe that rationality predominates in far more complex situations. This is where we return to the issue of belief—neoclassical economics has a very strong belief  in the rationality of actors in the market and thus in the market itself tending towards rationality. Designing a regulatory system based on this assumption, which Greenspan prefers, is foolish.

Instead, what is needed is an assumption of irrationality with which to guide our development of new regulations—whether that leads to attempts to provide information and coordination abilities to enhance the possibility of rational decisionmaking or whether it leads to tight constraints on the complexity and independence of the market from control, it will have a better end result than a regulatory scheme which has as its basis a patently false assumption.

Songsmith FTW

So, people love to heap hatred on Microsoft Songsmith. To them, I say, “Watch this.“

Memento Mori

So, I got my new driver’s license in the mail and happened to glance at the expiration date. Upon doing so, I noticed that it didn’t expire until my 30th birthday. I was thus mildly unsettled to consider the implications of such a reality, as, at 30, one has, statistically speaking, lived approximately 40% of one’s life…there is much to do, and little time!