Sunday, 30 October 2016

Work Out What You Want To Say And Find A Fact That Sounds Like You're Saying It

Open any left wing paper and on a weekly basis you'll be overrun with stories of societal injustice where we are told the income gap between rich and poor is disastrous, that the rich get rich at the poor's expense, that real incomes have stagnated for the majority, and that the poor have been getting poorer.

All of those claims are untrue, but the left wing newspapers are regularly providing us with skewed or bogus statistics to show why they think they are true. A puzzling question in scenarios like this is to consider whether these distortions are cases of economic naïveté or cases of mendacity where they try to be creative with the facts in order to get people to believe their fabrications.

It's probably a bit of both, and as such I will tell you where I think they are going wrong. One category error here is in reading too much into statistics without trying to understand how those statistics actually relate to the dynamical nature of human beings.

Take the statistics we often see relating to income inequality. The first thing to point out is that those statistics begin with a false premise, because there are actually no static income categories - people move around in different categories depending on where they are in their life stage (age being a big determiner of where you are in your career). Secondly, different statistical groups have different numbers of people, which also skews the data.

For example, it is totally possible for the richest people to receive a higher share of the UK's overall income yet still see their personal incomes fall. This is not a contradiction, it is simply the case that some people were in the top 1% and then dropped out, and others increased their income at the expensive of those in the top quintile. Equally, it is possible that the share of the income going to those in the lowest quintile can decline even though those in that group see an increase in their own personal incomes.  

To highlight another case where statistics deceive, let's take for example a claim I saw in the Guardian this week about households not feeling the benefit of economic growth. The writer made this claim by asserting that there has only been about a 6% increase in household incomes in the past 40 years. As you can imagine, the people writing in the comments section were outraged.

The statistic though is deceptive because household income is a misleading way to gather data. What you should look at instead is real income per person, where you'll find it has risen by about 51% (or something close to that last I checked). How can both those stats be true?

Well, what's been happening in those 40 years is that average household numbers have dwindled in terms of individuals in a household, whereas number of households has increased as more people have bought their own place and moved out of the family home. The increase in the average number of persons per household is caused by increased economic growth. That is, people move out and become home owners because they can now afford to do so. Complaints about household stagnation are really complaints about individuals doing better.

Being a regular Guardian reader, but not on their side in most economic arguments, I have to find myself wondering why you will never see a Guardian writer talking about the positive parts to the human growth story. When they wanted to talk about Labour's term in office in 1997 to 2010 they would usually use per capita income statistics to talk of its successes; whereas when they wanted to criticise Cameron and Osborne they would usually use household income statistics when they wanted to depict failure.

Not only is it the case that increases in real income enables more people to live on their own, and no longer with their parents, or house sharing - what we have is a statistic that actually results from increased real incomes but yet can be used to look like stagnation when describing households. A reduction in the number of people living in a household will bring down average household income when better off individual start their own household.

If the Guardian printed something along those lines their piece wouldn't technically be inaccurate, but it would be wholly misleading. Suppose there are, as I think there are in America, approximately 40 million people living in households whose income is in the bottom 20% and 65 million living in households in the top 20%, measuring income inequality is going to mislead.

If different groups contain different numbers of people, a stat about income inequality concerning the bottom and top percentages is deceptive. Moreover, in a changing time when people get paid more for their work, those that either don't work or work part time will fall behind those that work full time. But it goes deeper, because there are other factors that contribute to income inequality that are not merely society's injustices, they are simply the result of billions of individual choices that people have made.

Remember even St Paul in his letter to the Galatians declared that we do actually reap what we sow as well - not that we should hold back from caring for and helping those less well off than us, but that actually society is not a melting pot of injustices, but rather it is an aggregate of millions of people reaping what they sow in terms of millions of life decisions made every year of their lives.

As I've said before in a previous blog or two, the biggest determiner of how well people are doing is work. A household that has two workers in it will usually be doing better than a household with one. A household with no workers will be doing worse still. Last time I fact checked, the top 20% of households have four times as many workers as those in the bottom 20%, and more than five times more in full-time work. That is going to make a huge difference - and it is one of the most disingenuous things we do to say this doesn't matter.

Alas, Ken Loach, the director of very enjoyable films such as Kes, Riff-Raff and Raining Stones, treated us to a litany of these basic category errors on Question Time this Thursday - demonstrating to the entire country that while he's a good movie-maker, he is basically clueless about how economies work, and blind to how individual choices eventuate in the societal outcomes we see.

Income inequality is caused by people contributing different amounts to society, and that is reflected in the wage differentials. The left are always going on about how unfair society is because there is so much income inequality. But even by the time we reach puberty we ought to have worked out that this is the opposite of the truth. A society that has unequal income distributions based on having unequal societal contributions is hardly one that ought to be called unfair - it is the playing out of what Paul said in Galatians.

Yes in spite of this, the very notion that inequality is caused by some contributing a great deal to society and some producing considerably less is scarcely mentioned, which is surprising because every person reading this will know of people to whom both examples apply.

Those in the bottom 20% of earnings not only have far fewer people in work, they have fewer skills and less education with which to contribute as much as the top earners to society. The bottom 20% will have far fewer university graduates and people with college qualifications than the top 20%, and these are important statistics that demonstrate not an unjust society, but one that is a lot more just than many care to acknowledge.

Moreover, that's not quite the end of it either, because as well as the Guardian's and Ken Loach's mendacity in skewing the narrative, income inequality stats are quite naturally misleading in other ways too. For example, they omit the welfare received by those in the bottom 20%, which amounts to substantial benefits to which the recipients contribute nothing. In fact, it may shock you to know, but the bottom 50% of earners in society pay only about 5% of the total tax generated.

Last time I checked, transfers from the government to the welfare recipient accounted for around 78% of resources for people in the lowest quintile. Not only does this mean we live in a society in which the rich heavily subsidise the poor; it means that the inequality statistics that are always appearing in the social commentary of the left are based on just 22% of the lower quintile's income - their earned income, where the rest constitutes handouts.

Another popular way to underestimate growth and overestimate inflations is to refer to a price index to make your case - the most popular one being the consumer price index (CPI). It's easy to use the consumer price index to focus more heavily on the lower prices of the recent past (thus flagging price increases) and focuses less heavily on the higher prices of the recent past (thus overlooking price reductions).

