Thursday, February 25, 2010

Is a great big new tax such a bad idea?

‘Where have you been? Have you been hiding from me?’ I saw it was Jim speaking when I looked up from reading the paper. I hadn’t exactly been avoiding him, but then I hadn’t really missed not seeing him for a few months.

Jim asked me if I could give him a lift home. He gave me some long and convoluted explanation about why he needed a lift, but I thought he was probably just looking for a captive audience - someone to talk to about something that was on his mind.

He certainly did have something on his mind. As soon as we started off he asked me what I thought of the outcome of the Copenhagen climate change summit. I admitted that I thought it was fairly predictable. Given the way western governments were approaching the issue it would have been hard for China and India to accept that they were serious about achieving concerted action even if the science was settled. I said that if governments thought the stock of greenhouse gas emissions was a serious problem they would be focusing on the incentives needed to develop technologies that would reduce the stock of emissions, rather than just attempting to cap the growth of emissions.

Jim said: ‘I thought that emissions trading schemes, like the one Kevin Rudd is proposing were meant to provide appropriate incentives for firms to develop better technologies.’ I responded that in my view Rudd’s ETS stood for Enormous Transfer Scheme. I suggested that the Australian government was attempting to confuse welfare issues with environmental issues in order to smuggle income redistributions into the scheme. I added that it was crazy for Australia to go it alone without concerted international action and that if we are concerned about incentives for developing new technologies we should be thinking in terms of explicit taxes rather than cap and trade systems.

Jim said: ‘Ah, that’s Warwick McKibbin’s view isn’t it.’ While I was still pondering whether I had under-estimated Jim’s knowledge of the topic, he pointed to a house we were just passing. ‘Look at that abomination’ he said. I assumed that he was referring to the solar panels that covered a substantial part of the roof. I said: ‘I don’t think they look too bad, actually’. ‘It’s not how they look’, he replied. ‘Every time I pass that house it reminds me that the government subsidies that encourage people to put those things on their roofs are an abomination. Solar panels are about the most costly method there is of generating electricity. If governments were really serious about climate change they would be spending taxpayer’s money more wisely so we get bigger bangs for our bucks.’

I observed that Jim’s comment must mean that he was obviously not a fan of Tony Abbott’s winner-picking proposals to reduce CO2 emissions. Jim said: ‘I wouldn’t mind so much if Abbott could actually pick a winner to subsidize. The technologies that he has picked so far are either proven losers or have no track record. If he really wanted to pick a technology that had some hope of competing with fossil fuels without huge subsidies he would advocate the nuclear power option.’

I couldn’t help asking: ‘Does that mean that you would support revival of the proposal to build a nuclear power station at Murray’s beach on Jervis Bay?’ When I glanced across to see how Jim was reacting to the idea of a nuclear power station in his own back yard, he growled: ‘Look where you are going!’

After what seemed like a long silence, Jim asked: ‘What do you think of no regrets policies?’ I replied: ‘What, like the federal government’s home insulation scheme?’ Jim replied: 'I think the government might actually be regretting introducing that scheme with so much haste last year. No, what I meant was a great big new tax on carbon emissions'.

I was dumbfounded. When I asked Jim to explain how this could be a no regrets policy he asked me whether I had supported the introduction of the GST as a broad-based tax to replace less efficient forms of taxation. When I nodded he then asked: ‘Do you think a tax on carbon emissions would be a more efficient way of raising revenue than existing taxes on insurance and stamp duties on property transfers?’ I had to admit that it would probably be more efficient than some other taxes. Jim then said: ‘So wouldn’t it make sense to introduce a great big new tax on carbon emissions to replace other taxes? If we do this we might even be able to have an impact on global emissions by persuading governments in some other countries that this is a good idea’.

While I was pondering how to respond Jim laughed and said: ‘I don’t expect you to see anything about this on your blog. Judging from what you have written there about climate change I expect that the polar ice caps would need to melt before you would support introduction of a tax on carbon emissions as a precautionary measure’.

Sunday, February 21, 2010

Does persistence provide a basis for morality?

Before I write anything further I should clarify what I mean by persistence in this context. Survival is probably the most appropriate synonym. The question was prompted by Martin Walker’s book, ‘Life! Why we exist ... and what we must do to survive’ (2006). More information about the author can be found on his blog.

