Use Your Models, Don't Believe in Them!

I formulated this principle when I was programming mathematical models of financial markets. I noticed that my colleague who generated the models (that I then implemented) was never particularly attached to them. He would run them so long as they were indicating profitable trades, and then abandon them when they stopped. I was also writing Economics for Real People at that time, and grappling with the issue of the relevance of mathematical models in the economic world. Noticing the modelers attitude, one day I asked him, "Would you say that our practice is to use our models, rather than to believe in them?"

"Absolutely," he replied.

Mary Morgan's book reaches a similar conclusion.

Models: What Are They Good For?

"Writing down a model and manipulating it allows economists to think through in a consistent and logical way how a number of variables might interrelate, and to find solutions to questions about such systems. This habit of making and using models extends the powers of the mind to ask questions and explore the answers in complicated cases." -- Mary Morgan, The World in the Model, p. 258

Hayek abandoned methodological individualism

"In his work on the evolution of social orders, Hayek thus abandons the individualist methodology he proposed in the wartime writings, thereby rectifying the inconsistency that that precept implied for the system of his thought." -- Andy Dennis, "Methodological Individualism and Society: Hayek's Evolving View," in Austrian Economic Perspectives on Individualism and Society, p. 18

That is correct.


Now, no one has a patent or copyright on the use of the word "naturalism," so anything one says about what it means can be contradicted somewhere in the works of people who call themselves adherents of naturalism. Therefore I am just going to describe a typical view that I have seen out there: "Nothing exists except the sort of things described in the theories of physics." (That exact definition of naturalism is not given in the Wikipedia entry, but I know I have seen it stated: if this were an academic paper, I would go hunt down the exact place I saw it, but this is just a blog post.)

There is a rather obvious incoherence in this idea: One of the things that is very much not described by the theories of physics is.. the theories of physics. (These theories are about quarks and electrons and photons and forces and so on: they never are about theories themselves, or how theories come to exist, or causal relationships between theories, etc.) Therefore, the theories of physics are not real entities in the world. So naturalism, in this version, essentially says, "The only real things are the things in that box over there, which, by the way, does not exist."

This is why when Keshav, for instance, tells me that "But naturalists often believe X," I tell him that this is beside the point: once you have excepted a contradiction at the core of your philosophical thought, all bets are off: you might as well throw in whatever other ideas seem convenient as well, since logic has been tossed out the window.

And I don't for a second think that this is some novel discovery of mine: many, many philosophers have pointed this out previously. I am just doing my small bit to stem the tide of nonsense.

Pygmalion comes alive

I actually had an economist tell me the other day that "utility" is a real "thing" out there in the world, and not just a theoretical construct to help economists understand it! Mary Morgan, in The World in the Model, has some good quotes explaining how this sort of thing happens:

"(The triumph of modelling) has created a perspectival change in the way economist view their field: they began by looking at the economic world through the lens of their models and ended by seeing their models in the world" (379).

"in the process, those small world models of their science became so familiar to economists that now, when economists look at their small mathematical models they see the real world, and when they look at that big real world they see it is a sequence of their small models" (409).

You know how when you spend enough time staring at a white circle on a black page, and then look away, you see an after-image as if it is out there in the real world? Well, that.

If you treat your postulates like hypotheses, you wind up talking nonsense

Physics postulates a world explicable under the category of measurable quantities. Any such quantities it finds will be deemed "physical." The fact that everything physics finds is explicable in terms of the physical is not a hypothesis that physicists are testing, it is an assumption of their science.

As such it is ridiculous to point to the work of physicists as "evidence" for a philosophy which one may refer to as "naturalism." It is not a flaw of physics or physicists to make this assumption. What forms any particular science is the set of postulates which it makes about the world, and through which it proceeds to investigate the world as it is seen under those postulates. But it is a mistake to forget that these are postulates and not discoveries.

Consider an episode like the discovery of the weak nuclear force. Certain measurable phenomena cannot be explained through any of the other known forces. These phenomena have weird characteristics: certain parities that are usually maintained are violated, and quarks change their flavor. So physicists postulated the existence of a force that would produce these phenomena.

Now perhaps what was "really" going on was the God, having nearly finished creation, thought to himself, "I can foresee these people called physicists, who are going to think their theories explain everything. So let me continually cause the universe to behave in such a way that certain parities are regularly violated, and quarks change their flavor. That should shake them up."

So long as God did this in a measurably regular way, what we would see would be no different than if these things are caused by a "weak nuclear force." But physicists proceed by postulating things like heavy bosons and a weak nuclear force. One may protest, "But physicists are able to draw new predictions from their idea of these phenomena arising from a force!" That is great, and it is why physicists should continue to postulate forces. But the end result is not distinguishable from a case in which God was "fiddling" around with things in a regular, predictable way that hinted at further regularities to be detected.

Or consider the partial confirmation of Bell's theorem by Aspect et al. One might view this result and conclude, "Well, God just keeps these spatially separated particles correlated." But what many physicists have decided is that "local realism" is false. Now, local realism was a linchpin of the very idea of a "physical world," which is why Einstein and his colleagues proposed their original thought experiment, intending it as a way of showing that quantum mechanics must be incorrect in some way. But in the face of Bell and Aspect, what most physicists have done is simply to alter their idea of what "physical" reality is like.

Once again, I am not criticizing physicists for proceeding in this fashion: this way of proceeding is the very thing that creates physics as a distinct world of ideas. What I am pointing out is that is no more significant that physicists find everything in the world of physics explicable by physical principles than it is that Swahili speakers find everything in their world adequately described in the Swahili language. Swahili is, I am sure, a fine language, and I bet it describes the world quite well. But it would be a terrible error to leap from that fact to the conclusion that the world is actually built out of Swahili words and phrases.

An Observable, Reproducible Supernatural Phenomenon

I heard this phrase on some show that was touting the reality of the "supernatural." It is a bit of silliness that plagues both skeptics of and believers in the supernatural.

The silliness consists in this: Anything observable and reproducible will be considered natural. When quantum physicists discovered wave-particle duality or non-local effects, things that had never been considered "natural" before, did they declare these things "supernatural"? No, they just said, "Well, nature is stranger than we thought."

I am not trying to comment on the existence of the "supernatural" here: I am just noting that asking for or hoping for scientific evidence of the supernatural is absurd: whether or not any such thing as the supernatural exists, there will never be scientific evidence for it, because every sort of thing for which scientific evidence exists will be incorporated into the "natural."

Edgeworth Boxed!

Through the most difficult part, I think: the agents trade their goods until they reach an equilibrium. Here is the Python code that does this, formatted by Blogger, which seems to always want to reduce two spaces to one:

An Edgeworth Box model where two agents trade goods.
import logging
import entity
import spatial_agent

TRADE = "trade"

WINE = "wine"
CHEESE = "cheese"

GAIN = 1
LOSE = -1

Accept = True
Refuse = False

def util_func(qty):
    Later, we want to be able to pass in arbitrary util funcs for each good-trader combo.
    return 10 - .5 * qty

class EdgeboxAgent(spatial_agent.SpatialAgent):
    Agents who attempt to trade goods to achieve greater utility.
    We are descending this from SpatialAgent, because later on we want
    traders who can detect local prices but may not know about distant ones

    def __init__(self, name, goal=TRADE):
        super().__init__(name, goal, max_detect=1000.0)
        self.goods = {}
        self.utils = 0

    def act(self):
        Act is called in an interactive loop by code in the base framework

        potential_traders = self.survey_env(TRADE)       
        for t in potential_traders:
  "Potential trader for "
                    + " (who has " + " ".join(self.list_goods())
                    + " and utils of " + str(self.utils)
                    + "): " +
            for g in self.goods:
                if self.goods[g]["endow"] > 0:
           + " is offering " + g + " to " +
                    t.rec_offer(g, 1, self)

    def endow(self, good, endow):
        if good not in self.goods:
        self.goods[good]["endow"] = endow
        for i in range(1, endow):
            self.utils += self.goods[good]["util_func"](i)

        self.pretrade_utils = self.utils

# for the moment all offers are of 1 unit!
    def rec_offer(self, offer_good, amt, counterparty):
        Agent has received an offer of a good, and loops over her goods to
        see if there is a profitable trade. If 'yes,' make a counter-offer.

