Nudges Versus Regulation

Nudges Versus Regulation

“Libertarian paternalism, we think, is a promising foundation for bipartisanship.” Write Cass Sunstein and Richard Thaler in their book Nudge. The authors are in favor of a governance structure that does not eliminate choice and possibility for people in the world. They are in favor of a system that allows flexibility for the people who have the time and capacity to consider all of their options before making a choice, and they prefer subtle and almost invisible forces to shape public opinion and behaviors. Throughout the book they argue that heavy handed regulation can be harmful to the long-term success and progress in some areas because people may push back against laws and regulations that limit freedom.  Nudges, in their view, can be an avenue toward real bipartisanship and cooperation because they can make real world changes without heavy handed government action.

 

The authors present the standard view of American politics where the Republican Party is presented as the party of small government while Democrats are the party of big government action. Republicans are all about freedom of choice and individual responsibility while Democrats are the party of government planning and the use of public institutions to improve people’s lives. I think this view is wrong. I think people are primarily self-interested, and gravitate toward the party that better reflects their identity, personality, and self-interests, and through motivated reasoning find high-minded excuses for supporting the party that generally aligns with the overarching political preferences that the standard view of American politics presents. But does this mean that Sunstein and Thaler are wrong about the ability of nudges to bring together Republicans and Democrats for action on public policy?

 

They write, “In many domains, including environmental protection, family law, and school choice, we will be arguing that better governance requires less in the way of government coercion and constraint, and more in the way of freedom to choose.”

 

When we consider whether Sunstein and Thaler are correct, we have to ask what is meant by better governance. Better governance might be reaching actual goals and actually improving people’s lives. It might mean creating a system that people are happier to interact with. Better governance may also mean a system that is more equitable, creates more social cohesion and trust, or that operates quicker. Each of these concepts is different, yet related, and we demonstrate that how we chose to measure better governance can shape the approaches we take. A focus on greater equity might come at the cost of quicker hiring and firing processes. Creating a system that leaves individuals who interact with governance happier may mean a system that is bigger and more expensive, but might not mean that it actually solves people’s problems. What we mean by better governance can conflict with what someone else means by better governance, so it is important to be clear about goals and expectations.

 

And that gets to the question – do nudges actually do any of these things? In terms of addressing environmental protection, I don’t think nudges are adequate. I think we are at a point where catastrophic environmental damage and climate change are unavoidable unless we have massive societal and technological changes. Simple nudges that tax oil and gas while offering rebates or incentives for purchasing electric cars won’t change the landscape quick enough to help mitigate climate change and create a sustainable world moving forward. I think we are at a point where we need real action to produce meaningful changes that lead to better governance in environmental policy. It might be time for outright bans on sales of gasoline and diesel engines, billion dollar prizes for green technology, and other heavy handed government interferences in markets and people’s daily lives.

 

However, within family policy, nudges do seem like they can be meaningful. Tyler Cowen recently shared research correlating child car safety laws with the number of children a family has. The argument being that car seats and seat-belt requirements may make it more difficult to have multiple young children who take a long time to get situated in a car before driving, reducing incentives for parents to have more kids. Family decisions, it seems, can be highly influenced by seemingly inconsequential factors. If this is accurate, then nudges, such as child care rebates, really might reduce the costs of childbearing, and might encourage larger families, shaping the actual outcome of people’s lives and securing a young tax base to support social service programs. Nudges might be an effective approach to encouraging more family formation.