Martin Walker’s book is an extremely well-written attempt to promote a better understanding of the fundamental principles that explain why we exist and to use those principles as a basis for thinking about how we can live meaningful lives. The book begins with a story about a child watching two old men playing chess and wondering who is winning. Most of the book has been written from the standpoint of a person who is observing the game of life in order to infer the most basic rules and then to consider what implications those rules have for the way the game is played.

The main message of the first part of the book is that the evolutionary principles that explain material existence and the emergence of life are ‘the principles of coming into being and persistence’. In later parts of the book the author uses those evolutionary principles to make moral judgements.

I expect that some other readers would share my initial concern that the concept of persistence does not seem to be a particularly appealing basis for a system of ethics. The problem arises in part because persistence is associated with survival of the fittest and concepts like the selfish gene and even ‘might makes right’. However, the author manages to argue that we should have regard to the effects of our actions on the community and species, and on other living things. He suggests: ‘To answer any moral question pertaining to living organisms we must ultimately determine whether the act of choice will tend to make a positive contribution to the persistence of life as a form’ (p. 81).

How does Martin make the transition from the persistence principle, as an explanation of what ‘is’, to the persistence principle, as an ethical principle providing guidance on how we ‘ought’ to behave? It may be worth noting in passing that he rules out the idea that there is merit in acting in accordance with an ultimate purpose that lies behind persistence. He claims that material existence has no purpose (p 31-2). Martin’s transition from ‘is’ to ‘ought’ is based on parallels between moral choices made by humans and the survival instincts of non-conscious organisms that lead them to act in ways that will benefit their own persistence or the persistence of their relatives or communities. He writes: ‘As conscious organisms, we use concepts of good and bad to guide our actions, a process that simply extends the non-conscious process’ (p. 65). The final step in the transition from ‘is’ to ‘ought’ is made with an explicit value judgement:
‘That which contributes to our persistence, or the persistence of our species, or the persistence of life as a form is definitely better than that which does not. Contribution to persistence is good, detriment to persistence is bad’ (p. 65-6).

In my view it would be difficult for anyone to mount a convincing argument against such sentiments - except perhaps on the grounds that they do not go far enough. Persistence is good, but flourishing is better!

This brings me to my only critical point. While reading this book I found myself wondering at various times how the author’s views relate to those of Aristotle, Ayn Rand, Robert Nozick in ‘Invariances’ and Matt Ridley in ‘The Origins of Virtue’. The part of ‘Invariances’ dealing with ethics seems highly relevant (I have written a very brief summary here). I think many of Matt Ridley’s observations in ‘The Origins of Virtue’ are also highly relevant. I would particularly like to see further discussion of Ridley’s view that environmental ethics do not come naturally to humans: ‘Yet the conclusion that seems warranted that there is no instinctive environmental ethic in our species – no innate tendency to develop and teach restrained practice. Environmental ethics are therefore to be taught in spite of human nature, not in concert with it. They do not come naturally’ (p 226). I wonder whether that claim is supported by people who have conducted research on environmental norms, e.g. Elinor Ostrom.

If Martin Walker had spent more time in his book considering the views of other people I would have found that illuminating. It would, however, have made the book longer and more difficult to read. I think the main virtue of this book is in providing a clear and simple exposition of a point of view that deserves serious consideration.

Wednesday, February 10, 2010

How far can Ayn Rand's ethical egoism be defended?

In a post a few months ago I discussed whether Ayn Rand actually viewed selfishness as a virtue. I suggested that in arguing that selfishness is a virtue she was adopting a peculiar view of selfishness because the heroes of her novels did not seem to me to be particularly selfish.

The point was explained more clearly by Neera Badhwar in the recent discussion of Ayn Rand’s ethical thought on Cato Unbound (What’s living and dead in Ayn Rand’s moral and political thought):
‘Like Aristotle, Rand holds that the virtues, including justice, are not only means to the agent’s happiness, but also an essential, constitutive part of it. Julia Annas calls Aristotle’s ethical egoism a “formal” egoism because it essentially incorporates regard for others. Rand’s eudaimonistic egoism, likewise, is a formal egoism’.