        util_gain = self.__marginal_util(offer_good, amt, GAIN)
                + " is looking at a util gain of "
                + str(util_gain)
                + " for good "
                + offer_good)
        for g in self.goods:
            if (g != offer_good) and (self.goods[g]["endow"] > 0):
                util_loss = self.__marginal_util(g, 1, LOSE)
                     + " is looking at a util loss of "
                     + str(util_loss)
                     + " for good "
                     + g)
                if (util_gain + util_loss) > 0:
                            offer_good, amt, g, 1, self) is Accept):
              , counterparty, offer_good)
                        return Accept

    def rec_reply(self, my_good, my_amt, his_good, his_amt, counterparty):
        This is a response to a trade offer this agent has initiated

        util_gain = self.__marginal_util(his_good, his_amt, 1)
        util_loss = self.__marginal_util(my_good, my_amt, -1)
        return (util_gain + util_loss) > 0

    def list_goods(self):
        goods_list = []
        for g in self.goods:
        return goods_list

    def trade(self, my_good, counterparty, his_good):
        We actually swap goods, and record the trade in the environment
        """ + " going to trade " + my_good + " for " + his_good)

        self.__gain_lose_good(my_good, LOSE)
        self.__gain_lose_good(his_good, GAIN)
        counterparty.__gain_lose_good(his_good, LOSE)
        counterparty.__gain_lose_good(my_good, GAIN)


    def util_gain(self):
        return self.utils - self.pretrade_utils

    def __gain_lose_good(self, good, gain_or_lose):
        self.utils += self.__marginal_util(good, 1, gain_or_lose)
        self.goods[good]["endow"] += gain_or_lose

    def __marginal_util(self, good, amt, gain_or_lose):
        g = self.goods[good]
        if gain_or_lose == GAIN:
# we are calling our utility function stored in a dictionary here:
            return g["util_func"](g["endow"] + 1)
            return -(g["util_func"](g["endow"]))

    def __add_good(self, good):
        self.goods[good] = {"endow": 0, "util_func": util_func}

class EdgeboxEnv(spatial_agent.SpatialEnvironment):
    Contains goods and agents who exchange them.

    def __init__(self, length, height, model_nm=None):
        super().__init__("An Edgeworth Box", length, height, model_nm=model_nm)
        self.do_census = False
        self.trades_this_turn = 0

    def step(self, delay=0):
        self.user.tell("Trades this period: " + str(self.trades_this_turn))
        for a in self.agents:
            print( + " has gained " + str(a.util_gain()))

# any return other than "None" from the step function breaks the interactive loop
        if self.trades_this_turn <= 0:
            return("We've reached equilibrium.")

        self.trades_this_turn = 0

    def record_trade(self, amt):
        self.trades_this_turn += amt

Modeling can highlight real-world difficulties

So I'm making a model of agents who might exchange goods. The initial idea is to have utility function for each good they might have or obtain, as well as a present endowment of each good (which may be zero). Now, for an Edgeworth Box, my initial price model, this is easy: we only have two goods, and we know what they are in advance.

But eventually, we would like to have agents discover goods on the market that they know nothing about before encountering a potential seller. So how can they have a utility function for a good before they know it exists? (I have not solved this problem in my model, although I have ideas.)

In fact, this reflects a problem that actual market actors face: how can they know how much they want of, or what price to pay for, a good they have never encountered before? As my mentor Israel Kirzner has noted, markets inherently involve discovery.

General solutions to coding problems often take little more time than specific solutions

I am now coding up an Edgeworth Box model, in which two agents will trade goods until they reach an equilibrium distribution. Now, in the Edgeworth Box, there are only two agents, and each of them only has one good to start with.

But there is no need to program those latter two facts into the model: it is pretty much every bit as easy to code a model with N agents and G goods, and let this particular model be a special case where it just so happens that N = 2 and G = 2. It will only add a couple of lines coding to this round to make this code more generalized, while saving me a great deal of work in the future.

Exploring a model

As Mary Morgan notes in The World in the Model, one of the things we do with models is explore them, and hope that exploration tells us something about the world outside the model as well.

I appreciate this more and more as I experiment with my agent-based models. Look at the following graph of a run of Adam Smith's fashion model:

There are several very interesting things here:

1) Why does the number of followers wearing blue only once drop below the number of trendsetters wearing blue?

2) And why does that drop happen in the second period of the cycle? If I was going to get some one-off behavior from the model, I'd expect it in the first cycle, not the second.

3) And just why is that first cycle so minor compared to the others?

4) And what is going with the trendsetters in that middle stretch where they don't really seem to cycle along with the followers?

Here is a larger point to take from this: Have you ever wondered why testing business cycle theories is difficult, and economists have not all agreed on a single one? Well, the above graph is produced by a very simple model with only a handful of parameters. Real business cycles obviously have essentially an infinite number of "parameters" feeding into what occurs. So that is why!

A Wise Man's Life

"The latter part of a wise man's life is taken up in curing the follies, prejudices, and false opinions he had contracted in the former." -- Jonathan Swift

And the same goes for my life!

Nash equilibrium bleg

Updated with an expanded quote:

"If we expand are small world [of the Edgeworth Box], we meet with considerably more difficulties. This expansion goes as follows. Suppose we had Albert's possession of money taken as a starting point, instead of his possession of cheese. And suppose that, after some bargaining, Beatrice is willing to give up to over bottles of wine in exchange for 100 of Albert's guilders. If Albert agrees, the border has resulted in the price of 50 guilders per bottle. That is the so-called equilibrium price. Other individuals, with the same convex characteristics as those of Albert and Beatrice, can now enter our small world and also bid for Beatrice's wine. We can also continue this process by exchanging money against all other goods. Thus, ultimately, it appears that it can be mathematically proven that, where there is free barter, equilibrium prices can be established for all goods. This is the so-called Nash equilibrium..." -- Arnold Merkies, quoted in Mary Morgan, The World in the Model, p. 102

I have never seen Nash equilibrium connected with general price equilibrium before. Economists, does this make sense?

Setting the start-up state of a program

As my agent-based modeling system develops, I am starting to hit the issue of how to uniformly and simply handle things like passing parameters into a program, reading initialization files, and saving program state.

I decided I had better read up on this and see how others have handled it. Searching brought up this article, but the writers seem like a couple of knuckleheads, and I am having a hard time understanding what they did

Perhaps you will git my humor

I try to put my changes up to my git repository. It says the push failed, and I should try to do a pull first.

So I run the pull command, and I get a message telling me I really ought to explain why the pull is necessary.

I felt like typing, "Well, git dude, perhaps you should tell me, because you just told me I ought to do it!"

Why Python overtook Perl

A decade ago, I used Perl quite a bit. It is a very handy language that makes it possible to do many things quickly and easily.

Python also allows the accomplishment of many tasks with a few lines of code. It has some weird features that continue to annoy me: having to explicitly declare 'self' as a parameter to every class method while never explicitly passing it is close to the top of the list.

Perl had a large head start on Python in terms of users and libraries. And yet Python seems to be passing it by. Why?

My tentative answer: while Perl is very useful, it is clunky and cobbled together.

Python, on the other hand, while it has its flaws, is beautiful.

Human beings are attracted to beauty.

Updating the Christmas classics

We all love those familiar Christmas songs around this time of year. But let's face it, their themes don't resonate with the modern listener like they did with those of the past.

So here is my first effort to incorporate more modern charcters into these songs:

Rusty the blowman
Kept his twenties in a roll
With a runny nose and a glass crack pipe
And two eyes that never close

Rusty the blowman
Is a fairy tale, they say,
He was made of blow but the crackheads know
How he ran out one day.

But there must have been some powder in
That old dollar bill he found.
For when he placed it up his nose
He began to dance around!

O, Rusty the blowman
Was alive as he could be,
And the crackheads say he could laugh and play
Every morning until 5:30.


I am currently reviewing Mary Morgan's book, The World in the Model. (An excellent book, by the way, and one that shows the value of the history of economic thought for the practice of economics: economists who read it will, I think, have a much better understanding of what modeling is all about.)