When you go to Tesco and come away happy that your bananas and your cereal and your flaxseed were all cheaper than last month, do you honestly think that those reductions came from nowhere? Had you bought grapes and tinned fruit and fresh fish you might well have found that you had paid more than last month. Only a fool would focus on the goods they happen to flag as being reduced and naturally assume that Tesco’s net price index was lower than last month. 

It’s another easy way to create a false impression by only focusing on one aspect of the situation. You might be perturbed by price rises if I only told you about the increase in price in train and bus fares, newspaper obituaries, postage stamps, and chocolate bars over the past 25 years. Less so if I only told you about mobile phones, computers, media players, and most household electrical goods (televisions, fridges, freezers, microwaves, washing machines, cookers, etc).

That is what the consumer price index does – it focuses most heavily on the things we used to get cheaper and overlooks all the things we used to pay more for. It is impossible to present a meaningful value index that encapsulates all elements and is without bias. Even a totalised economic price index would still be devoid of many factors that are related to good consumption – pleasure, utility, happiness, and well-being are four examples.

Moreover, as will be pointed out in the early chapters of many economic text books, analysis of inflation must also factor in changes in products that are concomitant with price increases. The most obvious example is cars, which are more expensive these days, but also full of features that would have been considered a luxury a few decades ago (I remember as a young boy being fascinated by a neighbour's new Ford Sierra because it had electric windows).

Think back to when cars were first prototyped and think about the vast progressions since those early days. Not only have cars become safer every year, they have improved their speed, their efficiency, their technology and their luxury, as well coming equipped with alarms, air conditioning, satellite navigation systems and CD players (these days it's actually now an iPhone played through the car stereo with an auxiliary port).

Cars that used to be luxury are now standard and affordable for the majority, and this applies to laptops, mobile phones, video cameras and similar such things. Also someone of today has access to all the world's knowledge, access to the most up to date research, countless public services benefits that were once inaccessible, and communication with the world's most developed countries.

Most of the taxes paid are by people with an above average income, and many with a below average income are receiving transfers of wealth from the top downwards. Statistics about income greatly exaggerate the differences in standards of living, particularly so nowadays. Lefties have a tendency to exaggerate what Jack has and understate was Jill has, to construct fallacies of injustice.

I think a lot of the problem is that people tend to assume that when people get rich they do so at the expense of others getting rich. But this is to fall for the fixed pie fallacy. Think about it; if having billionaires was detrimental to the rest of the population then America would be one of the poorest countries in the world, as it has over 500 billionaires.

But the wealth of the richest doesn't occur at the expense of the poor - just the opposite - it helps create wealth for others in the population. In fact, last I read in Forbes the number of billionaires and millionaires in the world began to decline, which indicates that more people are seeing their real incomes go up. Just over 50% of American households have incomes of $50,000 and higher, whereas fifty years ago the number of households with the equivalent purchasing power was less than half that.

A lot of people who are statistically recorded as being not well off in terms of income are actually some of the most well off people in the land - wives of high-earning husbands, pensioners who have retired, but who own their own home and have assets that do not count as income; university graduates who are going to go on to earn a good living, young adults who are still in the high income family home, and young professionals at the start of their career who've yet to start earning what their qualifications and training will see them go on to earn.

All of the above will fall under the Guardian's statistics as being low earners, because statistics don't differentiate between the people who are going to have low incomes for much of their lives and those that have not or will not. Many of the people whose incomes are in the bottom two quintiles in the early parts of their working life will go on to be in the top two quintiles in the next 10 to 20 years of their working life.

For this reason, income inequality measured at any given time is not representative of income inequality over people's lifetimes. Nor is it representative when huge cash transfers from the government are omitted, nor the large taxes paid by the higher earners, nor the wealth of pensioners and the future wealth of the young but well educated post-graduates. The rhetoric from the media-celebrity left is all a bit of a mess really, and unless more people in the country stop encouraging them, wise-up and learn some of the basics, they won't grow out of it anytime soon. 

In failing to admit these truths, the left are letting down the people whose causes they are purporting to champion. While they assert that the poor are victims of injustice and that through no fault of their own society has placed roadblocks in front of their path to success, they gloss over many of the actual reasons why some do less well than others.

In other words, in many cases (although not all cases, of course) what those falling behind need is not so much a character embellishment but a reality check and a few home truths about the decisions they've made. I don't mean we should turn into a society that is judgemental towards those who've made a series of bad life decisions - but to do as the left does and not only fail to acknowledge these things but also pretend they are not there by writing their own hackneyed, distorted version of the reality, is helping nobody.

Wednesday, 26 October 2016

Saying Britain Is Overcrowded Doesn't Make It True!

To those who assert that Britain has reached its capacity on how many more people it can fit in - it's just not true! Last I heard the UK National Ecosystem Assessment (NEA) worked out that the proportion of England's landscape that is built on is a mere 6% (in fact, once you include parks, allotments, and domestic gardens into that equation, the actual figure is more like 2.27%).

Or to put it in an even more compelling way, excluding parks and gardens, if we were to quadruple the size of every city, town and village in the UK, it would still be the case that just over 90% of UK land is not urbanised.

Now obviously I'm not saying that every bit of non-urban land can be built on - there are important areas of natural beauty, there are mountains, rivers, canals, lakes and reservoirs; and there is important land for farming, horticulture and silage, but the mere suggestion that the UK is overcrowded, and that we are full, is frankly ludicrous, and ought to be put to bed right away!

As I explained in a past Blog post:

"Regarding overcrowdedness, the upshot is, rural areas are quieter because fewer people like to live in them - and house prices are very expensive in Central London and Manhattan because more people want to live there.  Its simple logic - the reason London has 8.6 million people and rural towns have only a few thousand is because more people prefer to live in London than they do rural towns. The reason being, not only is there is a greater abundance of the aforementioned benefits in more populous areas, there are also better career prospects, higher salaries, better nightlife, greater choices of restaurants, a richer choice of entertainment, more tourist attractions, better public transport, greater diversity of people – the list goes on. 

In terms of probability, the highest number of complainers of over-crowdedness will most likely come from a highly populated area, which probably explains why to them the UK feels overcrowded. Most people who pontificate on overcrowding are likely to be pontificating from a vantage point of high population density. The people with the highest probability of feeling an intense population density are those who live in the densely populated areas. For example, if city x has 7 million people and a village y has 1000 people, and only x and y exist, there is only a 1 in 7000 probability that you don't live in city x.

