Monday, September 21, 2009

Don't restrictions on freedom affect the quality of life?

It is hard to believe that the Commission on the Measurement of Economic Performance and Social Progress would consider that freedom and personal responsibility have little relevance to the quality of life. However, I haven’t been able to find any discussion of freedom or personal responsibility in their recently published report. The Commission, whose members include Amartya Sen and Joseph Stiglitz along with a list of other prominent academics, was established by the President of France, Nicolas Sarkozy.

The Commission’s report seems to have plenty to say about the limitations of GDP, and various issues concerning measurement of quality of life and sustainability, but the closest it comes to recognition that freedom might have some relevance to the quality of life seems to be in a sentence discussing freedom to exercise political voice. While it is good for people to be permitted to complain about restrictions on their liberty, it seems to me that it would be better if they had less restrictions on liberty to complain about. The authors give the impression that they consider that only the latter two words in the call for “liberty, egality and fraternity” are relevant to the measurement of social progress.

I would have been pleasantly surprised if the Commission’s report had endorsed the theme running through this blog that human flourishing must be a self-directed activity and that liberty is necessary for self-direction. (Some posts discussing these concepts are here, here and here.)

However that would have been too much to hope for. Although the relevance of rights is widely recognized in discussions about political institutions, the importance of the right to self-direction is often overlooked when it comes to discussions of the merits and demerits of alternative policies. Rights are routinely overridden when democratically elected governments consider that more important matters are at stake such as “social justice” or even the well-being of the people whose rights they infringe.

I had hoped, nevertheless, that the report would give some recognition to research findings that people value freedom. For example, it could have mentioned John Helliwell’s finding that people tend to have higher life satisfaction in countries in which a high proportion of the population are satisfied with their freedom to choose what to do with their lives (see NBER Working Paper 14720). The Gallup World Poll shows that satisfaction with freedom in France (82%) is somewhat higher than the U.K., but lower than in the U.S. (88%), Australia (91%) and Denmark (96%).

The fact that the vast majority of people in democracies tend to be satisfied with their freedom is related to economic freedom and civil liberties (as shown here). In addition, people would not be expected to feel that their freedom is being unduly restricted unless they are not permitted to do things that they actually want to do. But their sense of personal competence and self-respect must be weakened when responsibility for important aspects of their lives – such as family health care, education and saving for retirement - are taken out of their hands by paternalistic governments.

There is some survey information available to compare the extent that people in different countries feel that they have personal responsibility for what happens in their lives. Data from the World Values Survey shows that French people tend to feel that they have less control over their lives than people in the U.K., U.S. or Australia. The French also scored lower than people in the U.K, U.S. and Australia on the Gallup World Poll question asking whether respondents were proud of something they did yesterday. The Commission seems to overlook such matters.

I am sympathetic to the Commission’s view that more research should be done to assess the links between various dimensions of the quality of life. It is disappointing, however, that the Commission does not recognize freedom as an important dimension of the quality of life.

Postscript, May 2012:
In retrospect, I should have read the report more closely. It contains at least one fairly strong statement of the value of freedom: 'what really matters are the capabilities of people, that is, the extent of their opportunity   set and of their freedom to choose among this set, the life they value'. I am particularly impressed that 'freedom to choose ... the life they value' is not qualified by weazelwords which cast doubt on the ability of people to choose lifestyles that they value.  (See para 29.)

Friday, September 11, 2009

How credible is Rudd's spin on the history of economic reform?

In his comments in “The Australian” (8 Sept. ’09) on Paul Kelly’s new book, “The March of Patriots”, Kevin Rudd attempts to make a distinction between the economic reforms of the Hawke-Keating Labor governments and those of the Howard conservative government. Rudd describes the Hawke-Keating reforms as “modernising our economy to make it more competitive in a rapidly globalizing world”. He describes the Howard reforms as “neo-liberalism” or “a form of free market fundamentalism that has little in common with the philosophy and policy of the reforming centre of Australian politics to which we belong”.

