Are some questions just too difficult? Part I: Should I blog about DIP?

The other day I was talking to Ruth about this blog. Ruth is a nurse who has worked in psych wards and prisons. So she has an interesting range of experiences to talk about and she's interested in economics.


I mentioned that there were some issues that I steered clear of in my blog because they were just too difficult. Ruth objected strongly to this approach on the grounds that ‘someone should be writing about the difficult issues’. I’m not sure why that someone should be me, but I can see the point she was making.

The first example that Ruth gave of what she was talking about was the high incidence of mental illness among young people that has been linked to drug use. She said that this had increased to a huge extent, since the 1990's. We talked around the problem for a while and later exchanged emails about it. The story that Ruth tells below is one of the saddest stories I have ever read.

Ruth says that the most prevalent mental health diagnosis in acute mental heath facilities these days is a relatively new one - Drug Induced Psychosis (DIP). People are only admitted to acute mental health facilities if they are in danger to themselves or someone else (not simply suffering extreme effects of illness as was the case prior to the onset of the drug problem). DIP is now recognized in the DSM4 manual - the diagnosis tool used by all western mental health medics. A major difference between DIP and schizophrenia is the level of associated violence and treatability. Schizophrenia is treated reasonably well with psychotropic medications as the primary treatment regime whereas DIP is treated mostly through drying out and containment (of extreme violence) with medications used as secondary measures.

Ruth tells me that she has chosen not to study a great deal of the theory about the relationship between drug use and mental illness because she wants to stay in touch with the reality on the wards. She writes:

Can I tell a story? It's the story of a young man, well, a boy about to be a man. He was out with his friends celebrating early, his 18th birthday which was to fall during the next week. So this weekend he and his friends went partying to celebrate. During the night one of his friends slipped him a tablet - slyly into his drink. The young man woke the next day still tripping. He was happy as can be, but by the Tuesday, his parents were very worried and took him to the doctor; he was still tripping - having a laugh. He celebrated his 18th birthday in an acute mental health ward, thinking he was still tripping, but was now fed up with being unable to tie his shoe laces, unable to get the fork into his mouth and having to eat with his hands. He was now hating this experience and getting angry with himself for not 'straightening out'. He began to cry in desperation. He cried over and over again, day in day out, while the medics tried in vain to help. After a couple of weeks, his parents wanted to take him home - they wanted to get him out of hospital thinking that maybe it was the hospital causing their son's problem. They took him home and he stopped crying. He still could not tie his shoe laces, or dress himself if there were buttons to be managed. But his parents were happy he'd stopped crying. After all, this fine young man was looking down the barrel of a great career as expected dux of his school, and a fine life. They were devastated at this turn of events. After a few days they brought him back to the hospital. They had not helped him and were even more devastated than they were before. This young man spent nearly a year in hospital, unable to 'get off his trip' as he so beautifully put it.

I was one of his nurses at the time. I was 22 years old, just 4 years his senior. Eventually both he and I left that hospital. But our paths met again in another hospital, another city even, about 6 years later. He told me he had never had a job for more than a few days, he still couldn't do up his buttons - he didn't wear buttoned garments - and that he was still having his 18th birthday trip. He still wanted to study economics (ironically enough) at university. He could still quote and discuss GDP / inflation / employment figures, monetary and fiscal policies, but old figures, those he'd learned for the HSC he still wanted to sit. And yet that young man has no mental health issues in his family, had all the academic potential in the world and a caring, present family. His parents had never divorced, his siblings all got along ok, his relationship with his girlfriend was going well. And there were no identifiable early warning signs of a mental illness about to strike. This man has DIP. He has never been diagnosed with schizophrenia, or any other mental illness.

Ruth concluded:

I wish I was telling the story of just one man, but I'm not. I've seen this same story and similar others so many times. Are some questions too difficult? Yes Winton, absolutely some questions are too difficult and too costly to avoid asking AND finding answers for.

The discussion continues in the next post.