Let's get one thing straight, though - the UK is not overcrowded. The mistake people are making is that they are trying to average population density of people instead of averaging over square miles. You can't get a proper picture of the UK's people to area ratio by counting how densely populated a populated area is - the only way is to assess how densely populated the average square mile would be when considering each square mile as a weighted average of total population and total area. A tube station in the rush hour can be overcrowded; so can a concert venue without proper door control - but take a trip around the UK by plane and look down, and for the most part you won't see crowds of people, you'll see fields and woodlands.

The rate of urban areas in relation to square miles is vanishingly small - there is potential for literally millions more people living in the UK. Of course, just like all sensible immigration policies, a nation must ensure it has the schools, hospitals, roads, etc to support more people, but given the myriad qualities and benefits one distils from living in places like London, that ought to be something that's greatly encouraged.

It certainly is the case that in some areas of the UK the infrastructure hasn't quite kept up with population demand, but once you accept the general maxim that more people means more cultural and social benefits, it's easy to see that inadequate facilities does not mean the nation is overcrowded, it simply means that the UK infrastructure has not progressed conterminously to facilitate the social and cultural benefits that come with an increased diversity of people."

Sunday, 23 October 2016

If There's One Must-Read Book Of The Past Few Years, I Think It Is This One....

In my opinion, one of the most important books in recent years is Matt Ridley’s Evolution of Everything - it's one of the few books in the modern era that I think can justifiably be called a must-read book.

After his excellent works The Red Queen and The Rational Optimist, Matt Ridley’s Evolution of Everything makes the case that bottom-up evolution rather than top-down design is the main driving force that has shaped much of culture, technology and society, and is shaping our future.

He argues, quite rightly that change in technology, language, morality and society is incremental, inexorable, gradual and spontaneous, and that much of the human world is the result of local human action, not of centrally planned human design; it emerges from the interactions of millions, not from the top down organisations of a few.

I should say, though, that while it's true he covers a wide range of topics, and gets most things right - from the internet to bankers, from crop circles to education, from the nurture vs. nature debate to technology, from mind to money, from genes to morality, and many more topics - the book is not perfect by any stretch of the imagination.

Some of the arguments involve selectively loose cherry-picking which is offered up to conveniently support some of his contentions at the omission of perfectly good contra-examples. And in a couple of the chapters, the one on religion being the best example, he builds too many presumptions on top of the central thesis of the book.

The other thing worth saying is that although the book is a very good compilation of how relevant the bottom-up understanding of society is to the reader, it's not as though this is the first time it has been argued. In fact, the book itself is based on the prescient wisdom of Lucretius in his masterpiece De Rerum Natura - (a work I've read multiple times, and one that seems more impressive each time I read it).

Evolution of Everything is also underwritten by decades of formal contributions to economics from the likes of Bastiat, Smith, Ricardo, Coase, Marshall, Hayek, Schumpeter, Mises, Hazlitt, Rothbard, Sowell, Friedman, McCloskey and Boudreaux, about how markets and society evolve primarily through local transactions, not command economies from on high.

It's a must-read for precisely the reason the critics hate it - because it involves a revolutionary (if long-standing) message that the majority of people haven't intellectually assimilated or emotionally accepted. That when left to act freely in accordance with our local initiatives, we frequently bring about societal progressions, economic growth, increased prosperity, reductions in global poverty, and an enhanced well-being and standard of living that puts to shame the self-serving and misjudged attempts to engender this from on high.

It's a message I, and many like me, have been trying to get across for years - one that is anathema to the politicians, ideologues, demagogues, self-appointed authority figures, socialists, environmentalists, cult leaders, and eco-warriors alike - that evolution is a phenomenon that extends far beyond the natural selection of biology. And that things that are widely believed to be the sovereign brainwork of the controlling few, such as morality, the economy, technology, science education, government, money and all manner of cultural norms - are actually, in Ridley's words, "phenomena of evolutionary emergence — of complexity and order spontaneously created in a decentralised fashion without a designer."

Bottom up, not top down
Central to the message is not just that bottom-up evolutionary emergence usually does a better job of organising and innovating that top-down control freakery; it's that the myth that nothing would ever get done without human direction from on high is a continually stultifying, misleading and damaging myth  - not just because of the deadweight costs and inefficiencies it imposes on societies, but because it persists with the precarious cult of personality and perpetuates Thomas Carlyle's anachronistic Great Man theory.

It is all too easy to tendentiously ascribe great theories, ideas and discoveries to great figures in history. As we know, Newton is most closely associated with the incipient knowledge of gravity, Maxwell with electromagnetism, Smith with free markets, Darwin with natural selection, Mendel with genetics, Einstein with relativity, Watson and Crick with the double helix of DNA, and so on. But those theories, ideas and discoveries didn't occur in a vacuum, they were a large group effort, and if it had not been them it wouldn't have been long before other names would have been the associative names.  

Perhaps the best living example of the phenomenon of the evolutionary emergence of a thing of complexity and order spontaneously created in a decentralised fashion without a designer is the means by which you're reading this - the Internet. Nobody sat down one day and planned the Internet as a fait accompli phenomenon - it is a global system of interconnected computer networks that evolved over time, and is still evolving, in a cumulative step by step process of trial and error that tailors to our tastes and needs.

The emergence of the Internet - like cities, cars, houses, clothes, supermarkets, science and medicine - was driven by consumer demand, be it for global communication, widespread knowledge, online shopping, social networking and the countless other benefits it brings to human beings all across the world. It provides a microcosmic example of markets in general - where the complex emergence of order occurs not from being designed top down, but by a long natural selection-type process of good and useful ideas surviving, and bad ones being weeded out.

The same is true in pretty much all walks of life. Leading figures in history don't really proscribe morality, Chancellors don't really run economies, Prime Ministers don't really run countries, and singers don't really catalyse brand new genres. Of course, individuals can be influential and help the world along, but one of the most perpetuated fallacies throughout history, and still alive and kicking in the present, is that these things are planned and designed rather than evolved on a trial and error basis.

The rational calculations of trial and error are the driving force behind our progression, not top-down prescriptions. The theologian that tells you how to be a good person, and the moral philosopher who enunciates the rules for being an ethical citizen are basing their precepts on what humans have already worked out over lengthy execution time through the evolutionary basis of trial and error.

Attitudes to sex are an interesting example of how evolution of thought changes thinking. Once upon a time homosexual practices were utterly frowned upon by large swathes of society, and punishable by law. At the same time attitudes to under age sex and abuse were relatively relaxed. Fast forward a few decades, and now (thankfully) the opposite has occurred in both cases - society is much less tolerant of under age sex and abuse, and homosexuals can live freely and openly in a more tolerant society.