This attempt to associate the Howard government with free market fundamentalism is typical Rudd-speak. This time, however, Rudd seems to have spun himself into a corner by also claiming that the Howard government was lazy. Rudd states: “we would describe our opponents as indolent: perhaps not always opposing the great transformational reforms engineered by Labor during its 13 years in office but hardly adding to that reform agenda during their 12 years in office”. Can an indolent conservative government be guilty of excessive zeal in promoting market-oriented reforms?

Peter van Onselen noted this apparent contradiction (in an article in “The Australian” on 9 Sept. ’09). He also updated a table in a book by Andrew Charlton (senior economic advisor to the PM) to enable the economic reform records of the Hawke-Keating, Howard and Rudd governments to be compared. The table suggests that the Howard government made some substantial reforms and that the Rudd government has tended to roll back previous economic reforms. (Unfortunately the table does not seem to be available on line.)

The table prepared by van Onselen is informative, but it would be nice to be able to compare the economic reform efforts of the three governments quantitatively. This is attempted in the chart below using economic freedom indexes constructed by the Fraser Institute and Heritage Foundation.

The chart confirms that the Hawke-Keating governments had strong neo-liberal credentials, but the two indexes provide a somewhat contradictory picture of the Howard government. The Heritage Foundation index even suggests that the Rudd government has made positive contributions to economic freedom. It might be interesting if someone could investigate why this is so and why two indexes seem to tell different stories about the Howard government.

However, while the history is interesting, the future position of the Rudd government on economic reform will be far more important to the future well-being of Australians. The one hopeful sign in Kevin Rudd’s latest graceless contribution is his praise for the reforms of the Hawke-Keating era. When he was elected to government Rudd seemed to want to be indistinguishable from John Howard in all important respects. Then he wrote an essay in which he seemed to have adopted the attitudes and language of Hugo Chavez. Perhaps he has now recognized that it is not necessary to choose between John Howard and Hugo Chavez (to paraphrase some infamous Rudd-speak).

Would it be too optimistic to interpret Rudd’s latest spin as a signal that he has now adopted Paul Keating as his role model?

Tuesday, September 8, 2009

What do we know about the neurology of human flourishing?

“Human flourishing is fundamentally a self-directed activity. ... Flourishing does not consist in the mere possession and use of goods that might be necessary for a flourishing life. Rather, human flourishing consists in a person developing the skills, habits, judgements and virtues that will, in most cases, achieve the needed goods. The goods must, in a central way, be made one’s own”: Douglas Rasmussen and Douglas Den Uyl, “Norms of Liberty”, 2005: 86.

Is there a readable book about the neurology of human flourishing? The only book that I am aware of that comes close is “Iconoclast”, by Gregory Berns. This book discusses things that have probably happened at a neurological level when famous people have achieved extraordinary things. The brain functions and processes that Berns writes about, however, seem to me to be relevant to the character development and flourishing of all humans.

What are the factors most likely to prevent individuals from achieving according to their potential? Anyone writing a list from the top of their head would be likely to include such things as: getting one’s thinking stuck in a rut; being constrained by fear of the unknown or fear of ridicule; social environments that reward conformity rather than individuality; and lack of skills in social networking. Gregory Berns discusses these factors.

Points made by Berns include the following:

  • In order to think creatively and imagine new possibilities it is necessary to break out of the cycle of experience-dependent categorization. We need novel experiences in order to see things differently.
  • Constraints associated with conditioned fear responses can be inhibited through cognitive reappraisal (re-interpretation of information). For example, fear of uncertainty or ambiguity can be inhibited if the situation is viewed as an opportunity to gain additional knowledge by experimenting.
  • People have a strong tendency to follow the herd in order to avoid activating their fear systems. But one dissenter is typically enough to break the herd effect.
  • Important social networking skills include promoting familiarity with the goods you are selling (because familiarity defines what people like) and establishing a reputation for being trustworthy.

Do we need a neurologist to tell us such things? Probably not, but it is good to know that there is neurological evidence supporting at least some of the claims made by personal development practitioners.