At the same time, I am busy building agent-based models. It is propitious that these two things are happening at the same time: my own modeling makes me appreciate Morgan's insights much better. In particular, she notes that models are away to explore how the world possibly works by exploring how the model works. The nature of models as something to explore has, I think, been underappreciated. I am fascinated, in working with my model of Adam Smith's theory of fashion, to see how much the results coming out of the model change based on tweaking the assumptions going into it. For instance, changing the amount of time that agents will tolerate a fashion scene not to their liking has dramatic effects on the cyclical waves of fashion that emerge from the model.

Anti-police violence


American police are way too quick to resort to violence. The figures on the number of people killed by police in the US versus the rest of the developed world are startling. We need real reform here.

But demonizing the police as "thugs," "pigs," and so on is no path to reform. It is the path to low-level warfare between the police and those most alienated from our current system. The more hostility towards the police is promoted, the more reason the police will have to fear being killed when dealing with such hostile people, and the more quickly they will resort to violence. And in this struggle, there is no doubt who will come out ahead: The police have resources that those prompted to violence against them simply lack.

Git documentation

Current, in a comment, shared this wonderful parody of git documentation. The unfortunate thing is that the actual git documentation is only a tiny, tiny bit more comprehensible then this spoof.

Also, from this and other comments arises a question: is every single regulat reader of this blog except for Bob Murphy a programmer?

White Privilege

Thoreau has a good post on this topic.

99% of the time I have heard the term used, it is a way for very privileged white people to show how superior they are to less privileged white people. For instance, it is a very good way for tenured professors (an extremely privileged class) to bash working class whites. In the struggle of the elites currently underway in the United States, it serves a very useful purpose: if working class whites can be convinced that they are actually "privileged," then maybe they won't notice how all three of the elite factions in the struggle are screwing them over.

Christmas reading recommendations

I recommend British idealism: A guide for the perplexed at The American Conservative Christmas reading list.

Obscure, I know, but at least I didn't recommend the Python Cookbook!

Somethings I really don't get

I can understand someone robbing a store. Not that I approve, but it is perfectly comprehensible: they want money, and the store has it. I can even comprehend attacking a store employee who gets in your way. but attacking a baby in the store you were robbing?

Was he afraid the baby might testify?

Programmer bleg and rant: Adrift in the amateurish world of open source

Open source software is nice in that it is free, and there are lots of great tools out there. But I'm not sure if developers, often upset by the fact this free software has not swept the field, are aware of how amateurish the design of the user experience often feels.

I installed Ubuntu Linux on my Chromebook. (The operation of the Ubuntu GUI itself is very buggy, and it has the same "sophisticated" GUI-look of, say, Windows 3.) Then I began using 'git', a source-code control tool, to place my code in an online repository.

The git documentation is pretty terrible: it is written by experts who cannot recall what using git was like when they started out. In other words, if you already know the system well and have forgotten some detail, it is probably excellent, but if you are trying to learn the system, it is incomprehensible.

Worse yet, when a command just failed, I tried to pull up help for the command, and found that this attempted to display a 'man' page... but my Ubuntu installation came without the man command! ('man' is the standard command-line help system for UNIX.)

Ah, but the fellow who wrote the page telling me how to install Ubuntu talked about this! Great, he says to use 'apt-get.' So I try 'apt-get install man' only to find that apt-get only installs "packages." So, Ubuntu has left out one of the most basic UNIX commands, and now I have to go hunting for what "package" it is in. Ah, but there is a search tool for packages. I type 'man' in that... and get dozens and dozens of hits, most of which appear to be games.

So I am now fifteen minutes distant from starting my original task, which was trying to check in my new code, and instead am searching for how to get help on how to get help on how to install the basic UNIX command for getting help!

Open sourcers, this kind of rigmarole is not going to woo the average Windows or Mac user!

My bleg: Can any of you nice programmers out there tell me how to get 'man' onto my Ubuntu system?

Adam Smith's fashion cycle, ABM version

So my agent-based modeling system has succeeded in capturing the dynamics of Adam Smith's fashion cycle. Let's start with Smith's description of how fashion works:
Fashion is different from custom, or rather is a particular species of it. That is not the fashion which every body wears, but which those wear who are of a high rank, or character. The graceful, the easy, and commanding manners of the great, joined to the usual richness and magnificence of their dress, give a grace to the very form which they happen to bestow upon it. As long as they continue to use this form, it is connected in our imaginations with the idea of something that is genteel and magnificent, and though in itself it should be indifferent, it seems, on account of this relation, to have something about it that is genteel and magnificent too. As soon as they drop it, it loses all the grace, which it had appeared to possess before, and being now used only by the inferior ranks of people, seems to have something of their meanness and awkwardness.
We add a slight tweak to the above in our model: the reason that those of "high rank" change their fashion is precisely because the "inferior ranks" are adopting it in great numbers. This appears to us a reflection of reality. Then we have a variation of the predator-prey model, where the "predators" are the fashion followers, and the "prey" the trend-setters. We simplify things by having only two fashions, red and blue. The followers all wear blue to start, and the trend-setters all red. We then set agents wandering at random on the Cartesian plane, and have them look around after every move. If they are a follower, and they see lots of trend-setters in their vicinity wearing a different color than them, they record this fact. If that situation continues for a few turns, they switch to what they take to be the "trendy" color.

The trendsetters behave roughly the same, but evaluate their circumstances in the opposite way: when they see too many followers wearing their color for too many turns, they switch to the other color. (How many is "too many" or "lots" are parameters that have interesting effects.) These simple rules produce the following pattern of "fashion waves":

A marvel of economics…

Is how little understanding there is of the existence of the firm. The fact that there are at least four rival theories in economics explaining its existence is symptomatic of the darkness prevailing in this area.

When the average person thinks of "the economy," perhaps the first thing they think of is "businesses." But economics cannot yet explain the existence of these businesses.

The world of physics is an abstract world and not the whole of reality

As Ed Feser notes:

"As I have emphasized many times, what physics gives us is a description of the mathematical structure of physical reality. It abstracts from any aspect of reality which cannot be captured via its exclusively quantitative methods. One reason that this is crucial to keep in mind is that from the fact that something doesn’t show up in the description physics gives us, it doesn’t follow that it isn’t there in the physical world. This is like concluding from the fact that color doesn’t show up in a black and white pen and ink drawing of a banana that bananas must not really be yellow. It both cases the absence is an artifact of the method employed, and has nothing whatsoever to do with the reality the method is being used to represent. The method of representing an object using black ink on white paper will necessarily leave out color even if it is there, and the method of representing physical reality using exclusively mathematical language will necessarily leave out any aspect of physical reality which is not reducible to the quantitative, even if such aspects are there.

"But it’s not just that such aspects might be there. They must be there. The quantitative description physics gives us is essentially a description of mathematical structure. But mathematical structure by itself is a mere abstraction. It cannot be all there is, because structure presupposes something concrete which has the structure. Indeed, physics itself tells us that the abstraction cannot be all there is, since it tells us that some abstract mathematical structures do not fit the actual, concrete material world. For example, Einstein is commonly taken to have shown that our world is not really Euclidean. This could only be true if there is some concrete reality that instantiates a non-Euclidean abstract structure rather than a Euclidean abstract structure. So, physics itself implies that there must be more to the world than the abstract structure it captures in its purely mathematical description, but it does not and cannot tell us exactly what this concrete reality is like."

Come get your agent-based modeling here!


Indra is an agent-based modeling system written in Python and available for download. I just finished coding Adam Smith's fashion model using it, and one of my students is going through Schelling writing up his models using it. Contact me if you would like to try the system, and I will help you get going.

Programmer bleg

I realized that two of my classes were going to use a function identical in all respects except that one of them would test for amount x being greater than amount y, while the other would test for x being less than y. Right now, I have coded the function to accept a boolean parameter I call "gt" which controls an if statement as to which test the function does. But what I really wanted to do was to pass in the operator to use itself.

However, generally speaking, programming languages do not accept operators as parameters to functions.

Is there a way to do this without the if statement?

The genius of Ken Thompson and Dennis Ritchie

How many pieces of technology developed 45 years ago are now more popular than ever?

I thought about this while running some UNIX shell commands in Linux (based on UNIX), which I am running as a alternate operating system on my Chromebook to ChromeOS (based on UNIX). So I picked up my iPhone running iOS (based on UNIX) to write this post, which I will put on Facebook, which runs on UNIX-based servers. Some of my friends will read my post on their Android phones, which run an operating system based on UNIX. Others will read it on their Macintosh computers, which run an operating system... based on UNIX.