This example, and many others like it, demonstrates how much our morality is an evolved, learned phenomenon. It's also a fact that the more economically developed and prosperous nations have become, the better their citizens have behaved. Similarly, the more state-oppression, dictatorship, and lack of basic rights seen in history, the worse they've behaved.

The main cause of why people are still stuck in poverty is the unaccountable power of corrupt self-serving politicians against citizens that lack the basics required to be a successful trading nation with access to the global free market economy. Corrupt officials and poverty-stricken citizens are sprung from the same root. This was true for most people for most of human history - now it's still only true for a proportion of people alive today, but still true nonetheless. 

The places where people struggle most are the places where politicians live parasitically off the fruits of the citizens' labour. While once it was primarily for luxury and war, now it is for control and indulgence off the backs of people who've not yet won the battle over the state for free trade, private property rights, stable rule of law, limited political interference, lower taxes and personal liberty.

Darwinian efficiency
What's most vital in all this is that the Darwinian model of natural selection is by far a more efficient and powerful driving force for improvement, prosperity and advancement than any top-down designer, precisely because it is the accumulation of individual efforts into one grand collective effort that sows the seeds (as Leonard Read's tremendous essay I Pencil shows better than anywhere else I've seen - all of our technology and material accomplishments are made by a cooperative endeavours, not by the few people associated with such gadgets).

The energy revolutions that have helped reduce our human effort and replaced it with the harnessing of animals and machines have mirrored nature's law of least effort in providing a correlation between energy expended and progress rapidity. A train being able to get us from A to B quicker than on foot, or a machine that can pack meat into tins quicker than the human hands, are the kinds of progress that when aggregated lead to, on average, a person in country A that consumes 7 times the energy of a person in country B, and one who is likely to be about 7 times richer too.

There is also an interesting observation by Edward Glaeser about the near perfect correlation between urbanisation and a nation's prosperity - that is, the countries where the majority live in cites are wealthier (about four times wealthier) than countries where the majority live in rural districts. Further, the faster the city grows in size, the more efficient it grows per head, largely due to the benefits of recombination of ideas in densely populated areas.

A term called Schumpeter's gale (coined by economist Joseph Schumpeter) is a term that observes that market progress is built on both failures and successes - what he called a 'perennial gale of creative destruction'. In other words, for the economy to progress with strong businesses that have the innovative impetus to survive, it must also contain less-strong businesses whose lack of success makes them fragile to the point of discontinuing. Schumpeter, in using a Darwinian analogue, called this 'industrial mutation'. And as another fine economist, Ludwig von Mises (1881-1973), was shrewd enough to point out in the 1940s:

"The real bosses, in the capitalist system of market economy, are the consumers. They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser. They make poor men rich and rich men poor. They are no easy bosses. They are full of whims and fancies, changeable and unpredictable. They do not care a whit for past merit. As soon as something is offered to them that they like better or that is cheaper, they desert their old purveyors. With them nothing counts more than their own satisfaction. They bother neither about the vested interests of capitalists nor about the fate of the workers who lose their jobs if as consumers they no longer buy what they used to buy."

Émile Chartier had a lovely way of analogising this:

"Every boat is copied from another boat. Let’s reason as follows in the manner of Darwin. It is clear that a very badly made boat will end up at the bottom after one or two voyages, and thus never be copied. One could then say, with complete rigor, that it is the sea herself who fashions the boats, choosing those which function and destroying the others."

The upshot is, the free market is the place where free citizens drive the outcomes - we are the bosses, which is why the things the agents in question govern have the highest probability of being the most efficient. As Matt Ridley reminds readers in the book:

"It is axiomatic among right-thinking people that there are many things the market cannot provide, and therefore the state must.  The sheer magical thinking inherent in this thought is rarely examined.  Because the market cannot do something, why must we assume that the state knows better how to do it? Take six basic needs of a human being:  food, clothing, health, education, shelter and transportation.  Roughly speaking, in most countries the market provides food and clothing, the state provides healthcare and education, while shelter and transportation are provided by a mixture of the tow - private firms with semi-monopolistic privileges supplied by government:  crony capitalism, in a phrase. Is it not striking that the cost of food and clothing has gone steadily downwards over the past fifty years, while the cost of healthcare and education has gone steadily upwards?"

Here's something I find quite intriguing about human progression
This section is probably interesting enough to justify its own separate blog post - but anyway, you may have noticed that more than ever before the world's two dozen most advanced economies are knowledge-based economies - service and technology based expertise are at the forefront of their growth, not the sweat and toil of manufacturing goods, and obviously not agrarian labour.

There is a good reason for this - we progressed from agrarian to manufacturing to knowledge-based economies, as did a handful of other countries that did so at roughly the same pace. All the other advanced economies did so, or are doing so at a slightly slower pace, and there is good reason why.

Not all countries will progress at the same rate - there will always be countries that get their foot in the door first, and are then followed by others. But what underpins this truth is something even more fundamental and revealing - it is probably impossible to jump the natural threefold order of progression: that is, it is probable that every country on the road, from majority poverty to majority well off, has to go through the threefold process of being agrarian, then manufacturing, then knowledge economies.

We see a lot of frustration that some countries are developing more slowly than others, but given that we established that no authority figures control economies, they occur bottom-up and are driven by the people, it could be that every country that is going to progress or advance has to go through the quite hard and labour-rich process of being a manufacturing country first before it becomes as prosperous as the world's leading economies (and even then, things like geography, climate and political situations in neighbouring probably will continue to have a bearing).

I suppose the logic is obvious really - it's difficult to become a financial service economy until you have gradually harnessed the infrastructure through the manufacturing process. National and international progress, again like biological evolution, occurs in small incremental steps, not giant leaps (the only caveat to this is that now so many countries are advanced, and now everyone is globally connected, it's quite likely that the developing nations will have a leg-up in their own version of the progression explosions we enjoyed when no one else was prosperous 200 years ago).

The other remarkable thing, as Matt Ridley points out in the book, is that inventions pretty much always come along at the right time - there are rarely products or services that come along years too early or years too late. Think about it; when have you ever known a good to be invented and sit idly for a lengthy period of time until we developed the technological wherewithal to utilise on it? Equally, when have you ever identified a desperate societal need for something and found we had to wait a lengthy period of time for it to be introduced? The answer is pretty much never.

