It’s monkeys, all the way down.

George Will puts a new twist on the classic Watergate question (What did the president know and when did he know it):

What didn’t they know and why didn’t they know it?  And the answer is: almost everything.  Because, in fact, they were not prepared for a massive social experiment.  They don’t understand the complexity of what they’re doing.

Here’s Veronique de Rugy on the same idea in Obamacare’s failed rollout and public-choice economics:

Yet the overall reaction from the supporters of the law remains that, while the website isn’t working properly and the rollout has been a disaster, that doesn’t mean the whole law is bad. They are obviously forgetting that this is not the first failure encountered by the law. In fact, many aspects of the law have had to be repealed and changed

As Yuval Levin wrote last week in a very thoughtful piece about the problems faced by the exchanges, we shouldn’t forget that these glitches are not our main beef with the law:

For me, and for other critics of Obamacare, the problem with the law was never about these technical matters. I didn’t think the system wouldn’t work because the government couldn’t build a website, but because the basic health economics involved is deeply misguided and would take the (badly inadequate) American  health-financing system in the wrong direction. But Obamacare was also always going to be a test of the sheer capacity of the administrative state to actually do what it claims the authority and ability to do. At this point, it looks as though we may be witnessing a failure of the administrative state on a level unimagined even by its staunchest critics. We may be. But we’ll have to see.

I agree. I also believe that, contrary to what liberals are saying, these technical problems are actually a sign of deep problems with the law itself. And I would go further: I think it is the sign of a deeper problem with government intervention in general. This is yet another piece of evidence that no matter how good lawmakers’ intentions are, no matter how much money government spends, government solutions are very likely to fall short of solving most of our problems, and often turn into massive disasters. Government fails to address most problems it tackles because the incentives are arranged in such a way that it favors interest groups and doesn’t reward success or punish failures in the same way as the market does.

Let me explain: It seems liberals truly believed that as long as they had the right people, the more compassionate people, and the people who truly care about the poor in office, they could pull off this massive government program to address our health-care woes…

Unfortunately, this comes from a serious failure to understand public-choice economics, the great work of Nobel Prize winner James Buchanan and many others. Let me sum it up for you: The problem isn’t that we have the wrong people in office; rather, it’s that the institutions of government themselves that are inherently incapable of performing certain tasks, prone to catering to interest groups, and inherently conducive to bad decision-making. This doesn’t mean that who holds power doesn’t have some influence on the outcome, just that it isn’t the most important factor.

It’s too bad that more people don’t get public-choice economics, because it would help come up with better policies. Being willing to ackwoledge that government fails is important, but understanding why it does would go a long way to design better policies.

She links to an outstanding (longish) piece by Pascal-Emmanuel Gobry which is one of the finest (and hilarious) explanation of public-choice economics I’ve ever read.  Worth the time:

To some of us, what the success of capitalism shows, and the reason why capitalism works, is, basically, that humans are pretty much hairless monkeys who are not just greedy and quarrelsome but not very smart. Because us monkeys are dumb and proud, we can only assimilate a little bit of information, and we are terrible at communicating with each other. This, in turn, means that us monkeys are pretty lousy at two important tasks: planning and coordinating. We really are terrible at it.

Now this happens to have some pretty significant consequences for how you might help a tribe of monkeys achieve some progress in material welfare. If your tribe of monkeys works by having one Head Monkey tell the other monkeys what to do, the problem with that is that any monkey, being bad at assimilating information, will give the other monkeys really dumb instructions. And since the head monkey (and the other monkeys) are not only dumb but craven and quarrelsome, you will soon have chaos.

Paradoxically, if you let most of the monkeys mostly just do what they want, actually, they will bumble and stumble and grope their way towards a much more advantageous state of being…

It turns out that we’re dumb monkeys who are not only dumb, but too proud to admit to ourselves that we’re dumb. But it turns out that, because we’re dumb, proud monkeys, the least-bad way we’ve got to achieve some process is through bottom-up trial-and-error experimentation, because that’s the thing dumb, proud monkeys do the least bad at. And even though bottom-up experimentation will be very messy, very imperfect, very problematic, it will still be much, much superior to central planning because monkeys are even much much worse at that

Planning is very hard because we are dumb monkeys.

And we are strongly inclined despite all evidence to the contrary to believe that planning can work because we’re not only dumb but proud monkeys and we don’t want to admit to ourselves that we’re dumb monkeys.

And when I say planning I mean planning.  I don’t mean “the market” versus “the gummit.” I mean planningAll planning is extremely difficult.

In some sense, it’s utterly baffling that CEOs of big companies think the private sector is more efficient than the government, because boy, are big companies utterly awful. Big companies are notoriously awful at planning. If big companies were good at planning, no startup would ever succeed, and yet not only do startups succeed, they succeed all the time.

Conservatives like to grouse at the perverse incentives of tenured public school teachers, but any big corporation is a tangled mess of awful, destructive incentives.

It’s monkeys all the way down.

99.9% of science experiments fail, and yet that is still so much better than anything else.

This understanding of the role of limited information and our own limitedness is really, really, really, deeply counter-intuitive, but it is also really important. Because we are dumb, proud monkeys, we think we know a lot more than we actually know. And so we make big mistakes. We invade Middle Eastern countries. We think we can centrally plan an industry that’s 20% of GDP. And when the car ends up in the ditch, we say “Guess the plan was wrong!” No, you chimp! The plan wasn’t wrong. A plan is impossible. We’re willing to admit our plan was wrong. It is much, much, much harder to admit that planning itself is impossible.

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