And the really amazing thing here is that the work of Thompson and Ritchie endured several decades of ridicule before becoming the most ubiquitous piece of software in the world. And the reason for its success is intimately connected to their humility: instead of believing that they knew everything a user would want and building it into a monolithic operating system, they built a minimal framework within which it was very easy to add your own tools. They crowd-sourced the development of their operating system well before anyone had invented that term.

Agent-based modelling and the vindication of Mises

I've been reading agent-based modelling (ABM) literature the last week, and I am struck by its vindication of Mises's vision of economics. It turns out that to get phenomena like markets, firms, and market-clearing prices, the modelers only have to build agents that:

1) have a purpose
2) have some idea how to achieve it, even if that idea is sub-optimal
3) interact with other agents; and
4) face scarce resources.

Well, folks, this is nothing less than the basis of Mises's much reviled "praxeology." Mises just lacked the tools to formalize his vision, but they are here now.

Why is it difficult to detect bugs in agent-based models?

Rob Axtell, in his 2000 paper "Why agents? On the Varied Motivations for Agent Computing in the Social Sciences," attributes the existence of what he calls "artifacts" (program behavior that is not a part of the model being created, but a byproduct of a coding decision which was intended only to implement the model, but actually did something else as well) "partially" to the fact that, in agent models, a small amount of source code controls a large amount of "execution" code. As an example, he offers a system where millions of agents may be created and which might occupy up to a gigabyte of memory, even though the source code for the program is only hundreds of lines long.

But this explanation cannot be right, because the causal factor he is talking about does not exist. In any reasonable programming language, only the data for each object will be copied as you create multiple instances of a class. The functions in the agent-object are not copied around again and again: they sit in one place where each agent "knows" how to get to them. What causes the huge expansion in memory usage from the program as it sits on disk to the program running in RAM is the large amount of data involved with these millions of agents: each one has to maintain its own state: its goal, its resources, its age: whatever is relevant to the model being executed.

So what we really have is a small amount of code controlling a large amount of data. But that situation exists in all sorts of conventional data-processing applications: A program to email a special promotional offer to everyone in a customer database who has purchased over four items in the last year may control gigabytes of data while consisting of only a few lines of source code. So this fact cannot be the source of any additional frequency of artifacts in agent-based models.

So what is really going on here? (And I have no doubt that something is going on, since Axtell's basic point that we have to take special care to watch for these artifacts in agent-based models is surely correct.) I have done both traditional IT-type coding and agent-based modeling, and here is what I think is the main difference between the two in terms of the production of these artifacts: artifacts in both cases are the result of programming errors, but in the latter case, when you don't know what your output should be, it is very hard to distinguish them from interesting and valid results.

In most traditional data processing, it is easy to say just what the result should be: they are what your user told you they should be. (This "user", of course, may be a multitude of users, or even an imagined multitude of users you hope your new product will appeal to.) If you were asked to write the above program, that will email a special offer to customers who purchased over four items in the last year, it is easy to tell if your program is working: did those customers, and only those customers, receive the promotion, and only the promotion? Although you were writing the program to save going across the million customer database records by hand and generating the emails, you can easily select a small portion of the database and check your program by hand against that portion. If it is working for that portion, and it is a representative sample, you can assume it will work across all records. Or you can automate that process itself with a test suite, which contains a certain number of cases with known correct output, that your program's results can be checked against. (Of course, even this testing does not ensure the absence of bugs: there may be special cases in the full database that we omitted from our test data. Perhaps, for instance, for some customers, multiple orders were rolled into one for shipping purposes. The intention of the marketing department might be to still send them the special offer, but if we missed putting any such customers in our test cases, we may not detect that our code fails in these instances.)

But at least for Axtell's third type of agent-based model, the very reason we are writing the program is that what we don't know what the results of running it ought to be. We are using the program to explore the implications of the model, in a case where we don't know beforehand what those implications will be. This is not fundamentally different from what Ricardo did with his model farm (see Mary Morgan, The World in the Model, on this point), but while Ricardo was limited to using a limited number of simple cases where he could do all the necessary calculations by hand, by using a computer, we can easily test millions of more complicated cases.

We hope our code implements our model, and only our model. But we can easily make a mistake through a seemingly innocuous coding decision: for instance, as Axtell notes, the order in which agents act can be important in many models. If we write a simple loop proceeding from agent 1 agent N, we may give the agents earlier in our list a decided edge in something like grabbing resources for their own use. We might have to randomize the order in which agents act in every "period" of the test run to truly capture the model. If we fail to account properly for this fact, we might mistakenly think that these agents had some superior resource-capturing feature, instead of realizing that they are only "rich" because we (arbitrarily) stuck them early on in a list of agents.

If I am correct about the main source of these artifacts, then what are we to do about the problem? Although I have just begun to think about this problem, I do have one suggestion already: we can do something similar to what is done in more traditional IT programming: examine small test cases. But since we don't know the "correct" output, the procedure to do so will be somewhat different. In our early runs of our system, we can use a very small number of agents, and proceed step-by-step through our run, with lots of debugging information available to us. This allows us to get an intuitive feel for how the agents are interacting, and perhaps spot artifacts of our coding choices early on.

But while this is a help, it falls far short of the kind of systematic checking of our code that we can achieve with test suites for more typical IT problems. Is it possible to create a more automated method of detecting artifacts? Well, at this point, all I can say is that I am thinking about it.

Thoughts on software and hardware

There is no essential difference between software and hardware except the economic difference. The people who put forth metaphors such as "hardware is like the brain and software is like our thoughts" apparently have no understanding of how computers work.

Everything that is done in software can be done in hardware. In fact, the way software works is by reconfiguring the hardware. The introduction of the programmable computer was the invention of a machine that could be endlessly reconfigured without having to actually take tools to it and physically adjust its parts. And various features of computers have at various times moved from hardware to software or the reverse: The original Macintoshes could get by with so little RAM because a lot of the operating system was actually put into the hardware. The real difference between software and hardware is that it is cheap to reconfigure software and expensive to reconfigure hardware.

So software is simply a way to cheaply and continually reconfigure an electronic machine into new states. Those states by themselves have no meaning: any state could represent an attempt to solve a differential equation, a position in a chess game, or a line of music, depending upon what its users intend it to mean. The "analysis" of a chess game by a computer could be hooked up to a synthesizer and treated as a musical composition instead.

The chief impetus of new political movements...

Is a rising elite trying to seize control of power from an existing elite. The ideas they use to gain their followers commitment and enthusiasm are what Pareto called "derivations": secondary phenomena of secondary importance.

Idealism to the rescue!

Both "the right" and "the left" suffer from a one-sided focus on an aspect of poverty at the expense of the full picture. The right focuses on agency, and tends to dump the entire blame for their condition on the poor, failing to keep in mind adages like, "There but for the grace of God go I!"

The left tends to focus exclusively on circumstances, which winds up denying the poor any agency themselves, and portrays them like shelter animals waiting for a good progressive to come along and adopt them.

The reality is that both views are partial truths, each of which needs the other to round out the picture.

Although Hegel was somewhat mad at times, teaching us to look at these supposedly irreconcilable divides like this was surely a great contribution to human thought.

Not getting the concept

There are ads running now during the football games saying that "every kid has to play, 60 minutes a day."

So "play" is now a duty that has an allotted time scheduled for it in a day full of other duties.

Forgetting Mises When Doing Comparative Political Economy

In the field of Constitutional Political Economy, analysis often starts from the assumption that "political agents act to fulfill their interest just like everyone else."

But then the analysis immediately assumes that the interest of political actors consists solely of seeking monetary gain. Since most of the people I read working in this area (for instance, this post is inspired by a paper I am currently refereeing in this field) are at least passingly familiar with Austrian economics, this is a somewhat surprising assumption.

One of the things Mises was surely correct about is that "pursuing one's interest," if it is to be a priori true of all agents, must be interpreted extremely broadly. In this sense, as Mises taught us, "one's interest" must include anything that might motivate an agent to act: an aescetic's efforts to abjure all worldly goods, a hero's noble sacrifice of his life for his comrades, and a serial killer's attempts to create as much destruction and suffering as possible, are all examples of agents acting in "their own interest" in this broad sense. Mises was entirely dismissive of the idea that acting in one's own interest could only mean pursuing material gain. And yet, I keep encountering papers that seem to equate the two, from people who I would think ought to know better.