 

To continue analyzing policy in areas where Sunstein and Thaler’s quote suggests nudges would be helpful, my argument on school choice would be that it is effectively 100% signaling and self-interest. Religious parents probably don’t care too much about what their children actually learn in school or where they go. They do care about how much their school choice argument and energy demonstrate their religious devotion. Wealthy parents care about the signaling power of elite schools and universities, and similarly care about how much their children will be able to signal and benefit from a private school education that is out of reach for the majority of families who send their children to public schools. Race, socio-economic status, and other identity markers seem to be core to the self-interest of most school choice freedom advocates in my opinion. From my point of view, better governance would enhance social cohesion, encourage more opportunities for those individuals who otherwise would be left out, and help us manage diversity collectively. If school choice is overwhelmingly dominated by signaling and self-interest, then I see little reason why nudges would be the best approach to shaping policy. Nudges that increase costs of signaling end up creating stronger signals for those who can afford to still send their children to private institutions, therefore increasing their value and creating more division and contention within the debate.

 

Nudges seem to have real power in shaping public policy and can likely bring together Republicans and Democrats in some instances, but if governance is not about public policy, but is instead about identity, self-interest, and signaling, then I don’t think nudges can truly do much to improve governance or bring together Democrats and Republicans. Similarly, for massively consequential policy areas, I don’t think we can leave our future and success up to nudges. They may take too long and not be forceful enough to really shape public behavior and attitude, especially if they face entrenched opposition.
Risk Averse and Risk Seeking - Joe Abittan

Risk Averse and Risk Seeking

I would generally categorize myself as somewhat risk averse, but studies from Daniel Kahneman in Thinking Fast and Slow might suggest that I’m not really any different than anyone else. I might just be responding to the set of circumstances that I typically experience, similar to anyone else, and I might just be more aware of times when I am risk averse rather than times when I am more risk seeking. In particular, I might be risk averse in certain situations and categorize those situations correctly, but risk seeking in other situations without recognizing it.

 

Kahneman uses examples throughout his book to demonstrate to the audience that common cognitive errors and psychological tendencies are shared with even the most savvy readers who would pick up a book like Thinking Fast and Slow. Kahneman even uses anecdotes from his own life and his own thoughts to demonstrate how deep knowledge of cognitive biases and errors doesn’t make one immune. After demonstrating how our minds can lead us to be risk averse in some settings and risk seeking in others, Kahneman cautions us against a typical pattern that many of us will find ourselves in. “It is costly to be risk averse for gains and risk seeking for losses.”

 

On its own, this quote doesn’t seem to reveal anything to interesting, but in the context of Kahneman’s experiments and examples, it reveals a lot about the way we behave whether we are risk seeking or risk averse. When we are offered a flat sum or a gamble with the potentially win more than the flat sum, we often won’t be willing to take the gamble. The guaranteed money is more appealing to us than the prospects of a higher winning with a small chance of gaining nothing. When it comes to gains, we are often risk averse, preferring the sure thing rather than the possibility of getting more with the risk of getting nothing or facing a cost.

 

However, we become risk seeking when we stand to lose something. As long as there is a small outside chance that we won’t lose anything, we will avoid a certain loss, risk a larger loss, and take a gamble. In Kahneman’s example he demonstrates how people will quickly turn down a sure loss of $750 for a 25% chance of losing nothing, even when there is a 75% chance of losing $1000.

 

When you do the math over numerous trials, you see that taking the loss at $750 is better. However, our minds don’t perceive things this way. When we stand to win something, we tend to become conservative and risk averse, but if we stand to lose something, we suddenly become more risk seeking. Combining these two tendencies can be dangerous. It means we can stand to gain much less than we might if we flipped our biases around, and it also means we are more likely to face greater losses with greater frequency than if we had been less risk seeking with regard to losses.