Do global problems require domestic solutions?

‘Overall the best governments seek to extend the freedom of their citizens; we should not want them to wither away but to maximize individual choice while standing guard over a sturdy infrastructure of institutions and services. What they do within their (permeable) borders is reflected in what they should seek to do outside, increasing the range of free choices that people can make. Far from there being a clear choice between domestic and foreign policy, they are now frequently one and the same’ (Chris Patten, ‘What Next?’, Penguin 2009: 443).

It might seem to be a challenge for me to agree with the sentiments in that quote so soon after writing about the desirability of community self-regulation - governance without government. Those who want more self regulation must want government to ‘wither away’ to some extent to make room for this to happen. Yet I doubt whether it would be possible for people to prosper for long in a self regulating community without some kind of government to organize defence against external predators. I think Chris Pattern is right that we need governments to stand guard. I also think that if we had a government that was seeking to extend the freedom of its citizens, as Patten suggests, it would promote more community self regulation as a substitute for government regulation.

I’m not sure whether or not Patten would agree with me on that last point. Perhaps he would. He was not noted as a fan of statism when he was the last governor of Hong Kong and this book shows that he has retained many views favourable to individual freedom and free markets, despite having served as a European Commissioner.

One of the points that Patten makes in this book is that, despite globalization, nation states remain ‘the principal arbiters of politics’ (p.7). However, he questions how much states can do or achieve on their own:

‘Can they secure the welfare and safety of their citizens, policing borders, regulating economic activity, preventing financial ruin, protecting public health, avoiding environmental catastrophe? As the vocabulary of state aspirations becomes more ambitious, with political leaders promising almost every sort of fulfilled happiness, the capacity of states to deliver on these promises appears to become ever more suspect. A peaceful life, let alone a happy one, often seems more problematic than rhetoric suggests should be the case’ (p.9).

At the end of the book Patten tells us that his intention when he started to write it was ‘to demonstrate that nation states had to work together to cope effectively with the problems that crowd in on us all’. The point he ends up making is that ‘more effective domestic policies and better government at home are often needed to deal with global problems’ (p. 443). Three examples he gives are drugs (domestic policies in rich countries keep warlords in business in Afghanistan), epidemic diseases (breeding grounds in poor countries are sustained by inadequate public health facilities) and global financial crises (bad policies in individual nation states have effects that spread to other countries like an epidemic).

In my view there is another important example that Patten could have given of how domestic and foreign policy are frequently one and the same. This is particularly evident in international trade negotiations in which governments come together to talk about reducing trade barriers without any chance of achieving worthwhile outcomes because they are acting as the agents of the domestic interests which benefit from trade barriers. It is not possible for any government to take a sensible negotiating strategy to international negotiations unless it is supported by public understanding of the damage that its own trade barriers impose on its domestic economy.

However, I must be becoming a grumpy old man to complain that this book should have discussed any issue more thoroughly. This is one of the most perceptive books about global problems that I have ever read. The book shows that it is possible for a politician to acquire wisdom even though the incentives faced by people who choose that profession tend to work in the opposite direction.

Is reasonable regulation compatible with democracy?

Peter Boettke recently wrote a paper entitled: ‘Is the only form of “reasonable regulation” self regulation?’ (GMU Economics Paper 10-05).

This paper draws attention to the potential for self-regulating communities (governance without government) to achieve benefits of social cooperation even in unpromising situations. The subtitle describes the contents of the paper: ‘Lessons from Lin Ostrom on regulating the commons and cultivating citizens’.

Boettke attributes the concept of reasonable regulation to Anne Krueger. He tells us that Krueger got him thinking about the concept when she said at some conference that rather than central planning or unfettered markets we need reasonable regulation – regulation that is not capturable by special interests. Having read some of what Krueger has written about rent-seeking societies I imagine she put forward the concept of reasonable regulation as an ideal worth striving for rather than as something that could easily be achieved.