When someone presented a paper at NYU equating "a political agent pursuing his interests" with his "maximizing the revenue he can draw from his position," I offered two notable examples of quite different behavior, and could have offered many more if time had permitted.

My first case was Alexander the Great: if he had merely wanted to maximize the wealth he could extract from his realm, after conquering Persia, he would have simply stopped his campaign, and enjoyed the fabulous wealth of the Persian Empire. But Alexander was obsessed with becoming the greatest warrior-king who had ever existed, and so continued eastward well beyond any point of "revenue maximization."

On the other hand, Ashoka, a king in India, converted to Buddhism (or at least began to support it strongly: there is some historical debate here) after being filled with horror at the deaths resulting from his Kalinga War. In any case, he began to promote Buddhism, erect Buddhist monuments, and do things like use his wealth to establish healthcare facilities for his subjects.

Another obvious counter example would be Hitler: once he had acquired the Rhineland, Austria, Bohemia, and half of Poland, he had a whole lot of territory from which to draw revenue. But his racial obsession would not allow him to stop at that point, leaving him to make decisions that, from a revenue-maximizing point of view, were quite insane.

In Misesian terms, all of three of these rulers were "pursuing their own interest." But the interests that political agents can embrace are no less diverse than those of any other agent.

Now, I have no problem with someone creating a model that assumes political agents are "personal (monetary) revenue maximizing," and seeing what results that model yields. But the papers I have read in this field generally do not do that: they seem to simply assume that what political agents pursue must be gains in material wealth. And I do not see any warrant for that assumption.

"Anonymous" Refereeing

I have been asked to referee, I'd guess, about 15 papers. In almost every case I have figured out who the author is before finishing the paper, sometimes just by glancing at the bibliography. ("There is no way anyone but Jones would cite Jones 15 times!")

Crony Capitalism IS Capitalism

It is the only sort of capitalism that has ever existed anywhere. The people who chant, "But that's not real capitalism, that's crony capitalism!" should really be saying, "But that is not the fantasy capitalism that exists only in my head, that's real capitalism!"

[Inspired by Matt Bruenig: "Under 'crony capitalism' (more commonly referred to as 'capitalism')..."]

Knowing what is best for others

Today, I saw yet another libertarian complaint that any check on people's freedom to exchange -- for instance, mandating store closings on Thanksgiving -- is a sign that the proponent thinks he "knows what is best for others."

Ironically, this complaint came from an anarchist, who claims to know that no government would really be best for everyone in the world, despite the fact that 7.199 out of 7.2 billion of us disagree with him.

Legal holidays as a solution to a collective action problem

Many of my libertarian friends on Facebook are upset about the idea of possibly mandating store closures on Thanksgiving. But legal holidays are a pretty good solution to a collective action problem, and furthermore, there is no reason that they could not exist in ancapistan (although arranging them might be more difficult).

The fact is, however much we appreciate the market (and I do appreciate it, despite thinking it should not be the entirety of life), we all need breaks from the busyness of buying and selling. In particular, it is nice to have some breaks when (almost) everyone else does as well: that way, we can have things like family reunions over a nice holiday dinner. The difficulty comes in the fact that it only takes one defector from a general agreement that stores are closed on holiday X to begin putting pressure on every other store to open as well: after all, if they stay closed, they're losing sales to a competitor. Someone who buys a washing machine or a television set from my competition is unlikely to buy one from me the next day.

A solution to this collective action problem is to reach a general agreement that no one (or no one of some particular business type) will open for business on day X. This allows everyone a day devoted to family and friends.

Libertarians have many valid complaints about government action occurring in areas where it only makes things worse. But this is not one of those instances.

But, but… this is a *private* government!

I was talking to my next-door neighbor, in the private community I have mentioned previously, about our septic service. I said that I found it odd that the same company, X, that has the contract to test our tanks, also gets to pump the tank if the test proves pumping is needed. "It seems," I said, "as if this gives X a strong motivation to tell you that your tank failed the test."

"Yes," he told me, "I think someone on the board of the community has a close relative high up in the company X, so it was a kind of 'You scratch my back and I'll scratch yours' deal."

So… crony capitalism does not depend on the existence of the state after all! It turns out to depend on the existence of human nature, in particular, our natural inclination to do better by our friends and relatives then we do by strangers.

The most common use for invoking "argument from authority" on the Internet

Is crank self-protection. In this video a mathematician calmly explains why 0! = 1. In the comments, some crank shows up and declares the mathematician doesn't know what he is talking about, and he has offered no evidence at all. When they guy won't listen to anything anyone says, people note, "Well, every mathematician in the world disagrees with you."

And of course he rolls out... "Appeal to authority."

But when someone is so obsessed with some bugbear that he can't grasp the simplest arguments for some point, an appeal to authority is a perfectly valid move.

Jeremy Waldron on liberalism

According to Waldron, liberalism rests on "a requirement that all aspects of the social should either be made acceptable or be capable of being made acceptable to every last individual" (quoted in Liberalism, Fawcett, p. 399).

Waldron gives us two conditions joined by an "or." The first one sounds impossible to me, while the second seems vacuous: anyone can assert that everyone ought to agree with their politics, even though they do not, if only other people were reasonable.


The writing style of headlines is a frequent source of amusement. Language Log has often drawn water from this well. James Joyce famously cast one chapter of his novel Ulysses entirely in newspaper style, with many very comic takeoffs on the way headlines are written. My favorite headline from that chapter was "KMRIA," which was short for, "Kiss my royal Irish arse."

Tonight I had occasion to recall a headline I once read in a tech publication in the late 1980s: "Sun Eyes Apple Gains." (Sun Microsystems was a major computer-market player at that time.)

Imagine if we could send messages back in time, and we sent that headline to someone in 1960, and asked them to guess what it meant.

Why I try to explain how historical investigation actually proceeds

I posted a quote about the vitality of the High Middle Ages. The person quoted, Robert Bartlett, is Professor of Medieval History at St. Andrews. The book I am quoting won a top history prize. He has written several other books on the Middle Ages, and produced a number of BBC documentaries on the period. And he has spent the last 40 years of his life studying this period. He has spent that time pouring over original documents from the era, and tracking the work of other historians working on the era and of archaeologists excavating the period. He almost certainly can read original documents in at least Latin, middle English, old French, and Italian.

He notes that the High Middle Ages were a period of intense creativity. After I posted that quote, several commenters showed up. One says that he prefers the view of the Middle Ages that he learned when he was young. But this view did not change because, with a given set of facts, historians simply decided to put a different spin on them. Historians do not start with facts, they start with evidence, and deduce the facts based on that evidence. And their understanding of what the facts were has changed based on a wealth of evidence about that time.

Another commentor asks why, if the High Middle Ages were really so vital, did they simply accept what Aristotle had written centuries before on his authority? The answer is that they did not do so. Aristotle's works were lost to Western Europe for many centuries. But as soon as they were rediscovered, although he was recognized as a genius, his works were being critiqued and his conclusions modified. For instance, Buridan and Oresme developed a new theory of motion, that essentially was a halfway point between Aristotle's theory and Newton's. In fact, the Scientific Revolution was well underway in the High Middle Ages. (See, for instance, Grant's The Foundations of Modern Science in the Middle Ages: note that I am not here citing some fringe work putting forth a questionable thesis like a book that claims the Chinese discovered America: this is a standard work assigned in advanced history of science classes around the world.)

But if that is true, then what happened? Well, it was a little thing called the plague. Europeans in the Late Middle Ages had little attention to devote to science, as they were quite busy dying in droves. by the time you're up recovered, there were "new men" on the scene: the humanists. They reacted against the learning of the High Middle Ages -- not without some justification, as no age is perfect and every one has its characteristic errors -- but, as with most reactions, they went too far. They threw out the baby with the bathwater, and said we must start over again from the Greeks and Romans. So Galileo had to reinitiate the mathematization of physics, which had already been occurring in the Middle Ages. Descartes had to reformulate "Cogito ergo sum," which had already been formulated in the Middle Ages. Napier had to rediscover logarithms, which had already been discovered in the Middle Ages. Francis Bacon had to reassert the importance of empirical investigation, which had been pointed out centuries before by Roger Bacon.

