Predictable Irrationality

Following up on this, just a couple of short comments. The book is readable, and some of Ariely’s insights are interesting. But you just know somehow that a lot of our tax dollars funded some of it, and it’s not really profound enough to make you think it justifies that. Ariely makes observations of various behaviors, and then examines the rationality behind them to uncover a more irrational basis. To do this, he sets up tests. These tests, while sometimes revealing, can hardly be described as scientific experiments, and many are biased in such a way as to confirm his conjectures. All in all, that makes for so much witch doctory. It’s an interesting book, but don’t confuse it with authentic science.

The United States of America 1776-2008, RIP

A light has gone out in the world: the light of freedom. The USA is no longer. It is now the DSRA: the Democratic Socialist Republic of America. And even that, like all socialist words, is a lie. It is, and will be, neither democratic nor socialist, nor will it deal with just the public things (which is the meaning of republic). Those of you now in your twenties and younger have never known true freedom; at best you have smelled the smoke from the dying ashes. The next generation back (mine) saw the glow of the embers. The next, the so-called greatest generation, felt the heat of the dying fire. That fire was kindled by the real greatest generation in 1776, and socialism and greed for power has ever since been putting it out. It has finally succeeded. Oh, it won’t be dramatic, just the quick-step ticking of the clock. But the Constitution has been kicked to the curb, and all the fine words of our fathers now so much drivel.

The bailout bill, the Troubled Assets Relief Program, is one of the final nails in the coffin. Is it coincidence that murderers also wrap their victims in tarps? I have been reading this TARP in bits and pieces, and it gives sweeping new powers to the Secretary of the Treasury rivalling those of Congress or the President. In combination with the coming nationalization of health care (in one form or another), in combination with all sorts of well-meaning but ligaturing legislation, our public servant government has been changed into the-public-is-the-servant government. When democracies fall, as this one is doing, they fall into dictatorship of some form. This new TARP is a giant step towards the establishment of an American oligarchy, just as within its own wording it destroys the Constitution.

Where is the constitutional challenge to this law? (Not that that would stop it.) The Constitution limits any fiscal legislation to be originated in the House. The wording in this bill allowed it to originate in either chamber, and even though this wording should have been trumped by the Constitution, the Constitution is being ignored. And so it dies, not with a whimper, but with shouts of protest that shut the original House bill down. But it dies nevertheless.

What now? What happens to the United States? What happens to liberty? The law can only limit liberty. Constitutions cannot define or grant liberties to the people. The people have rights and liberties prior to any constitution or any form of government. They don’t need constitutions to get them. Constitutions can only attempt to rein in the vampires which all governments are prone to become. Now that our government operates outside the Constitution, in how many ways will it rape its own people in the name of doing good?

Just for starters, if the government owns your house (which is a result of this TARP law) and it also controls your health care, guess what? You’ll no longer have the privacy to act as you please in your own home. Excuse me, in the government’s home. That means, at a minimum, no smoking; but in all likelihood will also include the very types of food you have in your refrigerator. It could dicate the types of appliances and furnishings you have in the name of public health and safety. It may even go so far as to dictate the contents of your bookshelf. If you’re young, I know you think I’m crazy and blowing things out of proportion, but these are the least of what government will do in the name of doing the good and right thing. It’s the least of what it will do when it controls both the home you live in and your personal health care, and this is coming if not here already. If you are pregnant with a handicapped child, in the name of saving public expense you might be forced into an abortion. If you are old or disabled, no matter what your age, and if you are deemed to be a drain on society’s resources, you might become eligible for euthanasia. I’m not crazy, serious people will be led to this “unpalatable” conclusion, and will seriously suggest it, if not implement it. And it will go further. If you are pregnant with a boy (or girl) but a quota of boys (or girls) has been achieved already, you might face an abortion (look at China!). If DNA testing shows your baby will have a deformity or other defect, it might be aborted. Your home will no longer be your home. You will be required to comply with all manner of public safety and health regulations. The internet will be censored in the name of the public good. Look at China again. You won’t be able to get access to web sites the government deems unsafe, unhealthy, immoral or corrupt in some way. There might even be book-burnings to protect the public good. Political imprisonments will become more and more common. Speech will be limited to the politically correct, and violations handled by so-called re-education, which is no more than indoctrination and brain-washing. I’m not making this up. These things have happened wherever the government has gained control over the public good, and they will happen again. And stupid us, we’re asking the government to establish and protect our good.