 

If we think about this in the context of our lives more generally, we can see that categorizing ourselves and most of our friends as either risk averse or risk seeking doesn’t necessarily make sense. When you are young, you really don’t have anything that you will be worried about losing. It makes sense that you might be more risk seeking, more willing to take on behaviors and ideas that are risky, but might have a big upside. You might procrastinate with important homework, retirement savings, and household chores because you know you will lose time (the only thing you may have if you are really young), and you can gamble on the consequences. As you get older, once you are established in a career, own a home, have a 401K, and move through life in general, you stand to lose more. Gains throughout your life become less significant due to Tyler Cowen‘s favorite idea, diminishing marginal returns. It becomes harder to give up the guaranteed gains because the marginal increase in a potential gain through a gamble is less appealing. You become risk averse as you get older and in more situations as you grow to have more things to worry about losing. Therefore, categorizing people as generally risk averse or generally risk seeking is meaningless. You need to look at the circumstances of their lives to understand where they find themselves in terms of social status, what material possessions they have, what their family structure is like, and you will start to understand why they make generally more risk averse or generally more risk seeking decisions. There is probably some variability across people, but I would expect the structures and systems in place around us shape our behavior more than any genetic or inherent factors.
Rich Representations of Things

Making Connections From Rich Representations of Things

On August 12th, Tyler Cowen released a podcast interview with Stanford Economics Professor Nicholas Bloom on his podcast Conversations with Tyler. In response to a question from Cowen about making adjustments in his life, Bloom said the following:

 

“For me, I really like to read broadly rather than deeply — sounds an odd thing to say. Every Monday, for example, or Sunday night, the National Bureau of Economic Research has this vast email of all the recent papers. I tend to try and scan every title and abstract. I read the papers. I like the Economist magazine. It’s good. It’s often been a source of ideas, actually.
We were talking before the call — I listen to your podcast. I actually listen to a lot of podcasts because I try and go out for a walk or a run for about an hour every day. I mostly listen to podcasts. [laughs] If I’m getting too tired, I have to switch to music. For me, that’s been helpful for coming up with new research ideas.” 

 

The quote from Bloom came back to mind this morning as I looked over a quote I highlighted in Daniel Kahneman’s book Thinking Fast and Slow. Kahneman’s quote is about connections in the mind, and how having a rich set of connections can help us have better representations of the world. When people are asked questions about Michigan, research in Kahneman’s book shows, they have different responses depending on whether they remember that Detroit is in Michigan. People with more knowledge of the state think differently of it compared to people with minimal knowledge of Michigan. Kahneman writes,

 

“More intelligent individuals are more likely than others to have rich representations of most things. Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed.” 

 

This idea relates to what Bloom said in the interview with Cowen. Bloom was asked about his productivity, and how he is able to keep up a high level of publications with co-authors across a wide range of academic institutions, geographic locations, and subjects. Bloom responded that he is developing rich representations of most things through broad, but not necessarily deep, investigations of a wide range of topics.

 

By taking in a wide range of information, Bloom is able to pick out the important connections between disparate topics. This gives him an ability to deploy attention where there is a lack of study on certain topics. By reading across many fields, he is able to look at current developments in economics, news, and society to find relevant material that can generate useful knowledge for the world of economics.

 

Not all of us are ever going to be economists, and not all of us will be in a place where we can publish academic articles on lots of topics. But all of us are asked by social media every day to offer our opinion on something. If we have a narrow and limited knowledge base, then our opinions and ideas are going to also be narrow and limited. If, however, we can work to broaden our horizons and work to focus our memory and attention on relevant material, then we can start to offer better opinions about the world, and we can start to move discussions forward in a better direction.
Skill Versus Effort

Skill Versus Effort

In the world of sports, I have always enjoyed the saying that someone is so good at something they make it look easy. While I usually hear the saying in relation to physical activity, it also extends to other generally challenging activities – Kobe made the fadeaway jumper look easy, Tyler Cowen makes blogging look easy, and Roman Mars has made podcasting look (sound?) easy. But what is really happening when an expert makes something look easy? Daniel Kahneman argues that increased skill makes things look easy because skill decreases the effort needed to do the thing.

 

In Thinking Fast and Slow, Kahneman writes, “As you become skilled in a task, its demand for energy diminishes. Studies of the brain have shown that the pattern of activity associated with an action changes as skill increases, with fewer brain regions involved. Talent has similar effects. Highly intelligent individuals need less effort to solve the same problems, as indicated by both pupil size and brain activity. A general law of least effort applies to cognitive as well as physical exertion.”