Some other participants in the Cato discussion were not so sure that Rand viewed the virtues as an essential, constitutive part of the agent’s happiness.

Roderick Long noted that Rand appears to waver between treating virtue as a constitutive part of the agent’s own interest and as an instrumental strategy for attaining that interest: ‘The constitutive approach predominates in her novels: the chief reason that Rand’s fictional protagonists ... do not cheat their customers, for example, is pretty clearly that they would regard such parasitism on the productive efforts of others as directly inconsistent with the nobility and independence of spirit that they cherish for themselves, and not because they’re hoping that a policy of honesty will maximize their chances of longevity’. He suggests, however, that in her philosophical writings that ‘her emphasis began to shift, though never unequivocally, to the instrumental reading’.

Other participants suggested that Michael Huemer had an instrumental reading of Rand's views in mind in his initial contribution to the discussion. Huemer suggested that: ‘ethical egoism posits that the only thing that ought to matter intrinsically to me is my own welfare—for me, my own welfare or happiness is the only end in itself. It follows from this that I ought not to regard other individuals as ends in themselves; rather, I should see them only as means to my happiness—just as I see everything else in the world. This is a very simple and straightforward implication of the theory. I cannot hold my own well-being as the only end in itself, and simultaneously say that I recognize other persons as ends in themselves too’.

In defending the constitutive interpretation, Neera Badhwar made the point that ‘Rand shows her philosophy in the worlds she creates in her novels better than in her non-fictional statements’. I think this is a good point. Rand’s ongoing influence stems mainly from her novels rather than her philosophical writings.

Much of the Cato discussion centred on the question of whether what is good and right for one individual can ever conflict with what is objectively good and right for another individual. Douglas Rasmussen expressed his view that ‘if human flourishing is individualized and agent-relative ... then this would mean that human flourishing is different for each person, and thus it is possible for there to be conflict—that is, there is no way that one can in principle rule this out’.

Roderick Long was closest to endorsing Rand’s view that there can be no conflicts between two people’s rational interests: ‘One’s individual nature can make the requirements of human nature more specific, but it cannot contradict them. ...So the fact that the human good is individualized differently for different people doesn’t entail that one person’s good can conflict fundamentally with another’s.’

Neera Badhwar responded by suggesting that such fundamental conflicts, including situations where there are two equally good candidates for one job, occur frequently.

I think it is appropriate to give Douglas Rasmussen the final word in this highly selective summary of a complex discussion:

‘I do think that it is possible for people to cooperate peaceably. This is why basic negative rights are so important, but the issue here between me and Rand seems to be whether the existence of such rights depends on the assumption that what is objectively good for one individual cannot ever conflict with what is objectively good for another. I don’t assume this. She did.’

When I think further about the example of two equally qualified job applicants competing for one position it seems to me that this is a fairly trivial example of conflict of interest because the convention that the employer should choose between the applicants is not in question.

However, not all conflicts between what is good or right for different individuals can be easily resolved by reference to widely accepted conventions about the rights of various parties. For example, individuals can make rational decisions about the kind of music that is good for their families to listen to and yet come into conflict with their neighbours if they play that music loudly enough to interfere with their neighbours’ enjoyment of peace and quiet. Some might try to argue that such conflicts cannot occur among rational people because rational people would not play their music loudly enough to upset their neighbours. I think that stretches the definition of rationality too far because it implies advance knowledge of how neighbours will react. In my view people who find themselves involved in such conflicts are likely to be able to negotiate better solutions if they openly acknowledge their different interests and, most importantly, view mutual respect and peaceful co-existence as of over-riding importance.

Sunday, February 7, 2010

Who can tell the history of the future?

Jacques Attali thinks he can. Attali, author of ‘A Brief History of the Future’, is an eminent French economist who was an advisor to President Mitterrand during the 1980s and has since become a big wheel in microfinance. On the cover of the book, Alvin Toffler is quoted as describing Attali as ‘one of the most brilliant, original minds in Europe’. That is one of the reasons why I bought the book.

As the title suggests, Attali has written the book as though he is writing the history of what is going to happen over the next century or so. And the book is written as though ‘history’ drives what happens in the future. For example, near the end the author suggests: ‘History will thus drive the integration of collective intelligences into a universal intelligence; it will also be endowed with a collective memory that will preserve and accumulate its knowledge. ... Universal intelligence will even be able to conceive of machines in its own service, defending the common good on its behalf. ... Universal intelligence may next bring about an intelligence peculiar to the species, a hyperintelligence that will act in its own interests ...’ (2009 edition, p. 273).