Unfortunately, there’s almost nothing we can do to change this in the short term. It won’t matter if we elect one candidate or the other, or vote one party in and the other out. The tide of history sweeps all before it. Just like, though the stock market has its ups and downs, in the long view it always goes up, the forces in play will take history in an inevitable direction. There are only two things that can be done to change this. One is the slow and steady, bit-by-bit erosion of socialist principles in favor of slightly more libertarian ones. This is how a trickle of socialism a hundred and fifty years ago has turned into this unstoppable tide today. I really don’t give this method much chance of success, but we have to try. Those of us who remember liberty, who remember what it means and where it comes from, must pass on the knowledge as best we can, even in whispers if need be. Keep “freedom libraries” of libertarian thought, and keep them safe. It may be too late for us, but the hope of a return to sane government is with our children’s children, and their children. The yearning of the heart for freedom, let’s hope, will not be denied forever.

The other method is to change the flow of history by the flowing of blood. I think even today many would join this method, and more as time goes by, but I hold little hope for it, either. We have not a generation like Washington’s, and the world is a much smaller and vastly more dangerous place. Daniel Webster said, “If the American Constitution shall fall there will be anarchy throughout the world.” Well, it has fallen; and things will get worse before they get better.

Irrationally Predictable

     Dan Ariely has an interesting little book out which I am reading: “Predictably Irrational: The Hidden Forces That Shape Our Decisions.”  He talks about such things as imprinting, decoys, herding, anchoring, and market behavior.  And this is only in the first two chapters.  I’m sure there will be much more interesting stuff as I get deeper into the book, but right now I want to address the socialist fallacy he drops in at the end of chapter two.

     In chapter two, “The Fallacy of Supply and Demand,” he talks about a variety of experiments and exercises dealing with arbitrary coherence, or anchoring.  Arbitrary coherence is our tendency to base our perception of prices on our initial exposure to them.  That is, we can remember when we first started buying a cup of coffee at the convenience store for twenty cents, and so now a dollar (or four dollars) seems outrageous.  He even gives examples which show that the initial exposure doesn’t have to relate the price to the goods in any rational way – it can be purely random, but yet still be an anchor for our price perceptions.  In one experiment, subjects were asked to write the last two digits of their social security number preceded by a dollar sign next to pictures of four items.  Then they were asked to place bids on the items.  Their bids were found to correlate to their social security numbers.  After a number of other examples, he is able to argue with some conviction that the traditional forces of supply and demand are not a reliable guage of market behavior.  His summation goes like this:

. . . In the framework of arbitrary coherence, the relationships we see in the marketplace between demand and supply . . . are based not on preferences but on memory. . . .

 Another implication of arbitrary coherence has to do with the claimed benefits of the free market and free trade.  The basic idea of the free market is . . . that the mutual benefit of trading rests on the assumption that all the players in the market know the value of what they have and the value of the things they are considering getting from the trade.

But if our choices are often affected by random initial anchors, . . . the choices and trades we make are not necessarily going to be an accurate reflection of the real pleasure or utility we derive from those products. . . . If anchors and memories of these anchors – but not preferences – determine our behavior, why would trading be hailed as the key to maximizing personal happiness?

     He is under the mistaken impression that his theory of arbitrary coherence displaces completely the older theory of demand and supply.  This appears to be just an assumption he makes – the few pages he devotes to this entire subject can’t supply anything like the exhaustive analysis it would take to prove his assumption.  And a few seconds thought is enough to show that desire is still very much in operation.  His theory might be a useful adjunct, but a replacement? . . . nahh.

     His last paragraph reveals his socialist side entirely:

So where does this leave us?  If we can’t rely on the market forces of supply and demand to set optimal market prices, and we can’t count on free-market mechanisms to help us maximize our utility, then we may need to look elsewhere.  This is especially the case with society’s essentials, such as health care, medicine, water, electricity, education, and other critical resources.  If you accept the premise that market forces and free markets will not always regulate the market for the best, then you may find yourself among those who believe that the government (we hope a reasonable and thoughtful government) must play a larger role in regulating some market activities, even if this limits free enterprise.  Yes, a free market based on supply, demand, and no friction would be ideal if we were truly rational.  Yet when we are not rational but irrational, policies should take this important factor into account.

     What a maroon!  He takes his unproven assumption as fact and says that that makes the current (mostly) free market incapable and unreliable, and therefore the government must step in and control things because in its wise beneficence it can take all factors into account reasonably.  He’s living in a dream world.  He believes the government is the source of what is good and right.  Why he believes this, why anyone would believe this, is beyond me.  Any real assessment of things, however brief, would smash that false hope.  If you want things fubar, just let the government run them.  Running anything by committee, compromise, and scrabbling for make-work job security is a sure way to total inefficiency.  And what would make him think that the forces he talks about in his book aren’t just as much in effect for the government?  We all make decisions based on memories and desires (and other factors) and we might not even recognize them.  We rationalize our decisions later.  What could make him think that the people in government are any different?

     I guess his liberalism shouldn’t surprise me.  It’s everywhere these days.  And it just continues to show these human foibles – operating from desire and rationalizing later.  He wants things to be manageable.  He wants a better world.  He thinks everyone will see things his way.  Oh well.