Tuesday, October 8, 2013

Sorry, Milton. It's the free lunches we can't stand.

The conclusions:

1) At the core of human social intuition is a Puritan discomfort with free lunches.

2) It's not that we think there are free lunches; it's that we are satisfied that someone is paying.  The potlatch creates status much more powerfully than the marketplace, pillage even more so.  The highest status of all?  Pillaging those who appear to be high status themselves.

The commentary below the fold:

Management philosopher Mary Parker Follett separated conflict resolutions into 4 categories:

1) Voluntary submission
2) Struggle and victory of one side over another
3) Compromise
4) Integration

Integration, which entails innovating a solution that improves the lot of each participant, is obviously the best solution.  Functional markets (especially euvoluntary markets) and altruism rest somewhere between 3 and 4.

Altruism is the oddball of these two processes, since the act of generosity serves the interest of both the giver and the receiver.  And, in the end, altruism is the most problematic of the two.  Markets, even non-euvoluntary markets, preserve some level of decision making power for each negotiator, and the terms of the solution will reflect their demands.  With an altruistic act, the receiver is powerless.  All the power belongs to the giver.

Politics can play out in all of the categories.  Certainly, there is some set of core qualities of good governance that are among the best historical examples of mass integration (property rights, a well-run justice system, etc.).  And, much of politics is understood in the realm of compromise.  Politics at its most divisive plays out at number 2 (war, redistribution, social behavioral constraints, etc.).

Political participants generally believe these level 2 activities are only necessary because level 3 or 4 solutions are not available.  No doubt, this is frequently the case.  But, I am going to argue that, contra Milton Friedman, Integration is a free lunch; and at the core of human social intuition is a Puritan discomfort with free lunches.

TANSTAAFL?  We are surrounded by free lunches, and we can't stand it.

What is consumer surplus, if not a free lunch?  Every thing that works in my life works precisely because nobody asked for my input.  From the internet, to mobile phones, to grocery distribution, every day I walk out my front door, and a better world is there to greet me - free lunch.

An example of how our intuitions in this regard mess us up:

My town has weekly refuse service as well as recycling.  It's hard to tell from the city budget what the net cost of the recycling program is compared to just sending everything to the landfill.  There is a nominal expense in the budget for the program and I presume that if we just threw everything away there would be some nominal extra expense resulting from that.  All in all, in terms of added value, it's probably just about a wash.  Somewhere a mountain has been slightly less gutted because we're recycling some aluminum, but some similar amount of resources are being used up in the process of collecting and attempting to recycle several materials that is too diffuse to measure except by the monetary cost of the activity.  I suspect the environmental impact and use of resources is similar either way.

But, my town also has an absolutely effective and fascinating reuse/recycle program, which goes by the name of "Monthly Bulk Trash Collection".  One day a month, the city comes around and collects anything we put in the driveway that was too big to fit in the weekly collection container.  We usually set out the bulk trash on the weekend, and sometime during the week, the city workers come down the street with a waste truck and a front loader.

But the interesting stuff happens before the city gets here.  While the stuff is sitting out, the town is abuzz with little, late model pickup trucks.  You can watch your driveway, as trucks randomly drive by.  Occasionally one stops, and the driver steps out and inspects your pile.  Maybe your old microwave stopped working.  I don't know if he wants to fix it, if he wants it for parts, or if he can sell the copper and aluminum out of it.  But, he'll put it in the back of his truck, usually precariously balanced on top of an old Fisher Price kitchen, a set of lawn chairs, and parts of a desk, all barely held in place by a couple of ropes.  All I know is that within days, or hours, practically the whole pile is gone before the city ever arrives.

Now, there is some integration....I get rid of some stuff, the guy in the pickup converts a lifetime of knowledge about scrap values, electronics, secondary toy markets, and who-knows-what-else, into earning a living, the city doesn't need as many garbage trucks, the landfill is less full, and a bunch of garbage magically becomes valuable.