With the Protestant Reformation and the political movement led by the philosophes against the Catholic Church (and by the way, Samson, "philosophes" does not mean the same thing as "philosophers"), this history became politicized. It served the interest of both groups to portray the Middle Ages as a period of unbroken intellectual ignorance. And so arose the myth of the stagnant Middle Ages, which 100 years of historical scholarship has barely been able to budge in the popular imagination.

But back to my original topic: it is the popular misunderstanding of what historians do that leads my commenters to reject their findings based on what they learned from a high school textbook or a TV show featuring Neil deGrasse Tyson. If the facts are simply what is written in old books, and all historians do is invent interpretations for them, then why can't I invent my own interpretation?

But that is not at all how historians work. What was written down at some time may be self-serving propaganda, mistaken memories, or simply a lack of understanding on the part of the writer of what was really occurring. Historians use this evidence that did survive to ferret out the facts of a past that has not survived. Augustus claimed that he was restoring the Roman Republic, but we know that he in fact was ending it, not because of what was written at the time, but because of what historians have concluded based on the evidence surviving from that time. The claims of Augustus were propaganda.

Imagine someone rejecting all of quantum mechanics, because in school he had learned the Bohr model of the atom as a little solar system, because he learned it in school, and he really likes it. Surely, anyone who is passingly familiar with modern physics would tell him, "But there has been a massive amount of evidence unearthed that demonstrates that that model is too simple!"

But, when it comes to history, the idea that it is merely the historian's interpretation of "given" facts blocks such humility when confronted with new historical findings.

Those dreary, stagnant Middle Ages

"and from the 11th century until the slump and crisis of the 14th and 15th centuries stretch the High Middle Ages, and epoch of economic growth, territorial expansion and dynamic cultural and social change.

"The vitality of European society between the late 10th and early 14th centuries can be seen in many spheres of life. The scale and speed of production and distribution were transformed: the population grew, the cultivated area expanded, urbanization and commercialization restructured economic and social life. Alongside the spread of money, and of banking and business devices, there developed in some areas a level of manufacturing activity that had never previously been attained. The same creativity is found in social organization. in many areas of life fundamental institutions and structures were given their decisive shape in the centuries: the incorporated town, the university, central representative bodies, the international orders of the Roman Catholic Church--all date from this epoch." -- Robert Bartlett, The Making of Europe, p. 2

Old Reviews Discovered Online

While compiling a book review resume, I found online versions of reviews of mine of two books on Galileo, and one on Kepler.

Practice and science

Ken B., this may make clearer what I have been saying about the relationship of the historical investigation and practical concerns.

Imagine that I am motivated to study computer science in order to get a high-paying job, or in order to impress the smart girl in my computer science class. While one of these factors may motivate my study, it should be clear that neither my plan to get a high-paying job or my dream of dating the girl are any part of computer science itself. And if I actually want to get the job or date the girl by this means, at some point I had better stop paying attention to the job market or the girl and start paying attention to computer science.

So it is with history: of course, an historian may be motivated to study some episode in the past because of some present concern. But if that historian actually wants to understand what occurred in the past, at some point, he must set his concern with the present matter aside, and focus upon the past.

Formalizing Fukuyama

Fukuyama posits a tripartite model of good government: it balances a strong state, the rule of law, and democratic accountability. It seems we might make a trigonometric model of government types to formalize this. We take the element of the three that is strongest, say, the rule of law, and make that hypotenuse. Then the relative strength of that factor and the two remaining ones can be expressed with the trigonometric functions. So we could say, for instance, that the sine of mainland China is much greater than that of Nigeria (depending, of course, on which other leg we put a strong state and which democratic accountability).

And, of course, if we venture into generalized trigonometry, we can even drop the requirement that we pick out a hypotenuse, and deal with all possible relationships between the three factors.

In any case, that is what I woke up thinking about this morning

Sometimes, you just haven't been noticed

I just found 19 unposted comments in my queue. For some reason, some comments get placed in my spam bucket instead of my inbox, and I only see them when I go into Blogger. And how often I do that variously enormously based on my schedule: today, for instance, was the first time in at least a week I got a chance to do this.

But it does make for amusing moments: today I discovered that "Robert," responding to my post discussing Bob Roddis's comments at Murphy's blog (so I am assuming "Robert" is Roddis) had an entire argument with me, in which he became increasingly angry, and finally wound up calling me a "pathetic piece of sh*t," without my knowing he had ever posted anything.

The disturbed are perfectly capable of working themselves into a rage all on their own, without any involvement by a second party.

For your reading pleasure

A great post from Adam Ozimek.

Mobile web versions

There must be rooms full of executives who sit around and declare, "I know what mobile users of our website want: A really half-assed version of the site with most of the features missing!"

The art of the book review

1) You will have many thoughts about topics brought up in the book, pet peeves about what the author claims, and opinions on the topics he discusses. These are an important part of your review, and give it its unique flavor. But your main job is to convey to your readers a sense of the book. Your unique insights on its subject matter should be like spices in a stew, and the bulk of your concoction should describe the book.

My favorite book reviewer who flouted this principle was Michael Oakeshott, who, when reviewing a book on topic X, would often spend the first 10% of his review noting that the author addresses X, the next 80% offering his view of X, and the last 10% discussing how the author's view fell short of his own.

But Oakeshott was a genius, and what he had to say on a topic was often more interesting than what the author under review had to say. We mortals should spend more time describing the book itself.

2) The table of contents is your friend! Keep referring to it. It will help structure your review, and alert you to important sections of the book you might be neglecting.

Counter-Factual History

Reader Ken B. is puzzled: "I don't see how you can deny that without denying the use of historical counterfactuals in toto."

First of all, to be very clear, no one is "denying the use" of anything in what follows, or in what went before. When I noted Fukuyama's remarks about "hijacking" the course of events, I was not trying to say he can't write like that: I was saying he is not writing as an historian when writing like that.

And in what follows, I draw heavily on Michael Oakeshott. He was once asked, by my PhD advisor, David Boucher, if his ideas meant it was illegitimate for historians to write certain things. Oakeshott responded that he had no interest in telling historians what to put in their books. What he was (and I am) interested in is conceptually identifying a certain attitude to the past we can term "historical."

And this is a very important point: Oakeshott made clear that there are pasts besides the historical past, which he identified as the past investigated in terms of what really did happen. A significant and different past he called "the practical past": this is a past from which we draw lessons concerning our present conundrums. Here are some things Oakeshott says about the practical past, all from his last work, On History:

"There are some well-known items which are so often used in the world outside that they may be said to be on permanent loan to the present of practical engagement. Here are Cain and Abel, Moses, Horatius, Caesar crossing the Rubicon, Athanasius at Nicaea, Canute on the seashore, King Arthur, Wilhelm Tell, Luther at Worms, Nelson putting his telescope to his blind eye at Copenhagen, Robin Hood, Captain Oates, Davy Crockett, and here is Colonel Custer making his last stand." (p. 44)

"Sometimes a search of this storehouse will you hold something more closely and usefully linked to our practical engagements. It may disclose a purported authority for doing what we want to do, a precedent for taking a certain course of action, a warning or encouragement...

"In short, the contents of the storehouse are altogether different from the recorded past of performances, artifacts and utterances, in which in historical inquiry begins. It is not a collection of exploits but of emblems; not evoked in the procedure of critical inquiry into the authentic character of a not-yet-understood survival, but merely recalled as unproblematic images; and valued, not for an historically understood past which may be inferred from them, but for their present usefulness." (p. 45)

"this collection of symbols is valued in respect of the support it may give to what it is recognized to be a desirable present a practical engagements, and what it is found to be valuable we may say that 'history is on our side.'" (p. 47)

"What I have called a practical past is, then, a present of objects recognize to have survived. It is an indispensable ingredient of an articulate civilized life. But it is categorically distinct from both the survivals which compose the present of an historical enquiry and from an historically understood past which may be inferred from them." (p. 48)

Once one understands the distinction Oakeshott is making, it is clear that counter-factual "history" is actually an element of the practical past: "If only Chamberlain had taken on Hitler earlier, World War II could have been avoided." This is trotted out repeatedly as a lesson for facing down some current dictator. But it is certainly not the conclusion of any historical investigation, since there is no historical evidence for events that didn't happen! That firmness on Chamberlain's part would have stopped Hitler is a practical, not a historical, judgment.