Boettke argues that self-regulation systems apply reasonable regulation. He suggests that since self-regulating systems are operating outside the formal realm of politics they do not face the problem of protecting against the unwarranted influence of politically empowered special interest groups.

I think that is a good point, but it may be over-stated a little. Community organizations do have to cope with the problem of protecting against the unwarranted influence of special interest groups among their members. They also have to deal with free-rider problems. The main difference is that when decisions are made within such organizations opportunistic behaviour is more easily seen to be opportunistic. It is more difficult for any individual or group to argue for unwarranted preferential treatment when the people who have to pay for this are members of the same community. It is also easier for the opportunistic tendencies of individual members to be restrained by subtle (or not so subtle) threats of retaliation by other members. It would be more defensible to argue that self-regulating systems are able to deal more effectively with the unwarranted influence of special interest groups.

Self-regulation systems seem to have some attractions for everyone opposed to statism, including self-styled commie libertarians and anarcho-capitalists (as well as sensible people like myself :-) . Such systems would presumably also be attractive to Burkean conservatives who emphasize the importance of the ‘little platoons’ i.e. the spontaneous social groups that arise in society.

Yet self-regulation may appear to be too utopian to play a major role in modern democracies. Everyone can understand that tribal groups were able to self-regulate to ensure that forests and fisheries were sustainable. They can understand that their ancestors were able to run schools and hospitals through local community organisations without help from governments. But I expect that many people would feel that there are powerful reasons why self regulation of many areas of life has been displaced by the regulatory apparatus of the democratic state. Is there something about democracy that leads inevitably to taking decisions out of the hands of local communities and placing them into the hands of governments, and then centralizing those decisions at the highest level of government?

This is a big question that I don’t think I can answer adequately at the moment. But I will make a few relevant points.

First, I think it is inevitable that a lot of people will look to politicians to offer solutions to local problems and that politicians will offer such solutions. Politicians do not win many votes by telling voters that they aren’t interested in local problems.

Second, I think that most people are aware that when a politician offers to solve problems by displacing self regulation, then someone has to pay for the costs involved. When people weigh up the benefits of regulation that will take the trouble out of things (to borrow a phrase from Charles Murray) against the additional taxes involved, there doesn’t seem to be any a priori reason why they should choose regulation. Perhaps the problem is that they think other people will pay – which could stem from confusion over tax incidence.

Third, to borrow another thought from Charles Murray (which he may have borrowed from Friedrich Hayek) I think the tendency for government regulation to displace self regulation is related to a tendency for people to see problems from an engineering perspective rather than a healing perspective. There is a tendency to try to solve problems by designing new systems to replace self regulating systems, rather than to think in terms of solutions that will enable self regulating systems to work better. I don’t think there is any fundamental reason why politicians should see themselves as engineers rather than healers.

These considerations provide grounds for optimism that reasonable regulation might be sustainable in a democracy.

Postscript:

The references to Charles Murray are from his book, ‘In Pursuit of Happiness and Good Government’, which I wrote about here and here.

Are Americans pessimistic about the prospects for the next generation?

Gary Becker has recently written an interesting article on the Becker-Posner blog about polls suggesting that the majority of parents in the United States are not confident that their children will be better off economically than they are. He suggests that the best way to counter such pessimism is to promote faster economic growth.


The article made me feel slightly uneasy because I wrote something a few months ago suggesting that the poll results actually conflict with the view that Americans are pessimistic about the future for their children. Have I mis-read the poll results? How much have the poll results changed over the last year or so?

Scott Winship has recently considered the evidence of a variety of polls on his blog: here and here. In brief, the polls indicate that the proportion of Americans who think that their children will have better standards of living than themselves consistently exceeds the proportion who think their children will have worse standards of living. The margin tends to narrow during recessions but, even this year, the polls suggest that optimism is no lower than in the mid-1990s (see Pew Research Center poll results here).

Rather than trying to explain why Americans have become more pessimistic perhaps researchers should be trying to explain why Americans are still so optimistic.