Now, if my town stopped the recycling program, there would be marching in the streets.  If my friends asked me to come join them at the march, and I said, "Oh, I'm going to do you even one better.  I'm going to go home and drag a bunch of garbage out to my driveway.", they would be utterly unimpressed.  But, the world gains much more from my involvement in monthly bulk collection than it does from the official recycling program.

The problem is that bulk garbage is a free lunch (Follett's #4).  The city's recycling program is something we fight for (Follett's #2) and then, once it is implemented, we dutifully prep and dispose of our recyclables according to the rules of the system (Follett's #1, 2, and 3).  Even when emergent systems are functional and imposed systems are not, we favor sacrifice over integration.

This is because, while Follett's hierarchy is a good global ethical construct, on a personal level the hierarchy of transactional satisfaction is probably something more like this (from most satisfying to least):

1) Forcing those we don't affiliate with to sacrifice.
2) Sacrificing voluntarily for others.
3) Engaging in mutually beneficial trade.
4) Receiving voluntary sacrifices.
5) Sacrificing involuntarily.

The difficulty that arises from this hierarchy of satisfaction is that number 3 is the only level that finds its own equilibrium.  Moving from level 3, up to levels 1 and 2, requires some other group of people who are moving down to levels 4 and 5.  In order to feed our admirable quest to be altruistic and caring, we require those who are so needy that they are forced to sacrifice their own sovereignty to accept altruistic support.  In order to feed our political thirst to impose strictures on opposing factions in the name of helping our political affiliates, we must use the power of the state to inflict our collective factional will on others.

We are far from Eden.  The world requires altruism and political impositions.  In the best current world we could realistically conceive of, activities ranging from level 1 to level 5 would be required.  The distinction that we need to be careful to mind is to sit at levels 1 and 2 only because there are others who simply cannot be moved from levels 4 and 5.  Just as often, we force or enable others into levels 4 and 5 because it feels so darn good to be at levels 1 and 2.

David Egger's "You Shall Know Our Velocity" is a great story revolving around this equilibrium problem.  The protagonist receives a windfall that feels a little too much like level 4, and then circles the globe in an effort to move to level 2, but consistently fails to find others willing to move to level 4.  Interestingly, the protagonist sometimes feels vulnerable to theft - while he is trying to claim level 2, others might force him to level 5 by burglarizing him.

While level 3 (mutually beneficial trade) is an imperfect cornucopia of free lunches and finds its own equilibrium, we are forced from that equilibrium by our own confused moral intuitions - our discomfort with having more than others, our discomfort with having less than others, our discomfort with protecting and saving our abundance, and the odd place all of these problems have to take next to our craving for material progress and protection from the vagaries of cruel nature.

We are all familiar with the power of status games.  There is a lot of blowback against wealth-based status races, but the irony is that this kind of status is frequently the kind of status we feel least comfortable with - it is probably the status game least in need of some blowback.  We are uncomfortable with a free lunch.  We are more comfortable with giving and taking.

In political discource, TANSTAAFL is frequently invoked ("There ain't no such thing as a free lunch.")  It's intended to be a corrective statement of fact.  It appears that proponents of coercive restrictions and redistributions only count the benefits of their policies and are ignorant of the costs, especially the hidden costs, a la Bastiat.  But, this oversight is not simply a matter of a lack of information.  The sacrifice is the point of the thing.  An ignorance of the full cost borne for a policy is not an error.  On the contrary, the ultimate human expression of strength and dominance is the imposition of policy against others, with no concern for the costs.

It's not that we think there are free lunches; it's that we are satisfied that someone is paying.  The potlatch creates status much more powerfully than the marketplace, pillage even more so.  The highest status of all?  Pillaging those who appear to be high status themselves.

I propose a rule of thumb for deciding if we are forcing those we don't affiliate with to sacrifice (transaction type number 1) for the right reasons or for the wrong reasons.  Compare the amount of effort we put into imposing the sacrifice to the amount of effort we put into auditing, minimizing, and eventually discontinuing the sacrifice.  Too much of the former is a good sign that we are engaged in pillage-based status activities.  More of the latter is a good sign that we are honestly engaging with human needs.

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