I strongly support attempts to consider the possible future implications of economic and other factors that are impacting our lives and the environment in which we live. At its best, this is what Attali’s book does. At its worst the book seems to me to read like a work of science fiction with inadequate plot development.

The first part of Attali’s book contains a history of capitalism as a story in which the economic core moved progressively from one city to another – beginning in Bruges around 1200 and moving in turn to Venice, Antwerp, Genoa, Amsterdam, London, Boston, New York and Los Angeles. I found this part of the book to be interesting and illuminating. I think the author makes the point fairly convincingly that new core cities often benefit as much from adversity affecting existing cores and potential rivals as from their own intrinsic advantages. Nevertheless, Attali has not convinced me that it makes sense to think of the current world economy as having a single city core in Los Angeles, despite all the technological advances that have occurred in California in recent decades.

The main phases of Attali’s history of the future are: the end of the American empire; the emergence of a stateless planetary empire (an oxymoron ?) characterized by global markets, individualist values and narcissistic ideals; then a series of wars and possibly hyperconflict; and finally, the emergence of planetary hyperdemocracy.

Why can America’s influence be expected to wane? Attali writes, unconvincingly in my view, of ‘irretrievable scarcities’ and ‘stagnating technology’, but he also suggests that like other major economic powers in the past America will ultimately be brought down by a financial crisis. According to Attali’s timetable, this is likely to occur around 2025 or 2030. That seems to be well within the realms of possibility if fiscal deficits and associated foreign borrowing are not brought under control. Unlike many other countries, however, the U.S. has a reasonable track record over more than a century of returning to responsible fiscal management when a major fiscal crisis threatens. While America seems likely to become more like Europe during the next few years, I think the odds are that fiscal responsibility will be restored in the U.S. before it reaches the stage where Greece, for example, now finds itself.

What happens after the end of the American empire? It begins promisingly enough with fulfillment of what might be called an anarcho-capitalist’s dream - big governments collapse, like piles of wet manure, as provision of services such as health care, education and security are handed over to the private firms.

Attali suggest that insurance companies would play a major role in this globally privatised society. They would gradually come to dictate planetary norms by penalizing smokers, drinkers, the obese etc. who represent high insurance risks. They would require clients to refrain from behavior that might increase insurance risks and introduce surveillance systems to ensure that contract conditions were met. That sounds like a healthy dose of reality to me. Why should people whose behavior makes them high insurance risks be subsidized by others? Those wanting to avoid surveillance would presumably have the options of paying higher premiums or carrying their own risks.

However, Attali’s vision of the globally privatised society is alarming. He suggests that while Africa vainly struggles to construct itself , the rest of the world will begin to deconstruct itself under the ‘hammer blows of globalization’. He writes: ‘Tomorrow’s Africa will therefore not resemble today’s West. Rather, it is tomorrow’s West that will resemble today’s Africa’ (p. 184). I don’t think readers are ever told why this will happen. Attali suggests that weakened states will no longer be able to afford to provide income support to the poor, but supporting the poor will not be a burden if globalization provides widespread economic opportunities. At one point (p. 255) he suggests that ‘market democracies have travelled a large part of the road predicted by the author of Das Kapital’. Perhaps he is implying that we should look for an explanation of his fantasy about the effects of globalization in the predictions of Karl Marx about the consequences of technological change and capital accumulation.

The next part of the story is about wars. To cut a boring story short, Attali tells us that there will be disaffection everywhere and it might all end in hyperconflict. After that, however, everyone will live happily ever after in a world characterized by microfinance and voluntary organizations run by nice people a lot like Mother Teresa and Melinda Gates. Attali’s version of utopia (thankfully he refrains from calling it hyperutopia) sounds OK to me. I do have concerns, though, that the hyperintelligence, ‘that will act in its own interests’, might actually be the ultimate Leviathan of big government. As in ‘Star Wars’, the empire strikes back!

Perhaps the most appropriate way for me to end this review is with a message for readers living in the next Century: May the Force be with you - and protect you from the hyperintelligence.