 

while I was at a UCLA summer basketball camp years ago, Sean Farnham told me a story about Kobe – he used to work out at the UC Irvine Gym every morning. He drew such a big crowd to the gym that UC Irvine asked him to either stop coming to the gym, or to arrive at a different time. Kobe didn’t stop, he just changed his hours, working out at 4 or 5 a.m., before the gym would be packed. Farnham told me that Kobe had a training entourage with him, so that when he would pass out on the court from physical exhaustion of working so hard, his staff could pull him to the side, get him some fluids, and help him get back out on the court until he would pass out again.

 

Tyler Cowen writes every day. On his podcast and in other interviews, he has explained how writing every single day, even on Christmas and your birthday, is one of the most important things you can do if you want to be a good writer and clear thinker. Much of his writing never gets out into the public, but every day he puts in the effort and practice to build his skill.

 

Roman Mars loves radio, and his hit podcast 99% Invisible is onto episode 410.  In a 2012 interview with Debbie Millman Mars talked about learning to love radio early on and how he developed a passion for audio programming, even if no one was listening.

 

Kobe, Cowen, and Mars all practice a lot, and have developed a lot of skill from their practice. As Kahneman explains, their daily practice doesn’t just allow them to make things look easy. For those who practice as much as these three, things really are easier for them. Kobe’s muscle memory meant that he was more efficient in shooting a fadeaway jump shot, literally needing less energy and less mental focus to pull off a perfect swish. Cowen writes every day and the act of starting a piece of writing for him probably requires less brain power to begin putting thoughts together. Similarly, Mars probably slips into his radio voice effortlessly, without consciously having to think about everything he is about to say, making the words, the voice, and the intonation flow more simply and naturally.

 

Kahneman and the three examples I shared show how important practice is for the things we want to do well. Consistent practice builds skill, and literally alters the brain, the chemical nerve pathways (via myelination), and the physical strength needed to perform a task. With practice, tasks really do become easier and automatic.
Focus on Process

Focus on Process

Recently, Tyler Cowen released a podcast interview he did with Annie Duke, someone I remember from the days when my brother watched tournaments for the World Series of Poker.  A line from the interview really stood out to me and is something I think about in my life all the time, but haven’t stated as eloquently as Duke. In the interview she says, “The way to happiness is to focus on process. Then the winning becomes secondary to that. It becomes a way to keep score on how you’re doing on the process piece. And to really focus on that as opposed to focusing on the end result.”

 

I really like the way that Duke thinks about life, happiness, and process. So often in our lives we look at the end results. We ask ourselves if our house is big enough, if our car is fancy enough, if we have a good enough job, and if we took a good enough vacation this year. The problem, however, is that these are end results that we use to judge ourselves. They are lag measures, not lead measures, and as a result they only tell us how we are doing long after we have a chance to make improvements and adjust our approach. The second problem with thinking about the end results is that the end result we pick is arbitrary and in many cases our chances of achieving our desired end result are often beyond our control. There are so many random variables that can determine how successful you become and exactly where you end up. In poker, the randomness and chance within the game is part of its appeal, and sometimes whether you walk away with the most chips or with none is as much a matter of luck on a single hand as it is a matter of skill and intelligence.

 

Similarly, in Letters From a Stoic, Seneca writes, “When one is busy and absorbed in one’s work, the very absorption affords great delight; but when one has withdrawn one’s hand from the completed masterpiece, the pleasure is not so keen.” This quote from Seneca highlights the importance of maintaining good process. We are happy when we are engaged and active in our pursuit of a goal. Achieving our goal and no longer have work to do in pursuit of our goal is actually less fulfilling than the process to obtain the goal itself.