And the reason is fairy obvious - technological emergence is concomitant with the whole nexus of other emergences - they interrelate, and they emerge in the period of time when they would be most use for a particular industry. Required innovations find their innovators rather than the other way round. Gloves find hands and glasses find eyes, not vice versa.

Patterned evolution
As we now know from reading works like Richard Dawkins' The Selfish Gene, the body of an organism is a mere vehicle for the genes to propagate themselves. It is the selfishness of the gene that is the primary driving force for the survival of the organism (same with markets) - it is these acting in accordance with local effects that goes on to produce the splendour we see in the biological diversity of plants, fungi and animals.

Any system where information is transmitted, provided there is reproduction fidelity and random elements, should mirror the evolutionary process we see in biological kingdoms, including ideas and the sharing of knowledge. It's a sobering thought, but had the materialist philosophies of Democritus, Epicures and Lucretius - particularly the idea that nature is made up of constituent parts - not been both suppressed and surpassed by competing monotheistic theologies of the era, we probably would have known about many of the post-1550 scientific discoveries long before we did.

Final word
To finish, we said earlier that the Internet is perhaps one of the best analogies of microcosmic free market in action - it has evolved into a wonderful nexus of human activity, all unplanned, all emerging from local incentives and bottom up ideas. On top of that, it should also be noted that if you transported an arcadian farmer from his habitat to the present day and showed him the Internet he would think it too sophisticated and complex to have emerged evolutionarily, and far too wonderfully ordered to be the result of local evolutionary emergence.

Yet if you apply Leonard Read's I Pencil model to something as complex as the Internet you'll find it takes something as prodigious as the collectivised human species to design something like it. Further, just imagine how much we'll take our sophisticated emergence in the years ahead - imagine the future digital democracy (as some have called it), is ability to share more and more ideas, and make people accountable like never before - what people from Lucretius to Ridley have posited is just the beginning.

Think back to a few hundred thousand years ago, and consider those primeval grunts from our ancestors as they began to make sense of their surroundings. They never could have imagined that those inceptive primate sounds would one day evolve into the entire world of languages, literature, poetry, philosophy, science and technology that we have today. And just as Lord Of The Rings, the Manhattan skyline, space travel and the Hadron Collider would have been far beyond the imaginative precipitations of our primeval ancestors, so too is much of humanity's future evolution beyond us today.

We are picking up pace in this modern age as we reach new heights and new depths in shorter passages of time - and the driving force behind this is bottom up, local ideas, as people gradually wean themselves off the old top-down ways of thinking. I think that is the essential realisation that the greatest number of people need the most, and Matt Ridley's book Evolution of Everything is a good place to start.  

Saturday, 22 October 2016

Why Shops Stock Up On Christmas Goods So Early

For the past few weeks I’ve heard/read several people bemoaning the fact that shops are stocking Christmas goods earlier and earlier. You only need to see a tree and tinsel in the shop window in late October and there will be a mass moan. Here’s what the moaners don’t understand – you cannot really blame the shops for opening earlier and earlier, it isn’t really their fault. If the critics knew about non-linearities and feedback effects they would understand what is happening.

To see why shops are opening earlier, consider this simplified feedback model. Suppose we have M & S, Debenhams, John Lewis and Jarrold’s in the city centre. A long time ago all four shops used to stock their Christmas goods from December 1st. One day M & S try to obtain the advantage over the other three by stocking their Christmas goods a week earlier (from November 24th). 

Debenhams, John Lewis and Jarrold’s have three choices; they can do nothing, they can emulate M & S, or they can go one better and stock their Christmas goods earlier (say, from November 17th). If they do nothing they risk losing a week’s vital Christmas trade from opportunist shoppers to M & S; if they emulate M & S then there’s nothing stopping M & S doing the same again, leaving Debenhams, John Lewis and Jarrold’s on the November 24th date and stocking their Christmas goods a week earlier (from November 17th).

So, quite naturally in response they pick the best of the three options by stocking their Christmas goods earlier than M & S. But it doesn’t stop there – what then happens is that each one of their competitors will look to outdo the other by choosing a date earlier than the others. This continues over the years – and if you obtain the statistics you would find a pattern of increased early Christmas stock to match and/or outdo the competition. .

This is what happens when feedback effects occur; the shops are continually under pressure to stock their Christmas goods earlier and earlier to obtain an advantage, which is why you see all these shops beginning their Christmas trading at times that are, to many of you, premature. Their hand has been forced, lest they lose vital trade time to their competitors.

The shops are subject to "feedback" effects – whereby a particular parameter x changes and via a "feedback" route the change in x causes further change in x (thus x is "feeding" back to itself). Feedback systems, depending on the kind of feedback involved, can produce varying "curves" of change when plotted on graph paper – some of which are quite chaotic.

There is a ‘but’ of course – if it were just down to procuring an advantage by trading earlier, then M & S, Debenhams, John Lewis and Jarrold’s would all begin their Christmas trading on January 1st. But, of course, it isn’t like that – there is a balance to be struck, because the shelf room they take up with Christmas stock amounts to a loss of shelf space for other more saleable goods if they are displayed too premature for the festive season. 

The decorations, wrapping paper, cards and bumper chocolates would be counter-productive stock if they were displayed in August in the hope of obtaining a festive head start on the rival shops – which is why the balance between being too early and too late in the year is of huge importance.

* This article was first published here at the Adam Smith Institute.

Thursday, 20 October 2016

Why We Cannot Ever Get Our Money's Worth From Governments

It shouldn’t be much of a surprise that we have a natural curiosity about whether morality can be assigned some sort of value system – value systems are inherent in most of our thinking. We measure with calculus, we calculate with algebra, we assess shapes with geometry, and perhaps most essentially here, we estimate and forecast with probability theory.

A question about value was asked this week on a BBC 2 programme called Who's Spending Britain's Billions? It asked the kind of question I'm repeatedly answering, even when you don't ask (heh!) - and that is: What sort of value does the government provide for us? The programme focused primarily on all the profligacy that comes as a result of officials spending other people's money more frivolously than they would their own, but I want to take a different angle tonight.

As I'll explain, and as you won't be surprised to hear, government value is far tinier than you may think. Perhaps the main reason that people think governments provide so much value is because they do not think of alternative providers or the countless ways that the public sector could be improved. That's not to deny that the government is worth having - it's just a very mixed bag.

