News

Loading...

Wednesday, October 31, 2012

Can a Jolt Be Good for You? (When Reductios Crash and Burn)

Bob Murphy tries to do a reductio of the case that disasters sometimes contain a silver lining by positing the absurdity of the analogous microeconomic case:
The "macro" case of an economy with idle resources, suddenly being jolted out of its rut by a hurricane, is analogous to a "micro" case of a man who was laid off, agonizing over what to do with himself. Should he go back to school, apply to work at fast food restaurants, start his own lawn-cutting business…? Then, in the midst of his indecision, he realizes his house is on fire! The man suddenly knows exactly what he needs to do with himself—he has to run to the kitchen and grab the fire extinguisher. Yet would anybody dare argue that the fire, notwithstanding the property damage to the house, at least solved the man’s problem of idle labor?
Well, Bob, the answer, unfortunately for your argument, is that perhaps not in such an extreme case (but who knows without more details), but in closely similar cases, yes, people would so dare argue, and do so dare argue, all the time. (And I think they are quite correct to do so.) In fact, as an Evangelical Christian, Bob must be familiar with the absolutely vast number of "it seemed awful at first, but it turned out to be a blessing in disguise" stories that arise in that setting. (I linked to just four of hundreds and hundreds of pages that come up with that theme in a Google search.)

Then, there is the well known adage in AA circles that one has to "hit bottom" before one can get better: "Hitting rock bottom in addiction or alcoholism is actually a good thing in most cases." And the same idea occurs in Buddhism, in Judaism, in Hinduism, in Islam, in Taoism, in New Age spirituality, in Wicca, in sports, in business, in handling post-traumatic stress, and more areas that you can surely identify for yourself. When I broke my leg a year-and-a-half ago, I had to conclude that, in the end, the stress and trauma had been good for me: I had grown too lethargic, and the injury forced me to take a good look at whether I really wanted to keep living that way. (And these examples show the utter stupidity of the response to "There is a silver lining to this disaster" that I sometimes see posted on blogs: "Yeah? Then why don't we nuke our own cities?" Well, if I had gone and deliberately broken my own leg, that would just have been sinking into self-destructive despair rather than rising above circumstances!)

Now, certainly none of the above proves that the same thing can happen on a macro level. That is a matter for empirical investigation. But it does show that Murphy's reductio fails spectacularly: Yes, at the micro level we dare to say good can come out of bad all the time, and across all cultures and all eras, as far as I can see.

9 comments:

  1. Yes Gene, I agree that if you totally change my analogy, then it doesn't work well.

    What I am taking as the "Keynesian" position on this (perhaps unfairly) is that a natural disaster can at least solve the problem of idle resources. So the analog of that would be a guy not knowing what to do with his labor, and then having that indecision solved because of a disaster.

    You then tried to make me generalize to all situations of "it was awful at first, but in retrospect good." OK fine, but that's not at all analogous to the "Keynesian" view on disasters. If somebody said, "Hey, it's possible that because of the hurricane, someone is going to get hit in the head and then realize how to design a flux capacitor. So Sandy actually will boost GDP 1000% and make us all kings next year. Are you saying that's impossible Bob?"

    Do you think I would say it's impossible, Gene?

    No, I'm not talking about disasters having possible benefits through mechanisms like this, I'm talking about disasters having benefits because they put people back to work. That's not analogous to your AA examples.

    ReplyDelete
    Replies
    1. Well, I think it really is very similar: look at my broken leg example. In *many* of these cases, the disaster is good because people rally to face it: which is exactly the Keynesian case.

      Delete
    2. Or look at it this way, Bob: if anyone thought, "Yes, jumping up to get the fire extinguisher, the guy will be busy for five minutes; then, right back into his stupor of indecision," then no one sensible would write these columns you attack. But that's not what they think: they think, this will get him going again! First he'll put out the fire, then repair the damage, then he's going to write a great story for Reader's Digest about the episode, and then he'll finally write that novel he's been talking about."

      It is an empirical question whether in any case this *does* happen: but it is not incoherent to think it *could* happen.

      Delete
    3. True, if people fundamentally abandoned their most often-advanced arguments in favor of stimulus, and instead made the argument that "Working to restore the previous will make it easier to identify sustainable patterns of production, once that previous state is reached", then that would very much be worth engaging!

      May that search-theoretic, entrepreneurs-matter argument commence!

      Delete
  2. The silver lining in the physical pain you are causing me, is that I now will write a bestselling novel about two Irishmen who argue over everything.

    ReplyDelete
  3. Isn't Bob actually making the case for Keynesianism? After all, as Gene implicitly argues, it is possible for a jolt to shift an *individual* from one quilibrium to another, higher one. Gene is surely right about this; he AA example is on point. So by analogizing Bob seems to suggest that in the economy as a whole there could be lower local equilibria and a jolt could send us to a higher one. I'm not sure that matches my idea of how economic equilibria distribute themselves, but it seems possible; Bob has given me food for thought.

    ReplyDelete
  4. Have either of you seen Hotel Terminus, about the SS and deportations in Lyon? At one point one of the interviewees, a middle aged woman, tells about the nazis rounding up the Jews in her building. As she was passing a door one of her neighbours, whom she did not know well, suddenly opened the door, pulled her in, and hid her. Now I want to ask about that neighbour. Will Bob, believing christian, not agree that rescuing this child was in some important sense the best thing that ever happened to this woman? Because I think it was, and I've seen enough rescuers interviewed to know many felt that way.
    Enough I think to show these macro-micro reductios have problems.

    ReplyDelete
  5. A jolt can be good for you.

    It cannot be good for you in expectation, or that would suggest that the optimal strategy for everyone would be to keep destroying everything they've achieved because of all the monumental blessings that will spill off from it.

    ReplyDelete
    Replies
    1. We agree! I made this point in a post one or two after this one.

      Delete