 

When we consider the quotes from both Seneca and Duke we see how important it can be to think about our daily habits, routines, and processes. If we can focus on goals related to process then we can have something meaningful to engage with that is unlikely to disappear and leave us feeling empty once reached. For a poker player, walking away from the table with a large stack of chips is what the game appears to be all about, but it is in playing poker, discussing strategy, and focusing on one’s abilities and weaknesses that professional poker players find the most enjoyment. Those are the pieces the player can control and engage with, and if the player focuses on process, they will improve and reach their end goals to ultimately be successful in the game. Focus on the process to build success and to enjoy the path toward continued success and excellence.

Self-Seeking Versus Unselfishness

“The world is so full of people who are grabbing and self-seeking. So the rare individual who unselfishly tries to serve others has an enormous advantage.”

 

Dale Carnegie wrote that line in his book How to Win Friends and Influence People. The line comes right after he describes a day where he encountered two life insurance salesmen. The first mentioned a new life insurance option, but because he didn’t have much information, didn’t press the sale and make much of an effort. The second salesman also didn’t have much information, but showed a lot of enthusiasm, encouraged setting up an additional appointment with someone from the company who knew more, and offered to help handle some of the paperwork to get the sign up process started more quickly. The second salesman got the sale.

 

When I read the quote in isolation I thought about people hording supplies during our current social distancing efforts to limit the spread of the Coronavirus. I thought about how tempting it can be to try to make a quick buck, even if the couple hundred dollars the hoarders might make by selling marked-up toilet paper won’t really make much of a difference in the lives of most of them. I also thought about a conversation from the Ezra Klein Show, where Klein, the host, interviewed Jane McAlevey, a union organizer who discussed the way that employees could instinctive tell if you actually care about them when you show up on the job-site, or if you look down on them and think that they are not as smart and deserving as you think of yourself. To live in a world that doesn’t price gouge during a crisis, and to be effective in working with other people requires an unselfishness that recognizes that you are not better than other people, no matter what your degree, your bank account, or the social status of your job says. Being truly unselfish means that you view everyone as having at least the capacity for having the virtues that you prize in yourself, and being willing to help them express those virtues.

 

There is a difference between the way I thought about unselfishness when reading the quote in isolation versus the way that Carnegie thought while writing the quote in his book. For Carnegie, the idea is that you can use your selfish impulses and personal desires to improve the lives of others, at least if you can step into the other person’s shoes, see what they need, and fulfill that need in a way that is deserving of compensation on your end. It is a capitalistic view of selflessness, and while it is not a terrible thing on its own, it requires the possibility for Pareto efficiency, for the world to be in a state where an action can be taken that would improve the world for both you and everyone else. It requires that our actions have only positive externalities. This is the view the inspired the entire book How Stella Saved the Farm, in which a brave sheep steps us to lead a farm and creates prosperity for everyone working on and depending on the farm through an embrace of good management in a capitalistic system.

 

The other view of selflessness is a much more social form. It doesn’t ask if there is a Pareto efficiency that can be met, but instead asks if our goals and desires are really necessary. It asks if the resources we have can be better used by people who are in need. It is part of a bigger question of whether we can do things that will improve the lives of not just us and the person in front of us, but of the entire society.

 

I don’t think that either view is necessarily wrong, but I do think that both views can easily be overstretched. Thinking of selflessness in purely the context of capitalism, as Carnegie was and as is presented in How Stella Saved the Farm can be good, but it can also create a system where our core societal value is what you contribute and produce in an economic sense. As we are not Homo Economicus, this can put many of us who are not great market thinkers and are not inspired business efficiency and productivity in a tough place where we are viewed as undeserving.

 

The second view sees us as valuable and deserving simply by being human beings, but it does raise question about how we reach economic development. An argument can be made that big business and technological development are crucial for improving living standards and actually improving lives more than just social do-gooding. Indeed, Tyler Cowen has made these arguments, and while I’m not sure he fully considers how damaging many of the negative externalities can be, I think he is broadly correct.

