It’s now available.
If I had it to do over again I’d start with a brief introduction of Slavisa and some information putting the discussion in context. I assumed I’d have administrative access to the page the interview was placed, and that I could compensate with text. Alas, unless you receive the Critical Review newsletter you may be in the dark. Or you may be reading this.
I met Slavisa Tasic, Phd candidate in economics a the University of Turin, last summer in San Antonio at a seminar sponsored by the Critical Review foundation. The article we discuss in the interview is “The Illusion of Regulatory Competence,” found in the newest issue of CR. The priors involved in the piece are thoroughly classical liberal, and it takes a Hayekian perspective on government intervention informed by experimental psychology.
Tasic utilizes the work of two psychologists, Leonid Rozenblit and Frank Keil, and their discovery of what they call “the illusion of explanatory depth” (IOED) – the “…belief that we understand the causes, effects and inner workings of complex mechanisms, events and processes much better than we actually do” – to address the efficacy of regulatory action. Rozenblit and Keil find that, more often than not, participants in their studies of competence and awareness on a variety of issues know far less about said issues (the working of a helicopter, etc.) than they initially thought. In Tasic’s words: “The illusion occurs when we have a general, superficial knowledge about some obvious patterns, and confuse this with insight about the mechanics of a phenomenon.”
Also mentioned in the article (but not the interview) is the work of Dietrich Dorner, whose experiments are, on their face, more relevant to issues of state regulation. Dorner had subjects manipulate computer simulated land use planning scenarios, with poor results manifest due to a lack of taking into account unexpected factor interdependence (competing goals and policy tools). The article did not go into any depth, so to speak, on the specifics involved, but only addressed the frustration of achieving a given goal in the model due to the ignorance that is the article’s theme.
Addressed in the interview, and a closely related subject matter, was behavioral economics. I mention the work of Mario Rizzo and Glen Whitman in undermining the increasingly sophisticated case for a “new paternalism.” Instead of getting into it here, I’ll link to the timely subject matter at Cato Unbound.
I hope to do more interviews in the future, but there is no reason to limit myself to only scholars for Critical Review.
April 7, 2010 at 1:28 am
I agree there should have been more introduction. I liked the goalie analogy used near the end. Not only would the immobile goalie be bored, he might also be booed! I believe you mentioned that incentive for the FDA, but I could be confusing you with David Friedman since I listened to both recordings (the beginnings at least, I listened to the end again just now to remember what analogy it was I liked) more than 24 hours ago.
April 7, 2010 at 12:56 pm
Nah, I didn’t mention the FDA. I’ll take a look at that Friedman video.
April 10, 2010 at 4:42 pm
Paywalled journals are so last century.
The main point seems to be that regulation is hard because cognitive biases and limitations make it difficult to accurately judge its consequences. That seems so obvious as to hardly be worth stating, but if you need some trendy research to reinforce this bit of common sense, then OK. But the implication that regulation is almost always bad is not warranted. That its impossible to predict all the ramifications of regulation just means it is like every other human action.
It’s a fundamental misundestanding of the role of regulation to assume that it requires excessive amounts of “explanatory depth”. Let’s take regulation of the mining industry, for instance, whose weakness recently contributed to the death of 29 miners. The need for regulation arises because mine owners are greedy and mine workers are desperate, and thus safety tends to be shortchanged. Regulating this industry requires some knowledge of mine safety issues, but it doesn’t require the regulators to have any deeper knowledge of geology and mining than the other parties involved. The problem is one of interests, not understanding. Regulators aren’t necessarily wiser than the mine operators, they simply different jobs, jobs that involve taking into account interests other than the purely economic.
April 10, 2010 at 5:10 pm
Just because miners are desperate means you better know what decisions to make for them. “Shortchanged” must be relative to some correct safety measures, and a possibly infinite premium could to placed on it to ensure there are no deaths at all (and also no mining!). Just because a disaster occurs doesn’t mean it’s not ex ante efficient.
April 10, 2010 at 5:32 pm
…the implication that regulation is almost always bad is not warranted. That its impossible to predict all the ramifications of regulation just means it is like every other human action.
I agree it was implied. Our libertarian priors were on display for anyone paying attention. The interview was not exhaustive, true. In retrospect a discussion about the way that regulation limits potential exit options by mandating a homogeneous regime of contractual arrangements – and the way this creates systemic problems when it goes wrong – should have been explored.
The need for regulation arises because mine owners are greedy and mine workers are desperate, and thus safety tends to be shortchanged.
Sure, in a vulgar civics textbook maybe. Positing greed in no way sheds light on the purpose and potential result of regulation. Indeed libertarians and conservatives would suggest that greed is the reason why mine owners would be more interested in safety and regulators rather indifferent.