As you'd expect, the government quite naturally spends its money wisely and poorly. But perhaps the big thing against it, aside from its waste and inefficiencies, is that its control of the market is so minimal it is virtually negligible. An economy is so complex that no individual group can hope to predict it accurately. Even when you find an accurate prediction, what you're seeing is cherry-picking, as that prediction almost always omits the parts the predictor got wrong or incorrect parts on which the predictor chose not to predict.

When the government spends well, the world gains. If it is prudently allocated foreign aid then mostly poorer people benefit from water, food clothes and shelter; if it is on health the sick benefit; if it is on road maintenance the drivers benefit. But if it is spent poorly, on wars (some wars are injudicious), on profligate enterprises like consultants fees and think-tanks (which are often a waste of money) then everyone need not necessarily suffer financially.

It may surprise some of you, but poor government spending can still lead to a somewhat accidental overall job growth, because when people’s resources hit a significant loss, borrowing increases, which hikes up interest rates, which dissuades people from holding onto money, which has the corollary effect of increasing spending, which drives up prices, which either leads to business expansion (creating more jobs), or a concomitant rise in employees’ wages commensurate with the employers’ profit increase, which means workers have more to spend, and so on.

But excepting the above, by and large when governments interfere in the economy they do more harm than good. When the government prints extra money it expands the money supply, but that means it devalues the economy. Say a government prints £1 billion pounds – the prices of all consumer goods are increased by exactly one billion.

This principle is easily explained – when you go out tonight and spend £100 in your local supermarket you put up the price of everything else by a net total of £100. If instead you burned the £100 (and of course I wouldn’t advise it) you would decrease the price of everything else by a net total of £100. Naturally those sums are so small that society never notices when we’ve made the economy richer or smaller, but technically we have.

Just like physics has the law of conservation of energy – it can be transferred but it cannot be created out of nothing – the same principle applies to the economy. Resources can be transferred from one state to another, but equity cannot be created from nothing. If the government prints £1 million pounds, the economy as a whole is £1 million worse off. If I have a million pounds and I put it under the floorboards and nail them shut the economy is £1 million pounds better off for as long as the money stays under the floorboards. It is true that governments can sometimes do better things with resources than most individuals (although not always) but when any amount of money is transferred in an economy it has a correlative effect elsewhere.

Imagine this as a microcosmic example of a macroscopic state of affairs; the government hikes up my taxes by 13%, which means I have 13% less of my equity to spend. The government gains more roadworkers or local council administrative officers, but my gymnasium loses in the subscription fee from which I withdraw. Then the gymnasium has less money in its bank, which means that bank has less to loan to Sue for starting up her new business, which means Sue’s shelf prices are higher than she planned, which means Mary her customer spends more on a washing machine, which means the curry she was going to have at the weekend is forgone, which means Roshes the Indian restaurateur has less money in his till, and so on.

That is how the economy works – and no government can make us richer on average, they can only shuffle money around from one place to another. There is also the little matter of the futility of governments getting involved in prices. To emphasise this point, you have to realise that prices find their level based on the entirety of human market transactions in the global society. It is literally impossible to make this more efficient by tweaking a few knobs - impossible.

To illustrate this, suppose the government decided to take control of the fruit and veg industry, whereby everything grown, imported and exported is under their management. Everyone in society would still be best off if all fruit and vegetables continued to be priced at its market clearing rate, because any price the government set outside of the market value would either be too high or too low, which means there'll be the wrong amount of fruit and vegetables.

If the price is fixed too low then demand will increase and willing suppliers will diminish, creating a shortage of supply. If the price is fixed too high then consumption will decrease, which in the case of fruit and vegetables will achieve the opposite of the desired effect. The only way to optimise the price is to leave it to market forces, which, of course, involves no price-fixing at all.

Finally, I'd like to draw your attention to this article from American economist Robert Murphy, who roughly (but soundly) calculates a $2.6 trillion increase in annual economic output if "the government were to restrict itself primarily to its classic role of protecting the country's residents from criminals and invaders".

Wednesday, 19 October 2016

The Moral Fuzziness Of The Moral Calculus

Here’s a moral question for you to consider (based loosely on a real life scenario in 1884 called the lifeboat case: The Queen vs Dudley and Stephens). Four students named John, David, Derek and Alan are stranded on a boat with no food in the middle of the ocean after their engine fails.

The students call for help but their rescue crew won’t get there in time, meaning they look set to die of starvation. There is a revolver in the cabin, and a possible solution to save three of the four students - with one student being shot in the head (for a painless death) and then being eaten by the other three, ensuring survival until the rescue crew arrives. Would it be morally wrong to kill one to save the other three (the famous trolley problem has a similar dilemma)?

The answers to that question tend to depend on how the person to be shot and eaten is chosen. If you asked 100 people whether it would be right for David, Derek and Alan to gang up and nominate John to be killed, most would feel uncomfortable with this scenario. If, however, you asked 100 people whether it would be right for the students to put the four names in a hat and then randomly pick a student to be sacrificed for the greater utility of the other three, many would feel much better about that scenario (as I argue in this blog post, in scenarios like the trolley problem we should pretty much always take the consequentialist action).

One of the many interesting things about moral dilemmas is that we get to draw the important distinction between what we ‘should’ do and what we ‘would’ do. If forced to choose between pushing a button to kill your one child or pushing a button to kill 500 randomly chosen strangers, you probably should save the 500, but many probably wouldn’t. If faced with a screaming child on the top floor of a 3 storey house on fire, we probably should go up and try to save the child, but ‘should’ and ‘would’ are two different things. It’s always easier to say what you ‘should’ do than be sure of what you ‘would’ do.

Moral philosophy enables people to exclaim (and often exaggerate) their own probity in defining what is theoretically the right course of action - but, as the old maxim goes, actions speak louder than words - and the real life evidently can bring about a gulf between what we should do and what we do end up doing. If it didn't, there would be no wrongdoers in the world.

Another thing to consider is this. Does acknowledging the right thing naturally mean that one must always do the right thing? I'm not sure it does. For example, in the trolley problem, could it be the right thing to do to push the fat man to save the five, but not morally essential to do so if one's personal deontology trumps the consequentialism of the act? It's possible. Furthermore, are there actions for which any of the two outcomes are either both moral or both immoral? It could be conceivable that pushing the fat man and not pushing the fat man can be argued to be moral, and I suspect, immoral too.