There is a fair amount of discussion in the book relating to wisdom and knowledge, courage, humanity and justice, but I don’t think there is much discussion of temperance or transcendence. One could hardly have expected all the human virtues to be discussed in the book, however, because Greg Burns did not actually set out to write a book about the neurology of human flourishing.

Friday, September 4, 2009

What practical measures can be taken to improve policy outcomes in democracies?

There seems to be increasing scepticism these days about the worth of democracy. The following quote from a post by John Humphreys on the “Thoughts on Freedom” blog provides a good example of what I mean:

“Democracy has become a new faith. Simply saying the word supposedly makes an argument stronger, as though there is some inherent morality in two wolves and a sheep voting on what to have for dinner. Democracy has it’s uses — it allows you to change government without any killing and it puts downward pressure on corruption. But I doubt that it leads to better policy, and indeed I think it has a built-in bias towards ever more totalitarian policy controlled by special interest groups ...”

In my view Humphreys is wrong. There is an inherent morality in democracy when it is perceived appropriately as a system in which all members of the polity have equal potential to influence the construction and operation of the political order. The problem is that it is often seen to be legitimate for some groups to use democratic politics as a means to obtain benefits at the expense of others. Such attitudes should be denounced as immoral for the same reason that the attitude that the market economy exists to enable some people to benefit through opportunistic exploitation of others is widely denounced as immoral. As James Buchanan has emphasised, the viability of a market economy and a democratic political system both depend on norms of mutual respect and reciprocity.

The political system in most democratic countries does not have huge problems in dealing with blatant attempts by some people to benefit at the expense of others. Democratic politics can be effective in dealing with corruption (as John Humphreys acknowledges). It is worth noting, however, that corruption often goes undetected for long periods where dedicated institutional arrangements do not exist to detect it.

I think that democratic politics are also reasonably effective in dealing with unsubtle attempts at vote buying, for example where a governing party promises additional benefits to residents of marginal seats in a desperate attempt to hold onto or win office. Parties initiating such tactics risk being perceived by voters as acting unfairly - and hence unworthy of being elected to government.

It is much more difficult for voters to deal appropriately with complex issues such as those involved in trade protectionism. A recent policy brief prepared for the Lowy Institute by Bill Carmichael, Saul Eslake and Mark Thirlwell describes the nature of the problem as follows:

“Most of us have a limited understanding of what is at issue in decisions about protection. Our response to the prospect of opening domestic markets is influenced by the information available to us about the domestic consequences. In the absence of public information about the economy-wide gains at issue for the community as a whole, and in view of the more visible costs to prospective losers, the latter have naturally found support at home. As a result, governments have had difficulty mobilising a domestic commitment to open domestic markets to international competition” (“Message to the G20: defeating protectionism begins at home” p 7-8).

The solution advocated by the authors is “a domestic discipline on national decision-making that promotes wide domestic awareness of its economy-wide costs.” Rather than attempt to summarise the proposals here I recommend that people should read them in the context in which they are presented in the paper.

The thought that I would like to leave you with here is that there is scope for policy outcomes in democracies to be improved if more intellectual effort is put into constructive efforts of the kind presented in the Lowy paper.

Addendum by Bill Carmichael:

It should not surprise us that those responsible for articulating the theoretical basis for market economics and democracy--people like John Stuart Mill, David Hume and Adam Smith--placed a condition on the relevance of each in enhancing the quality of governance and community welfare. The condition was, and remains, the existence of a well informed community in the case of democracy and well informed consumers as the basis for market economics. The message from these theoretical founders is that the value (in each case) is not in the theory, but its practise. That is the rationale for the domestic transparency arrangements established in Australia in the early 1970's, structured to operate outside government and independent of private interest groups. Those arrangements were put in place for a specific purpose--to make our democratic system and market economics relevant in decision-making on protection issues, by providing the information governments, communities and consumers need to promote decisions that enhance community welfare. I believe such arrangements have a wider application than decision-making on protection In their absence, our expectations about what the community gains from market economics and democratic governance are likely to lack substance.