 

In the end, I fall back on what both perspectives have in common, which is captured in another line from Carnegie’s book just a few sentences later than the line that opened this post, “If out of reading this book you get just on thing – an increased tendency to think always in terms of other people’s point of view, and see things from their angle – if you get that one thing out of this book, it may easily prove to be one of the building blocks of your career.” I would switch the final word career to life, but the idea is there. Thinking about the world and others from other people’s perspectives is crucial for avoiding selfishness and for making a positive impact on the world. Whether you chose to do so through business and capitalism, through direct work with those who need it the most, or a combination of both approaches, you must first be able to see beyond your own wants and desires and understand the way that others see the world.

When Are We Happy?

“During any given day people are typically least happy while commuting and most happy while canoodling,” writes Dan Pink in his book When. I currently have a long commute, and I have found that a long drive makes me more irritable, makes me feel more rushed in general, and really does lower the quality of my day. I’m working to make changes so that my commute is reduced, and it has me thinking about how I spend my time in general.

 

I like to be busy and active, but often end up working on things individually. I spend a good amount of time listening to podcasts by myself while doing dishes, cleaning my car, and putting away laundry. These things beat TV, but still don’t bring me a lot of deep value.

 

As Pink’s quote above suggests, we are more happy when doing things with other people. We like to do social things, to interact with friends and family, and to be around others. The time when we are by ourselves – isolated from the world, not engaging in deep ways with other people – is when we are at our lowest. In our daily lives we should consider what we are doing in isolation and what we are doing as a social group, and shift toward the latter.

 

I remember hearing Tyler Cowen on a podcast say that joining a social group that meets once a month is equivalent in terms of happiness production as doubling one’s income. If this is accurate, then we should shift our jobs so that we don’t take careers (or stay in careers) where we are pushed toward isolation (in terms of commute or other factors) and ultimately have our time wasted instead. We should try to find ways to open more time for ourselves, and then we should try to fill that time by participating in social endeavors. If Cowen is correct, starting new clubs and participating in groups will not just increase our happiness, but the happiness of others who can join in.

 

We shouldn’t necessarily just pursue a life of continuous canoodling, but we can pursue a life of real world connections by limiting our isolationism. It is hard, especially if one lives in a sprawling suburb, to maintain good connections, but by being intentional about our time and lifestyle, we can slowly shift ourselves back to a more communal lifestyle. Some of us are lucky enough to decide we don’t want to keep the job that forces us into a miserable commute, and some of us are lucky enough to be able to move to different cities or parts of town where the traffic isn’t so bad. The research from Pink on happiness, and Cowen’s thoughts on social connection suggest that a cut in pay may make us much more happy if it frees our time and allows us to connect with others. Prioritizing social connections over cash might be the best thing for our happiness.

Providing Meaningful Integration Opportunities for Our Youth

In The Complacent Class, Tyler Cowen writes about a decline in people moving in the United States. Rates of people moving across state lines, from one city to another, or even just across town seem to be on the decline. People seem to be less willing to take risks and put themselves in new places. As a result, we have fewer people from diverse backgrounds meeting each other and getting to know each other. For children, this means they are more likely to grow up around other children like themselves, and are not as likely experience different cultures, communities, and families. They are not likely to meet other kids from different racial, socioeconomic status (SES), and cultural backgrounds.

 

Cowen identifies one counterexample to this trend in his book, but notes that it is more of a temporary departure from the trend rather than a clear reversal. Writing about young college educated couples, Cowen describes a movement back toward cities, often living in artistic neighborhoods with interesting homes and fun opportunities to engage with city life. This gives cities new life and creates pockets of diversity, but only until the children of these young couples reach school age.

 

“When they have children and it is time to send the kids to school, they often move to the suburbs, or to a more expensive part of the same city, or to a different city altogether. The integration is a kind of temporary experiment in white lives, to be reversed once the next generation comes along. It is good that so many people are willing to make this temporary experiment but bad that it doesn’t have greater staying power or turn into a means of integrating young children.”