Friday, February 5, 2010

Does the concept of national character make sense?

In my last post I noted that J S Mill argued that Jeremy Bentham did not qualify as a ‘true teacher of social arrangements’ because he was unable to point out how ‘national character’ ... ‘can be improved, and how it has been made what it is’.

It is clear that Mill saw national character as fundamental to human flourishing: ‘That which alone causes any material interests to exist, which alone enables any body of human beings to exist as a society, is national character: that it is, which causes one nation to succeed in what it attempts, another to fail; one nation to understand and aspire to elevated things, another to grovel in mean ones; which makes the greatness of one nation lasting, and dooms another to early and rapid decay’ (Bentham, 1838).

What is national character? A few years earlier, Mill had provided a sketchy outline of factors influencing national character in the context of considering the limitations of Bentham’s approach. He wrote: ‘A theory, therefore, which considers little in an action besides that action’s own consequences, will generally be sufficient to serve the purposes of a philosophy of legislation. Such a philosophy will be most apt to fail in the consideration of the greater social questions—the theory of organic institutions and general forms of polity; for those (unlike the details of legislation) to be duly estimated, must be viewed as the great instruments of forming the national character; of carrying forward the members of the community towards perfection, or preserving them from degeneracy’ (Remarks on Bentham’s philosophy, 1833).

What Mill had in mind in writing about national character seems to involve, among other things, what Douglass North has referred to as informal institutions or informal constraints. North’s institutional economics does not attempt to provide the explanation of national character that Mill criticized Bentham for not providing. By focusing explicitly on institutions, however, North has been able to make substantial advances towards a framework for analysis of social progress.

North writes: ‘In our daily interaction with others, whether within the family, in external social relations, or in business activities, the governing structure is overwhelmingly defined by codes of conduct, norms of behavior, and conventions’ (‘Institutions, Institutional Change and Economic Performance’, 1990: 36). He has explained the influence of such informal institutions on economic performance in the following terms: ‘Effective traditions of hard work, honesty and integrity simply lower the cost of transacting and make possible complex productive exchange. Such traditions are always reinforced by ideologies that undergird those attitudes’ (p 138).

Where do these ideologies come from? North suggests that our subjective perceptions ‘are continually being filtered through existing (culturally determined) mental constructs’. (p.183). At the level of the individual, ideological change can occur in a variety of ways. For example, it can occur as a consequence of changes in economic conditions that cause people to change their mental models of how the world works, changes in communications costs that influence how easily people can share their values and perceptions with others, and through institutional changes that influence the cost of expressing convictions that are at variance with conventional wisdom.

It seems to me that North provides a useful framework in which to consider the concerns that Mill expressed about mass media leading to the ‘growing insignificance of the individual in the mass’ which ‘corrupts the very foundation on the improvement of public opinion itself’ (See: Are J S Mill’s view about progress still relevant today?). Mill was concerned that the growth of the mass media would result in the weakening of ‘the influence of the more cultivated few over the many’. Paradoxically, those whom Mill would have viewed as ‘cultivated’ - people like himself - subsequently had a strong influence on public opinion on issues such as slavery and the emancipation of women. Nevertheless, I doubt whether Mill would consider that there has been much improvement in ‘national character’ since his time.

Mill’s approach seems quaint today because he was asserting that the views of a particular class of educated people should be considered to be cultivated and set above those of others. In my view he was right to recognize that some opinions deserve more respect than others but it is up to individual members of the public to decide for themselves whose views deserve respect.

Even if the public could be confident that opinions of experts are founded on a basic respect for truth there would remain the huge problem in choosing between conflicting expert opinions on complex topical issues. How can differing expert views be evaluated in a context which informs public opinion and discourages intervention by those seeking to confuse issues for economic or political advantage? How can the informal rules of the game of public discussion of topical issues be improved to encourage the development of public attitudes on public policy issues that are consistent with widely-accepted ethical values? Can the informal rules be changed so that overt populism is exposed in the media as disrespect for the intelligence of the public rather than viewed as clever politics? What changes in the rules of the game would encourage Australia's political leaders to make thoughtful contributions rather than presenting inane gibberish under headings designed to convey the impression that they are preparing for challenges of the future?