What we often find objectionable is when we think people are being used as a means to ends. But I've often thought the whole notion of means and ends to be limited - after all, what are ends to some consequentialists could be regarded as means to other consequentialists. And clearly an end isn't always an end in itself - it is frequently another means to a further end, which is a means to another end, and so the story goes on.

There is another reason why what we should do and what we would do don't always translate into a personal moral philosophy - most people don't really live their lives with an underpinning moral philosophy, they only think they do. That is to say, we humans have a tendency to place more emphasis on the theory of moral systems than is actually the case in action. We talk so often about creating moral rulebooks or philosophies, but they don’t seem to have much influence on our behaviour. 

Perhaps the theories are like maps we consult every now and then, and our daily lives are like trips around a territory with which we are habitually familiar. And just maybe that is actually good for the emotions – after all, a human that followed a book, or a rigid set of instructions, or a mathematical formula, or advice from a guru every time he was looking to do the right thing would be rather too much like a robot.  

We are not like robots, of course - we are much more dynamical, and hence much more inconsistent because of that. The trouble with the dynamical approach, I find, is for people not very proficient or balanced it could lead them into a life where they scarcely have anything of moral value at all. They end up being selfish, parochial and so unaccustomed to the pursuit of human excellence that they let themselves down and cause upset to others. 

What we actually find, in fact, is that humans tend to oscillate between what we might call "Working out our actions from emotional desire one situation to the next" and what we might call "Having a firm and consistent set of moral values" - and we are frequently trying to find the right balance between the two, which is why you'll often notice that some of our strengths lead to faults, and some of our weaknesses lead to positive qualities. And you'll find in some cases that the two are quite inextricably entangled. Or to paraphrase W.H. Auden, if you take away some of our devils you take away some of our angels too.

The danger, as always, is that those who live by their own self-regulated moral standards tend to make those standards comfortably low - thereby making it harder to fall short of them. The primary thing that reawakens our wrongness every day, every hour perhaps, is the wrongness we do in spite of knowing full well these things are wrong, even if it just mild solecisms like selfishness, bad temperedness and uncharity.   

For example, I have written a whole book on morality - and it's a very long one too - it covers just about every aspect of morality through the lens of philosophy, economics, psychology, religion and science. But even with all that knowledge and understanding I am, and continue to be, way short of where I want to be morally, and every day is a reminder of how much better I can be.

By no stretch of the imagination am I one of the world's worst people - but most of my badness is not contingent on any lack of knowledge or any logical inconsistency or lack of symmetry - it's to do with the fact that with our daily goings on we have continual daily reminders of how much better we can be. The knowledge, logical inconsistency and symmetry that increases our morality simply makes us aware of how, on a daily basis, we can do so much better.

On that spectrum our general human behaviour is bell curved shaped. That's why for most of us our failings are failings that we humans have made largely socially acceptable due to their commonality - failings like being too impatient with someone, acting a bit too selfishly, not speaking to someone nicely due to being a bit tired and grumpy, needing to take more time to show care for people we haven't seen for a while, not volunteering more of our time for good causes, being unwilling to give up more money to worthwhile things, and things of that nature.

There is no real moral philosophy in the equation - most of us are very rarely in positions in which we get to see how we'd react in those age-old moral dilemmas. And most of us are very rarely in positions in which we and are under great pressure to be amazing human beings, or ensnared in a situation in which we are terrible - our lives are played out as a kind of weighted average of the whole spectrum, in which we usually never allow ourselves the self-rebuke or the self-congratulation of extreme badness or extreme goodness.

Sunday, 16 October 2016

On The Higher & Lower Pleasures

The test of a higher pleasure, according to John Stuart Mill, is that those who have experienced both the lower and the higher always prefer the higher. So, for example, a man who could claim categorically that he always prefers the works of Sophocles to the works of Ibsen can say that, to him, Sophocles constitutes a higher pleasure than Ibsen.

There are a few problems with Mill's higher and lower pleasures - not the least of which is comparing apples and oranges (and oranges and books, and books and holidays, and holidays and sex, and sex and fast cars - you get the point), and the issue of the distinction between pleasures necessary for survival (food and drink) and pleasures unnecessary for survival (Shakespeare and The Beatles) whereby the latter may be higher in terms of pleasure but lower in terms of necessity.

But the problem I want to focus on here is the possible bias a Victorian polymath philosopher might have towards pleasures, compared with, say, a twenty-something working class female in 2016. Let me first start by trying to identify what I think the best physical pleasures are. I'm assuming that if it's true for me there's a good chance it'll be true for others too.

Good sex with someone you love is right up there with the best physical pleasures, as is eating a delicious meal when you're famished. Relaxing in a comfy recliner chair after some hard exercise is a very nice sensation, as is the feeling of freshly washed and ironed sheets on your skin when you first get into bed. A nice scenic view is very pleasing, as is cuddling, and doing something kind and generous for somebody else is highly rewarding too (you may want to classify the last one as an emotional pleasure).

But what about the intellectual pleasures associated with things like philosophy, art and literature? Is the complete works of Shakespeare a higher pleasure than the complete works of Alan Bennett or the complete box set of Nicolas Cage films? Is Van Morrison's Astral Weeks or Radiohead's OK Computer a higher pleasure-pairing than David Bowie's two Tin Machine albums?

John Stuart's Mill's test of a higher pleasure - those who have experienced both the lower and the higher always prefer the higher - may not apply to a man who loves Nicolas Cage films and is bored stiff by Shakespeare. It may be very difficult to get him to prefer reading Hamlet to watching Con-Air. In what has become a hugely famous quote, John Stuart Mill explains how we understand and not understand higher pleasures:

"It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied. And if the fool, or the pig, is of a different opinion, it is only because they only know their own side of the question.”

I think a good way to frame it would be like this. We can accept that there are people who prefer the complete works of Shakespeare and people who prefer the complete box set of Nicolas Cage films - but if you found people that know them both, and asked them whether they would choose to spend the rest of their life in the Lake District with only the complete works of Shakespeare or the complete box set of Nicolas Cage films, the vast majority would choose Shakespeare.

The reason being, of course - it would not be difficult to find out that works of genius like Shakespeare's plays are imbued with possibly unsurpassed deep and enriching qualities that get right to the heart of the psychology of being human, and the important questions of life that we grapple with.

Why is it, then, that in these modern times (particularly) more people seem to gravitate towards the easier and more superficial pleasures over the arguably more rewarding and deeper pleasures? I think there are two main reasons. The first, and probably the lesser of the two reasons, is that people are getting a smidgen of those rewarding and deeper pleasures in their more superficial pleasures - be they books, TV shows, movies or video games.