The problem is one of interests, not understanding.
If only. To draw upon our reservoir of stereotypes about which groups have which interests, and then choose the good guys and bad guys based on this, would make politics so much less intellectually frustrating. I think the cognitive problem of social democracy gets far less attention that it deserves.
April 10, 2010 at 6:59 pm
Indeed libertarians and conservatives would suggest that greed is the reason why mine owners would be more interested in safety and regulators rather indifferent.
A fine point. Maybe mtraven subconsciously is actually arguing that the regulators are actually a better and more conscientious caste who might do a better job of choosing what is right, even with lesser incentives to do so.
But if so, maybe mtraven is right to some extent.
I think some paternalistic regulation is probably good – but I think it should err on the side of freedom/danger. I don’t think it usually does err on that side. And I don’t think I know how to make a government where it would do so.
April 10, 2010 at 7:58 pm
What civics textbook? It’s straight out of the news. The mine operators sacrifice worker safety for increased production if they can get away with it (and I’m sorry I used the word “greedy” — would “profit-maximizing” be better? Consider it substituted). Those facts are not at all in controversy.
To draw upon our reservoir of stereotypes about which groups have which interests, and then choose the good guys and bad guys based on this..
Every group has interests, and for the purposes of this disscusion let’s say there are no good and bad guys. Capitalists extract the most value they can, because that’s what they do, and are heedless of externalities if they can get away with it (in this case the lives of workers are externalities). It is one of the jobs of government to impose the costs of externalities where possible.
TGGP: Are you saying that miners prefer to trade away safety for increased productivity, like the owners do? Seems pretty unlikely. I know you like evidence, perhaps you can produce some miners who say that. Here’s what their spokesmen say.
April 10, 2010 at 8:21 pm
I don’t know the preferences of miners, but I tend to rely on revealed preferences through actions. Ex post the disaster is obviously terrible and should have been avoided, but like Landsburg I think it makes sense to focus on the pre-fire attitudes of employees (any regulatory changes can only affect the future, of course) when they knew only a risk rather than certainty. I don’t know what workers would have needed to trade off in order to have safer conditions. I think it is mighty presumptuous to make those sorts of assumptions and overrule the choices people make.
The lives of workers are NOT externalities. You plainly don’t understand what an externality is or decided to act ignorant. Workers are parties to a transaction taking part in the activity, externalities affect people outside the transaction. If capitalists could get away with it they wouldn’t pay workers anything or let them have days/time off working other than the minimum necessary. That’s not sufficient for market failure. You’re a reasonably smart guy, I expect more sophisticated arguments from you.
April 13, 2010 at 1:49 am
The preferences of miners are revealed in the century-old battle for unionization and worker rights. (Here’s a small slice of history, but it’s not like its obscure or little-known. That this battle isn’t raging very strong these days is because the owners have largely won, labor has been more-or-less crushed as a political force in this country. But that’s not enough for you, you’d prefer to weaken the already weak but existing and hard-won regulatory protections they enjoy.
The Landsburg article seemed laughably innumerate as well as callous. It assumes that workers are stealing 2 shirts a week, and presumably not selling them or the economic argument wouldn’t work. Those tenements must have big closets. I find it hard to believe this guy is a respected economist (actually, sadly, I don’t).
I suppose you are right about worker injuries not being externalities in the strict sense.
The point of mine safety regulation, whether imposed by the government or by union contract is to ensure that market forces don’t result in preventable loss of life. Since I don’t worship the market as some kind of sacred oracle, nothing about that seems objectionable to me.
I’ll take libertarians more seriously when they start objecting to government inteference on behalf of the powerful 1/10th as strongly as they do when it intervenes on behalf of the powerless. Examples of the former are this legal principle and this illustration of how mining interests can run a state government.
April 14, 2010 at 12:16 am
I agree that Landsburg relies far too heavily on his armchair. He probably knows a hell of a lot more about math, physics and formal logic than any of us, but that’s of limited utility in many situations. That’s why I think Adam Ozimek (linked below) is more convincing.
The preferences of Americans were not revealed by the fight for independence. From what I’ve heard there were roughly as many loyalists as “patriots”, with about the same number of folks being indifferent.
Public sector labor unions are still politically strong. The economy has changed so that unions have been declining in the private sector though.
I’m not management or capital, so that makes me labor. I don’t “enjoy” your protections, which are really prohibitions on my freedom to enter into the contracts I choose. I don’t view it as benevolent assistance, but as a big “Fuck you, I don’t care what you think is best for yourself”, and I say “Fuck you” right back. Kevin Carson thinks labor unions would be strengthened by scrapping labor law, personally I’m indifferent.