And, again, this does not mean that no historian should put such a judgment in her books!

Can liberalism tolerate non-liberals?

"What if modern people opted in large numbers to be bigots and racists?

"Bouglé turn to that question in 'The crisis of liberalism' (1902). The persistence of intolerance had come as a surprise... Dogmatic or sectarian relapses looked at worst as temporary, unsustainable deviations from liberal modernity's happy path. Recent trends had woken liberals with a jolt. They were at a loss. Should they open-mindedly 'tolerate intolerance' or use the powers of state to curtail racial and confessional prejudice?" -- Edmund Fawcett, Liberalism: The Life of an Idea, p. 168

The problem is, of course, unsolvable so long as liberals cling to the notion of liberalism being a "neutral framework." Liberalism is, in fact, its own value system, down on all fours, competing with every other one.

Repeat after me: the government has no control over who pays taxes

Kevin Drum makes a common error:

"Does it matter that the working class barely pays for most of these programs in the first place, since their federal income taxes tend to be pretty low?"

The government can control from whom it collects taxes. It cannot control who pays them. That is determined on the market. As Caplan puts it, "Tax incidence depends on supply and demand elasticity, not legislative intent."

To take a simple example: Imagine you are a billionaire with a large domestic staff. You want to trust them, so you pay them a wage above the prevailing one. You're planning on giving them all large Christmas bonuses, when you read that a new tax law aimed at high CEO pay is going to cost you $50,000 this year. That happens to be the exact amount you were going to give out in Christmas bonuses, and so you decide simply to skip the bonuses this year.

The government purportedly aimed to tax high-wage CEOs, but in this particular instance, the entirety of the tax burden actually fell on low-wage domestic workers.

Or perhaps it did not even stop there: Perhaps your servants would have given their Christmas bonuses, if they had received them, to homeless shelters around the city. If that had been the case, the burden of the tax actually winds up falling on the homeless!

One consequence of understanding this is that one realizes our current, Byzantine tax code is absurd, and benefits no one but H&R Block and its ilk. Whatever level of resources the government is going to extract from the economy, it should be done with a minimum of fuss and bother. That is why I favor taxing land: you can't really hide it, so tax evasion and all the resources devoted to detecting tax evasion, disappear. And taxing this way would not pick on landowners, since the actual burden of the tax will get passed on by the market to wherever it winds up getting passed on to.

Pages befuddlement

Pages does not seem to be able to get me a word count on my documents. How in the world is any professional writer supposed to use a word processor that does not give word counts? Basically, every book review I have ever written, I start out by writing one and a half to two times my maximum word limit. The last week of work I spend constantly trimming out and refining what I've got. I'm going back and checking my word count every half hour or so, to see how close I am getting to my goal.

Weird bug convergence

I have been using Apple's program Pages lately in an effort to make my Chromebook work as an editing platform. (Google Docs simply does not cut it: it wipes out all memory of MS Word styles when you convert a file to Google's format, and messes with the existing formatting tremendously.)

Not bad, so far: I am very happy with the fact I can now edit on my iPhone. But as a software engineer, I have found one great puzzle: I was always annoyed that whenever I tried to re-format a paragraph in my "blockquote" style, MS Word would "leak" the style change over into the previous or subsequent paragraphs. Bizarrely, Pages does the exact same thing!

Perhaps, in their effort to capture MS-Word-style logic, Apple engineers also imported the bug in MS Word?

The course of events

From a historical perspective, there is no "course of events," other than what actually occurred, to be "interfered with" or "hijacked" by some "intervention." As Oakeshott noted, the actions of some monarch or pope were not "interferences" with the course of events: they were the course of events.

Generally when you see phrases like this, you are in the presence of partisanship. So, when Fukuyama says that democratic movements were "hijacked" by nationalists, what he means is that the actions of the nationalists are unfortunate from his point of view. When a modern libertarian claims that Progressives "hijacked" liberalism, all it really means is that he wishes liberalism had developed differently.

A surprising mistake from Fukuyama

"Having sat out World War I, [Japan] experienced a vigorous period of economic expansion..." -p. 347

In fact, Japan declared war on both Germany and Austro-Hungary in August 1914. It sank an Austro-Hungarian ship in the Far East, and seized several German territories in the area. In 1917, at the request of Britain, its navy ventured all the way to the Mediterranean, and provided escort services for troops of the Triple Entente. While this in no way constitutes participating to the extent that the major combatants did, it is also hardly "sitting out" a la Switzerland.

A model does not necessarily become more useful by being made more realistic

By default, Google maps on my iPhone offers me a satellite picture of the place I am trying to get to. I find this a ridiculous default choice: I am not interested in how tree covered the property in question is! I just want to see black lines on white space so I can figure out how to get there. And yet there is no doubt that the satellite view is more realistic than a typical street map.

Morgan on the economist's tacit knowledge

"Model-making is a skilled job. Perhaps it is not yet evident, but will become so in the chapters that follow, that learning how to portray elements in the economy, learning what will fit together, and how, in order to make the model work, are specialized talents using a tacit, craft-based, knowledge as much as an articulated, scientific, knowledge. It is not easy to pinpoint in any general way the skills of articulation and construction, or to see how economists acquire them except through apprenticeship." -- Mary Morgan, The World in the Model, p. 15

I'm with Fukuyama on this point

In a discussion of how the American system of checks-and-balances and federalism produces wildly inefficient legislation, Fukuyama notes that: "Congress created fifty-one separate programs for worker retraining, and eighty-two projects to improve teacher quality." (p. 497)

I have been making this point even before reading this latest work of Fukuyama's. But he has an interesting perspective on why this occurs.

The problem appears to me as a multiplayer prisoner's dilemma (see Schelling). To take an example: whatever level of taxation one prefers, from zero all the way up to 90% tax brackets for the very rich, it is surely preferable for everyone (except tax accountants) that the level of taxation that winds up being chosen be collected as efficiently as possible. You might hate paying 40% of your income to the taxman, but if you were going to do so, surely you would like to do so without having to undergo a lot of work on your own part in order to pay that tax, right? But the American political system, as it operates today, seems designed to collect 40% of your income in the most complicated way possible. And as I have noted in reference to the ACA, we could have gotten much more widespread coverage with a bill that simply said, "If your income is below X, The government will pay for your health insurance." Even if you oppose all welfare redistribution policies, I think you ought to prefer one that redistributes with a minimum of bother, rather than one that redistributes with a maximum of bother.

My own preference would be for worker-retraining and teacher-improvement programs to be implemented at a much more local level (the importance of local knowledge: see Hayek, as well as Catholic social thought on subsidiarity). The federal government should intervene in these issues only to the extent that it redistributes some tax revenues from the richer to the poorest states, to allow the poorer states the resources to implement these goals. But if these things are going to be handled at the federal level, I would much prefer Congress authorized a single agency to deal with each, and empowered that agency to do so.

Fukuyama contends that these legislative Rube Goldberg devices we create arise primarily from the way our system of checks-and-balances and federalism have worked out in practice: multiple branches, agencies, and levels of government are involved with almost every political issue in the United States. Rather than working to limit government, as the founders had intended, this multiplicity of authorities has served to create a byzantine government.

Hmm, I wonder if anyone has recently authored a book contending that the rationalist design of the American founders could never have worked out in practice in they way they intended it to?

Anarcho-capitalists provide their own reductios of their theory

This one is from Bob Roddis, in the comment section of Bob Murphy's blog:

"What do we do about the drug problem? Answer: druggies could be prohibited from driving on private roads and entering private neighborhoods and schools.

"What do we do about the porn problem? Answer: porn producers and consumers could be prohibited from driving on private roads and entering private neighborhoods and schools.

"What do we do about the problem of religious fanatics that won’t let us smoke dope? Answer: anti-drug fanatics could be prohibited from driving on private roads and entering private neighborhoods and schools.

"As a bonus, everyone will be safe, secure and prosperous."

But, in ancapistan, every road in neighborhood will be private, so "druggies," pornographers, and religious fanatics will be prohibited from going anywhere. Which, of course, will be a death sentence for them.