 

I have not spent a lot of time focused on housing policy or urban planning, but I think part of Cowen’s lament can be explained by a failure in both areas. I currently live toward the outskirts of Reno, Nevada, and live in a rather diverse neighborhood. Our home prices are not as out of control as other areas in Reno, and as a result we have a racially diverse set of people in our small out of the way neighborhood. However, it is hard to get to where we live. There are a only few main streets which all get very backed-up with traffic. We also don’t have a good park in our neighborhood, lack good sidewalks, and don’t have a lot of street lights. These factors diminish the attractiveness of the neighborhood and reduce the sense of (or opportunity for) community among the homeowners and renters here.

 

My wife and I are looking to move to part of town that is more accessible and easier for our work commutes. We hope to have a place with nice sidewalks for walking the dog and some open spaces for picnics or more dog activities. We have been looking into parts of town with higher home prices, which will likely result in us living in a more appealing, yet less diverse part of the city.

 

The failure of housing and urban policy is in the way we set up neighborhoods to encourage homogeneity. I understand from a housing developer that it is easier to have 3 or 4 relatively similar track-homes, however this creates a neighborhood where all the residents will have roughly the same income. Lower income individuals who cannot afford one of the houses will be pushed to less desirable neighborhoods and those who can afford to buy into the homogeneity will do so. Repeat this process enough times and you end up with the type of segregation Cowen described in the quote above.

 

I don’t want to approach the issue by saying that we will all benefit by making our neighborhoods more diverse. I don’t want to just accept that this is how things are and that “not-in-my-backyard” (NIMBY) sentiments are too strong for us to make changes. Instead, I want to be able to start a conversation that encourages us to live up to our belief that everyone deserves an equal opportunity.

 

Right now, there are children in my neighborhood who face a long commute if they want to be socially engaged with sports, music, or other extracurricular activities. These kids don’t have great places to go to play outside, and don’t have opportunities to connect with people near them to build connections to help them later in life. As a contrast to their experiences, I grew up in a neighborhood with ample space to play outside and be active, and I had neighbors who had connections that have helped me. If we truly believe in the idea of equality of opportunity, we need to find better ways to integrate young children and reverse the failures of our housing and urban development policies. These children deserve opportunities to maximize their lives and shouldn’t be locked out of opportunity simply because they grow up in parts of a city that don’t offer the same access to resources as children in other parts of the city.

The Whole

The United States is an interesting place. We have become an incredibly wealthy nation and have done things to advance things like technology, living standards, and scientific knowledge in ways that have improved the entire globe. The achievements of the United States have come while we have simultaneously adopted a narrative of individuality and individual success. It is our freedom, our pursuit of capitalism and greatness, and our individual desires to achieve and become great that have pushed our country to what it is today.

 

At least, that is the story we tell ourselves. While this narrative has taken hold, we have also had countless people who have advocated not for just individual freedom and success, but for national unity and for a cohesive vision of our society. Individuals who have been willing to sacrifice their own self-interest for the welfare of others has also been part of our American story, but it is often forgotten or at least not celebrated in the way that ruthless capitalism is (think about all the books written about Steve Jobs). Forgetting the connections between us all, the degree to which some people do everything they can for others, and the importance of becoming one people across the country is not new.

 

In his book The Quartet, Joseph Ellis takes a critical look at the actions of four of our founding fathers to bring about the adoption of our current constitution following the Articles of Confederation. In my last post, I wrote about John Jay, a relatively unknown founding father, and someone who made decisions across his political career to drive forward the national interest rather than a personal or state interest. An example of his nation-first mindset is given in The Quartet surrounding the question of Vermont Statehood. The state of New York at one point included what is now Vermont, and most New Yorkers did not want to allow Vermont to become its own state. Jay, however, recognized that Vermont statehood would be good for the United States as a whole, even if it was not in the immediate interest of New York. “Despite pressure from the New York legislature,” Ellis writes, “he would not budge from his conviction that the whole needed to take precedence over the parts, the first clear expression of his national orientation.”