A lot of people die in car accidents driving to work. If we wanted to avoid any such preventable deaths we could prohibit people from commuting. Or driving, period! Economics frames things in terms of tradeoffs, and my view is that the best people to make tradeoffs are individuals themselves rather than someone else choosing “for” them.
The legal rule issue reminds me of this. I didn’t read the whole thing, but it makes sense that the co-worker is responsible for the accidents they cause.
I see folks like Radley Balko, the Institute for Justice and others sticking up for the little guy all the time. The “Kelo” decision in particular resulted in pretty much unanimous outrage among libertarians (the bailouts rather similarly, even if relatively undeservedly). Jacob Sullum can even give a halfway decent argument for Scalia (conservative rather than libertarian, though I think that makes it an even stronger example) on civil liberties. Of course the amount of outrage one thinks an issue deserves is rather subjective.
April 16, 2010 at 1:29 am
I agree that Landsburg relies far too heavily on his armchair.
Hell, I’m in my armchair too, from which I can see that he’s full of shit. I probaby know more formal logic than him too, not that that has anything to do with anything.
I don’t “enjoy” your protections, which are really prohibitions on my freedom to enter into the contracts I choose.
Well, perhaps you should relocate yourself to the Marianas, a charming place that is US territority but generally exempt from the labor laws, and you would be free to sell your labor for whatever the market determines it is worth. But as long as you are in the
Economics frames things in terms of tradeoffs, and my view is that the best people to make tradeoffs are individuals themselves rather than someone else choosing “for” them.
Why? People are notoriously bad at estimating and reasoning about risk, for instance.
I see folks like Radley Balko, the Institute for Justice and others sticking up for the little guy all the time.
It’s true that there are some libertarian types who are activists in this sense. Not to take anything away from their work, but I don’t see it as distinctively libertarian, since there are plenty of groups on the left (like the ACLU) who do similar work.
April 16, 2010 at 9:28 pm
Your last sentence about the Marianas got cut off. There are a number of places I might consider moving to (hopefully many, many more once Seasteading hits the big time!) but there are a number of significant costs, most notably the job I already have.
You previously complained about libertarians not complaining about some things. Now you see it doesn’t count as “distinctly” libertarian because the ACLU does that too. Oh well. I suppose the defense of the property rights of the little guy (think Kelo) is an where libertarians have been at the forefront and meets your criteria.
April 18, 2010 at 10:56 am
OK: there is a subset of libertarians who are actively engaged in protecting the rights of ordinary people. This is useful and important work. Satisfied?
However, this is not the main thrust of libertarianism as I understand it. It’s not why the Koch Foundation gives away boatloads of money to libertarian-themed institutions. It conflates cases where government protects rights with cases where government violates rights. Because of its limited focus on property rights, it ignores the rights of the propertyless. It doesn’t explain why professed libertarians like Glenn Reynolds can support endless war, empire, torture, and violation of individual rights (and BTW, if I was a libertarian I would put more effort into protecting my brand from people like that who misuse it).
The cut off sentence was something like “as long as you are in the actual United States you have to operate under the the US political and economic system, which includes workplace safety regulations. Deal with it or get out. Or of course you can join up with the E. Coli Republicans and politically organize for the repeal of regulation. There’s plenty of money in it.”
April 18, 2010 at 7:26 pm
Radley Balko is one of those libertarians who have received money from Koch. I’m not aware of Glenn Reynolds having done so.
Libertarians view people as self-owners, hence making what might be called “human rights” a kind of property right.
Political organizing for repeal of bad laws is a public good. Any benefits from my actions would spill over onto others and my individual actions are unlikely to make a difference, so my incentive is to free-ride. At any rate, I don’t care for folk-activism.
April 10, 2010 at 8:11 pm
> Capitalists extract the most value they can, because that’s what they do
Ha. On a rational actor, non-HBD, Homo economicus model, the capitalists should desire resolutely that their mine have a reputation for safety. Admit it: your model assumes that mine workers are tards unable to evaluate risk, and/or that regulators are a relatively noble class that loves Mankind relatively more than money. Admit it! And note, I’m not saying that this model is wrong.
April 10, 2010 at 8:29 pm
What civics textbook?
The one that I was assigned in junior college that discussed the rise of the progressive state. No doubt there exist more…like the ones I was assigned in high school that discussed the rise of the progressive state.
The mine operators sacrifice worker safety for increased production if they can get away with it (and I’m sorry I used the word “greedy” — would “profit-maximizing” be better? Consider it substituted). Those facts are not at all in controversy.