So, in the new, "liberal," world of ancapistan, to do drugs, produce pornography, or be a religious fanatic gets you a death sentence. But at least you will have "voluntarily" agreed to your own death sentence.

"Everyone" will be safe, secure, and prosperous, except if the ancaps don't like you. (Note that for Hoppe, the people who wouldn't be allowed to drive on private roads would include anyone advocating democracy or wealth redistribution.)

Models *stand in* for the reality they are modeling

"Economists (just like their astronomer forebears) understand that a model stands in for their economic universe to enable them to explore certain properties of that world represented in the model." -- Mary Morgan, The World in the Model, p. 33 (emphasis mine)

The models of physics are no different: they stand in for certain properties of the real world, and allow us to study them in abstract isolation.

Models are like caricatures

Mary Morgan, in her book The World in the Model, likens models to caricatures, and offers the following graphic during her discussion:

That this process of caricature is interesting and informative I do not doubt: I am no critic of caricatures or of models! Seeing Louis Philippe as a pear, and seeing the world as simply an interrelated system of mathematical equations, are each interesting perspectives.

But if someone asks me if caricature of Louis Philippe as a pear is perhaps not the actual cause of the real Louis Philippe, who is a sort of cognitive illusion, I must admit I am so flabbergasted that I hardly know how to reply.

I spent several years modeling options in the financial markets. The programs I wrote to do that made a fair number of traders a good deal of money. but imagine their surprise if, one day when their actual trading lost money, I told him that this was of no regard: my models were the real thing, and those models had made money, and the traders' feeling that they had lost money that day was merely a subjective experience.

Historical understanding

"It is not the human conduct must in principle be taken to occlude regularities (other than self-imposed circumstantial practices), or even that there may not be some brooding providential Intelligence that accounts for them; The point is that these considerations do not mix with and cannot take the place of an historical understanding concerned with what was actually the case, there and then, in terms of situations composed entirely of mutually related occurrences inferred from record." -- Michael Oakeshott, On History, p. 65

I make note this for the reason that it demonstrates that for Oakeshott, as for Collingwood, history is intelligible in and of itself, without the application of further laws or theories.

Fukuyama gets Marx wrong

"Capitalist use of technology would extract surpluses from the labor of the proletariat, leading to greater concentration of wealth and the progressive immiseration of workers. The bourgeoisie who ran this system could not, despite their wealth, consume everything that it produced, while the proletariat whose labor made it possible were too poor to buy its products. Ever increasing levels of inequality would lead to a shortfall in demand, and the system would come crashing down upon itself." -- p. 436

Thomas Sowell, who wrote his dissertation on Marx and published an entire book on Marxism, gives the true picture:

"Crises are inherent in capitalist commodity production because producers cannot accurately predict the demand of the consumers or the supply of other producers...

"Neither underconsumption nor a permanent 'breakdown' plays any role in this picture..." -- Marxism, p. 92 (emphasis mine)

Marx and Engels in fact ridiculed underconsumptionist theories, by noting that the bust occurred precisely when wages were at their highest. Their theory is one of coordination failure, not of underconsumption.

It is still the "end of history"

While Fukuyama has toned down the extreme claims he was making in his book The End of History, he has not abandoned the thesis. History has still been on a "road" democracy. Societies are still judged by whether they have achieved "stable" democracy. (Which, of course, being stable, will mark the end of history for that society.)

Western Europe is still the goal for him (sometimes he phrases it "Denmark"), and everyone is, or at least should be, trying to get there.

More Fukuyama on China

"In the hands of good leaders, such a system [of autocratic rule] can actually perform better than a democratic system that is subject to rule of law and formal democratic procedures like multiparty elections. It can make large, difficult decisions without being hampered by interest groups, lobbying, litigation, or the need to form cumbersome political conditions or educate the public as to their own self interest... So too with China: its post-1978 performance has focused on widely shared goals such as economic growth, stability, and the broad provision of public services. Deng Xiaoping and the leaders of the party who followed him understood that the party's survival would depend on legitimacy, which could no longer rest on ideology but would have to be based on their performance in governing the country." -- p. 383

The "Fall" of the Roman Empire

For a long time, people in the west made a big deal of the date 476: it marked the "Fall of the Roman Empire." But:

"Fra gli uomini del V secolo, invece, essa passò quasi inosservata. L'impero, infatti, era in mano ai barbari già da tempo. Barbari riempivano i vuoti lasciati dai romani nelle campagne è nell'esercito, collaboravano all'amministrazione dello stato, comandavano le truppe imperiali. Alcuni, potentissimi, sposavano figlie, nipoti, sorelle di imperatori, altri facevano da tutori, cioè da guide e protettori, ai piccoli principi romani destinati a regnare." -- Il racconto dello storico

"For the people of the fifth century, instead, it went almost unnoticed. The Empire, in fact, had been in the hands of the barbarians for some time. Barbarians had filled the gaps left by Romans in the country and the army, collaborated in the administration of the state. Some, powerful, had married daughters, nieces, and sisters of emperors, others had been tutors, in other words, guides and protectors, of young Roman princes destined to rule."

The weirdness of academic writing

"The changes in the nature of Chinese government after 1978 where at least as great as those that took place in economic policy. Indeed, one could argue that the massive shift from a centrally planned economy to a more open and marketized one could not have occurred without corresponding changes in the nature of government." -- Fukuyama, p. 371

"One could argue"? Well, is one arguing? And who would that "one" be?

Why not just write, "I argue that"?

Fukuyama on the contemporary Chinese state

"I would argue that the state that has emerged in China since the beginning of reforms in 1978 bears more resemblance to this classical Chinese state than it does to the Maoist state that preceded it, or even to the Soviet state that the Chinese tried to copy. Contemporary China has been engaged in the recovery of a long-standing historical tradition, whether or not participants in that process were aware of what they were doing." -- p. 371

We should go easy on Mises

"Da molti italiani il fascismo fu considerato un male che era necessario accettare. La mancanza di libertà sembrò un prezzo che era giusto pagare per avere un'Italia ordinata, senza scioperi né agitazioni popolari, senza minacce di rivoluzione." -- Il racconto dello storico

"For many Italians fascism was considered a bad that was necessary to accept. The loss of liberty seemed a just price to pay to have an orderly Italy, without strikes and popular unrest, without the threat of revolution."

I hope I live long enough to see the ancap revolution

I want to be around to console my ancap friends when all the angry young kids on the Internet are posting slogans like:

"Defense agency fees are theft!"

"A defense agency is nothing but a criminal gang that has duped people into thinking it is legitimate!"

"The network of ancap defense agencies is a massive conspiracy to extort money from people!"

McCarthy on Burnham

You should really read this great piece by Dan McCarthy on James Burnham. Machiavelli was a realist, and of course was despised for being one.

But the most interesting thing to me was the influence of Vilfredo Pareto on Burnham. Pareto pointed out that every society that has ever existed has had an elite. But when a rising elite is struggling for power with an existing elite, it will often use anti-elitist language to inspire its followers, since "Give us power" is a slogan unlikely to attract many supporters.

Contemporary libertarians might ask themselves, "Is there a rising elite class who is using our idealism and energy in an attempt to gain power?" (Ahem, ahem, Koch Brothers, Peter Thiel.)

Literal deer in the headlights are no longer like figurative deer in the headlights

When I first started encountering deer on the road, 30 years or so ago, real deer acted like figurative deer in the headlights. But they have adapted to cars remarkably quickly. Now I see them calmly standing on the side of the road, waiting for my car to pass, after which they casually trot across the road.

"Overdetermined": A strange concept

"Latin American institutions are overdetermined: that is, there authoritarian and illiberal character has multiple sources and does not simply lie in the material conditions found by the colonialists." -- Fukuyama, p. 242

Outside of the world of controlled laboratory experiments, doesn't almost everything that happens in the world have "multiple sources"? Collingwood notes this in a discussion of causation: we can say "the high winds caused the tree to topple," but so did its weak roots. And the weak roots were caused by the poor soil in the area. And the poor soil was caused by overfarming in past centuries. And the overfarming was caused by…

Not getting the "web" idea

Looking at a job site today, I found:

"To search positions, click the Search Postings link on the navigation bar."

Um, why not allow users to click "Search Postings" in that very sentence?