 

I don’t have a prescription for the perfect balance between individualism and group centered thought, but I think the United States would do well to better recognize our interdependence and to encourage more actions that made personal sacrifices for the good of national unity. There have been studies recently that demonstrate that greater income inequality, particularly between an extremely wealthy few and the masses can lead to political instability, which could be damaging for the country as a whole. At the same time, encouraging individual success and achievement is of crucial importance. As Tyler Cowen describes in his book The Complacent Class, achieving economic growth should be a top priority, as increased GDP will lead to increased living standards and compounding returns on development and advancement. Encouraging wealth building potential can help with GDP growth, but on its own and without recognition of the value of social cohesion, instability can erupt and dismantle economic progress and development. The policy implications and solutions are difficult to think through, but on an individual level I think we can all do more to better respect the whole and discount our own personal interests.

Political Realism

The last presidential election in the United States was undoubtedly an election unconstrained by political reality, feasibility, and truth. Both parties saw candidates from the outside make huge promises and sweeping generalizations during the campaign, with little or no consideration for how things could actually work in our political environment and economic system. President Trump outlandishly called for a wall along our southern border though few felt that it would be practical, possible, or effective, and Senator Sanders passionately announced his desire for a new healthcare system run entirely by the federal government, all the while downplaying the program’s costs, its political unfeasibility, and the fact that he did not have much of the implementation planned out.

 

Political realism operates in a different way than seems to be successful in our extravagant presidential elections. We prize bold energetic ideas and characters when electing a president, and realism is left to the side. To be a political realist, you have to be honest about the current situation, about how the status quo could change, and about what improvements or harms could possible arise. Observing that the status quo is not too bad and that there are may potentially worse situations that society could be facing does not win elections, but being more aware and asking these types of questions does help government improve.

 

Large grandiose plans and visions do not hold up over the long term. It is important for policy planners and decision-makers to think about political feasibility and to think about alternatives so that plans can be chosen that can actually be implemented and to meet the needs of society. We live in a world with limited resources like time and money, so we must think rationally and strategically about what we have. Large sweeping changes and plans are difficult because they must find a new way to rearrange the already limited resources we have.

 

Jonathan Rauch describes political realists in his book Political Realism by writing, “Always, the realists, asks: ‘Compared with what?’ Principles alone mean little until examined in the harsh light of real-world alternatives.” When we elect leaders based entirely on principle and charisma, and not based on an evaluation of alternatives, we end up in a place where good plans are abandoned for fantastic plans that could never truly be put in place, at least not in a good way. When our leaders are constrained to a limited set of principles, their policy options are limited and less imaginative, and as a result, good policy is thrown out. If we can’t meet all our principles in this model (our current model for politics) then we don’t take any action and we don’t improve the status quo in any meaningful way. Political realism isn’t sexy and doesn’t always win elections, but it does help society move forward with policy that can actually be implemented.

 

Today, as I reflect back on this quick post that I originally wrote in May of 2018, I can’t help but think about the power of signaling. At the end of the school semester I read Robin Hanson and Kevin Simler’s book The Elephant in the Brain and was captivated by a conversation that Hanson had with Tyler Cowen. Much of what we do in politics is signaling, and describing grandiose plans and visions signals your belief in the future prosperity of the country. Your huge plan is also a signal to voters that they should align with you because you think that what we need is the most scaled up version of what your co-partisans say is necessary. In a sense, politicians are signaling their loyalty and willingness to defend party ideas, even if those ideas are practically impossible. Political realism just can’t bring the same signaling firepower to the conversation, and may ultimately signal a betrayal of the party platform and a betrayal of a core group identity.