Again, applying the potential for profit-maximizing (in the sense of seeking to gain more than one loses, monetary or otherwise) even-handedly doesn’t suggest that regulators would be any more willing to do what they were designed to do (in fact few really existing capitalist firms aim to perfectly profit-maximize). For a regulatory institution being profit-maximizing might mean revenue enhancement via congressional funding, not actually regulating.
Capitalists extract the most value they can, because that’s what they do…
Well just as in theory regulators regulate because “that’s what they do,” and being cognizant of worker protection is a subset of that, in theory capitalists reap profits because that’s what they do, and protecting the value of their employees by preventing their death is a subset of that.
Greed/profit-maximizing alone isn’t a reliable guide to determining the fate of workers in a social democratic market society.
Are you saying that miners prefer to trade away safety for increased productivity, like the owners do?
Substitute the word “productivity” for “compensation” and its obvious that everybody does this all the time.
April 10, 2010 at 9:42 pm
Sorry, I confess that I couldn’t make head or tail of that last comment. Regulatory agencies are not profit-maximizing. Some mine owners demonstrably do not value their employees’ lives and have to be pressured to do so by unions and/or government. That’s just the facts, which trumps theory.
April 11, 2010 at 9:52 pm
“Some mine owners demonstrably do not value their employees’ lives and have to be pressured to do so by unions and/or government. That’s just the facts, which trumps theory.”
I can’t resist the reductio. If I threatened to kill of a the workers in a mine, would the owner be indifferent? Of course not, he has invested in them and values their life, just to a lesser extent to the mineworkers. The mine owner doesn’t directly value anything above some basic subsistence to his workers, does that mean he will have to be forced? No, it’s just a fact that’s wrong, wages increase over time for normal economic reasons without government or union involvement (unions and governments can set a wage above a market clearing rate, but the rate itself can change independently).
Some relevant discussions of externalities here and here.
One possible argument for market failure is that individual workers cannot effectively obtain information about the safety of mines and because info is a public good nobody else will bother to collect it, so the government must do so (this is sufficient to justify public provision of info, but not regulation). The video you linked to suggests they were already aware of the poor safety record.
April 12, 2010 at 7:16 pm
Adam Ozimek has a some data on mining fatalities compared to the introduction of regulation over time.
April 11, 2010 at 6:47 am
Miners probably have the capacity to look into the safety of potential employers more than they do. But they may not want to, because it’s better to look ‘hardcore’ for reasons of status/mating. I’ve been lightheartedly mocked for using modestly more safety equipment/procedures than others in work situations. This is probably an obvious and normal status game to play, a universal one. I knew this kid Chuck who allegedly rode a BMX bike off the roof of a MacDonald’s. You can see the sociobio upshot: I thought, “wow, if he and I ever fall for the same female or whatever, I probably wouldn’t be able to prevail against him in male-male combat.”
An interesting example is helmets in cars. Pretty much no one has ever used them (except in racecars). My understanding is that they are possibly superfluous now, what with airbags being standard. But it’s fairly hard to see how they could have failed to be beneficial in the pre-airbag world. Racecars and motorcycles may be a stronger display of hardcoreness, but the lack of helmets in normal cars has particular interest because it involves the whole population, not just a few daring psychological types.
Of course, if I’m some mining safety bureaucrat today, I move amongst a less macho class. They won’t think I’m a wuss for trying to save other peoples’ lives. Moreover, it’s not my own self I’m trying to protect, anyway. So I don’t look like a person terrified of risks to *myself*, who will therefore do nothing to protect my allies or mate if they get into trouble.
So, the miners may face disincentives against looking after their interests sufficiently. And the capitalists have little reason to care more than the miners do, though they have plenty of reason to care as much as the miners do. Mine safety technocrats on the other hand will probably tend towards regulatory overkill. They don’t have too many obvious ways to distinguish themselves other than coming up with brilliant new regulations and enforcement procedures.
April 16, 2010 at 9:02 pm
For what it’s worth, here is an interview with Massey owner Don Blankenship from one of my local papers:
http://www.dailymail.com/News/201004140951
I don’t have much to add to this exchange, but I think it’s worth noting that underground miners in West Virginia these days are well-trained technicians who earn relatively high salaries for their work. The opportunity constraints that arguably applied in the old days are far less relevant now, and I think there is every reason to assume that modern miners are aware of the inherent risks of their profession.
One issue that is seldom addressed in the wake of mining disasters is the political — and regulatory — opposition to surface mining, which is safer and, by most accounts, at least as efficient as deep mining. Blankenship is a polarizing figure, but “mountaintop removal” has no political constituency. People here love their rolling hills, at whatever cost.
July 19, 2011 at 1:26 pm
[...] Instead of repeating myself, read this. [...]