The second, and I think by far the primary factor, is that when it comes to straightforward simple pleasures that demand little brainwork versus the more complex intellectually satisfying pleasures, humans have a tendency to favour the path of least resistance. Or to put it another way, when faced with the immediate prospect of watching Citizen Kane or Face Off, more people would choose Face Off because, although Citizen Kane may turn out to be ultimately more artistically nourishing, it's a lot easier to relax on the sofa with a beer watching an action movie like Face Off.

Implicit in this is the phenomenon known as hyperbolic discounting - the tendency humans have to prefer current rewards over distant rewards of a higher value. So for example, if I offered you £100 tomorrow or £110 this time year next year you'd probably pick £100 now. But if I offered you £100 on this day in 2017 or £110 the day after in 2017, you'd quite rationally choose the latter. Humans are said to discount the value of the later reward by a factor that increases with the length of the delay.

Psychologist Daniel Read of Warwick Business School and his colleagues have conducted experiments that indicate a connection between hyperbolic discounting and why we are more likely to choose a film like Face Off over a film like Citizen Kane the majority of the time.

What Read and his colleagues found was that experimental participants (students, from what I recall), when given the opportunity to select a film like Citizen Kane or Face Off to watch next weekend, were more likely to choose the highbrow film. But when the weekend arrived, they often changed their minds if given the option.

I think hyperbolic discounting has a lot to do with why so many people tread along nicely with the lower pleasures like surfing YouTube for funny videos when ultimately they'd find life more enriching if they pursued the higher pleasures. There is a human habit to suppress those deeper desires for fulfilment whereby what wins through more often than not is the seduction of the low hanging fruit.

For many it would take being stuck on an island or in a log cabin with a choice of lower or higher pleasures before they invested their time in the indulgences of the higher pleasures. But those higher pleasures definitely do exist; even if, prior to the effort of commitment, they can be quite abstruse and arcane.

Saturday, 15 October 2016

Some Things You May Not Have Considered About The Process Of Voting

The hideous Trump vs. Clinton contest has probably made more people feel like not voting than in any time in recent American history. The prospect of choosing their President this time around is rather like voting for a four year dose of haemorrhoids or a four year chronic earache. 

If you are someone to whom the above applies (and ditto the British political equivalent), I have one or two things to say. I've written before (here and here) about how in terms of probability your individual vote in an election or a referendum almost certainly won't make the slightest bit of difference to the outcome.
A challenger once tried to prove me wrong by posting a link doing the rounds to a low-turnout local election in which a councillor had won a district seat by two voles. What he should have realised is that the fact that an outcome like this is so newsworthy and shared so many times is all the indication one needs that 99.9999% of the time individual votes (or even a few hundred votes) don't make any difference to the outcome.
That doesn't necessarily mean I'm advising everyone not to vote - for some people the experience is worthwhile, and it's not for me to tell people how to behave. When it comes to deciding on whether to vote, people should do whatever is valuable to them. But it's always important to remember that value is measured in a whole range of things, and everything is a trade off. If you get x, you get don’t get y.

If you choose y you get less of z, and so on. One is ill-advised to just think of voting as ‘Well everyone should do it!’. Those for whom voting is a beneficial trade off should do it, and those for whom it’s not, should not. As with most things, it’s easy to plug in the numbers and ascertain probability for whether a trade off is beneficial, to yourself and to the wider population.
Here's an illustration to show why it probably isn't worth your while voting. Suppose a single vote costs you £3 of your time. In addition you are made an offer – if you care that much about the outcome you can buy as many additional votes as you like for £50 a vote. In other words, if you want to vote 11 times for your local MP or councillor it’s going to cost you £503 (that’s £500 in cash, and £3 in time).
Given the astronomically low chance that your additional 10 votes are going to make any difference to the outcome, I would think that most rational minds would agree that in the trade off – negligible chance of securing a candidate vs. not sacrificing £500 – you’d be ill-advised to waste £500, because in all likelihood your £500 of additional votes is likely to mean that the winning margin will be, say, 6031 instead of 6041 (or reverse that if you vote for the winner).
It’s pretty obvious to me that if offered additional votes for money, your individual demand curve for increased probability of outcome is pretty flat, and ditto almost the entire population. Therefore, taken to its rational conclusion, and in full knowledge that almost nobody else is going to change their voting habits based on the above wisdom, you’d be wise to take the logic to its farthest conclusion and trade off the vote that costs £3 of your time.
A friend replied with the following comment:
"I suppose the exception would be in the cases where the difference in the outcome would be so high that it would offset the negligible probability when working out the expected value. In the recent Scottish Independence referendum, 400,000 votes would have altered the outcome. At £50 a vote that would mean £20million would be the cost of a different outcome - so if you thought Scotland being independent would bring more the £20million in value to you then the £50 investment would be worthwhile (not to mention the £3 of time to vote). Admittedly, this exception would only apply to a very small number of people.
Also, there's surely an altruistic implication to this. If the £20million of value wasn't something that I saw for myself but for society as a whole (and people on both sides of debates of these kind are throwing around numbers much larger than £20million), then surely that provides a very compelling reason to vote - I am using my time (or in your hypothetical example, money) to produce a greater expected value for society than the cost I have incurred to do so. It seems to me that the smallness of the odds of an individual vote changing the outcome is mitigated by the largeness of the potential payoff of changing the outcome compared to the cost of casting that vote."
My friend is partially right - I could conceive of instances in which that’s the case, yes. However, by equal measure, uncertainty of the ramifications of an outcome has to be factored in too, as does the trivial nature of some outcomes.
In the case of the latter, in the grand scheme of things it really makes little difference whether the city councillors for Blackpool south wards are Labour councillors or Lib Dem councillors, so even if a millionaire could affect the outcome by buying £50,000 pounds’ worth of votes, I’d argue there are far better ways he could spend the money.
In the case of the former, it’s very difficult to know the exact ramifications of a massive decision like Scottish independence or hard and soft Brexits – much of it is contingent on numerous factors not yet apparent, so you could argue that spending millions of pounds affecting the outcome might be a bit of a blindfold in the dark-type of bet.
Finally, sometimes in life we find that even big outcomes could be settled in trivial ways, particularly if the democratic process has primacy, as I argued in this blog post about deciding the Scottish referendum by tossing a coin.