The Best Way To Derive An 'Ought' From An 'Is'

One of the long-standing moral problems in philosophy, dealt with most famously by David Hume, is the 'is–ought problem' of how to derive an 'ought' from an 'is'. Hume's 'is–ought problem' is the contention that deriving an 'ought' from an 'is' is not possible on deductive grounds - that is, you cannot 'prove' something normative from something descriptive. Or to put it more simply, in moral or ethical terms you cannot prove what you 'ought' to do from what 'is' in the factual scheme of things. So for example, statements like 'John doesn't pick up his dog's mess when he fouls on the park' and 'America spends millions on space exploration' are both descriptive. Hume is saying that nothing in experience enables us to prove that John ought to pick up his dog's mess or that the money America spends on space exploration is either too much or too little.

However, proofs aren't everything, and Hume was quite willing to concede in his An Enquiry Concerning the Principles of Morals that moral propositions are built on a decked succession of experiences related to preferences, feelings and strategies regarding our well-being. This is because, being a strict empiricist, Hume's primary concern is how these actions play out evidentially, i.e., how empirically they affect us. He didn't insist that morality has to be 100% factual; he merely insisted that our moral thinking is derived from general maxims built on analyses of particulars in everyday experience.

The trouble Hume has is that any connection we make is only one link on the chain - a chain that involves other links of connection, which ultimately lead to a brick wall. On this basis Hume is being ultra sceptical about how easy it is to make moral statements. If you recall, Hume's fork says that the whole human interface with reality can be demarcated into either matters of facts (experience of the physical world) or relations of ideas (logical and definitional connections of those experiences). Using Hume's fork we are unable to prove logical and definitional connections of morality (ought) from experience of the physical world (is), not because we can't make valid empirical statements (such as "If John wants to be knowledgeable he ought to study hard) but because under Humean terms being knowledgeable is only a preference humans have.

Similarly, we could say that it is better for the body to eat healthily, but that then leads to the corollary question, why is better to be healthy? A response might be 'To live longer', but that comes with the further question "Why is it better to live longer?". None of these answers are able to be proved deductively, so every answer always begs the question, and brings us eventually to this epistemological brick wall.

Sometimes, though, where philosophy reaches brick walls, economics can dig holes through those walls, particularly given that economics concerns itself with human behaviour, incentives and actions as well as arithmetic, graphs and bell curves. You may recall that studies from Paul Eckman show that the capacity for emotions like fear, joy, distress, anger, surprise and revulsion is not learned, it is innately part of being human. Cultural nuances dictate how people feel about those emotions, but that just about everyone has them is beyond reasonable doubt. What can be derived from this is that there are things that are objectively better and worse for all humans, and David Hume summarised the body of the book with this statement in good company with Eckman's finding --

"The final sentence, it is probable, which pronounces characters and actions amiable or odious, praise-worthy or blameable... depends on some internal sense or feeling, which nature has made universal in the whole species".

Or to put it in economic terms, humans as a species are very alike, and they do demonstrate numerous ways that their preferences turn into behaviour and actions. When it comes to questions of morality and ethics and right and wrong behaviour, rather than looking for any formal proofs, the question regarding deriving an ‘ought’ from an ‘is’ in economic terms is more about whether it is possible to arrive at a general consensus on morality, and if so, how we reach such a consensus. I’ll add that we can only attempt to do this in the first place because our experience of the world shows us that logical systems work in approximating reality. Consider this statement: “Plants take up carbon dioxide in the atmosphere by the process of photosynthesis”. Within the realms of the body of science we have constructed, this statement is a factual statement, because to contest it would involve departing from the standard rubric of the natural order and proposing an alternative statement that could be subjected to scientific scrutiny. Now consider this statement; ‘John shouldn’t bunk off school in order to steal cigarettes from his local newsagent’.  That is not a factual statement – it is the expression of a desire or feeling which requires much more complex analysis, and which, when subjected to intense scrutiny, would take us further and further into the realms of subjectivity and arguments about consensus. 

But pretty much everyone would naturally agree that it is correct that John shouldn’t behave that way. John shouldn’t bunk off school because evidence shows that poor education inhibits people’s chances of progress and it contributes to their downfall. Similarly, John shouldn’t steal because evidence shows that theft is generally bad for the individual and the society as a whole. John would be advised not to take heroin because evidence shows it will be detrimental to his health. We could come to agree that such statements could reasonably qualify as facts, because we have reasonable grounds on which to state it as fact. That's perhaps the best we can do. But arguably more importantly, the evidence for these propositions is based on how humans behave in order to arrive at goals, the values they have, the empirical evidence for what is good for us physically and psychologically, and what's consistent with human behaviour regarding the purposes we construct.

Given that we have limited knowledge of the empirical world, the only way I can see to derive an 'ought' from an 'is' is imperfectly by using our old friend probability. Once one gets one's head around the notion that almost all knowledge is about probability it becomes clear. To illustrate, there is a well known paradox that can shed light on this situation - the ‘sorites’ paradox. The ‘sorites’ paradox is attributed to Eubulides, who had a handful of beans, and in front of his students placed one bean at a time on the table asking them each time whether that particular bean made it a heap of beans.  They continued to say no, and then when the 15th bean was laid down, they said 'yes', that's a heap'.  The paradox asserts that it’s absurd to just declare that 15 is a heap.  Why is 15 a heap and not 14? Why not 16? What about if Eubulides did the same experiment to another group of students and they thought a heap was 13?  What if one or two in the group thought a heap should be 18?  The take home lesson is that although people adhere to systems they believe are assented to with rigorous reasoning, most often what they are actually dealing with is the arbitrary classifications.

Thought about logically, the question 'When does a heap become a heap?' can only be answered in two ways. We can say a heap of sand must exceed n where n equals a designated number for qualification. Or the other way to solve the heap problem is to say that the probability of calling the pile a heap increases with every grain added. The latter is the correct epistemological route to take because the world is full of many comparable examples, where things of which we think we are certain are really feelings we have based on probability estimates. This is perhaps the best rule of thumb for knowledge and for moral axioms; almost all knowledge is probability based, and everything that constitutes knowledge is arrived at in exactly the same way as the Sorites situation – each increase in evidence or data increases the probability of something constituting knowledge or a moral axiom.

Why We'd Be Better Off If Restaurants Charged Us To Reserve A Table

Restaurants should charge for booking a table at peak times as well as for eating the meal. I'm telling you this not just because I want to tell you something interesting which you may not have considered, but also because what I'm now going to say serves to explain well the economic concept of value, and why we would all be better off if restaurants charged for booking a table at peak times.

It's obvious to everyone that the laws of supply and demand factor in to the dining out experience. A 6pm booking on a Tuesday night at a restaurant that has been open for 10 years is bound to be in much lower demand than a 7:30pm booking on a Saturday night at a restaurant that has only been open a few weeks. That is why taking bookings on a first come first serve basis distorts the true signals of value.

A couple that phones up and books a table at random or a few friends who walk past and grab a table on a whim may not value their table as much as people that would have paid an extra surcharge to eat in there. Consequently, charging for table bookings increases the chances that the people who most value a dining experience have that experience, while at the same time leaving room for less discerning people to choose other restaurants. Plus, if non-price sensitive people pay more at peak times, price-sensitive people should find cheaper meals of the same quality at non-peak times.

So why, then, don't restaurants charge for booking a table? It could be for the same reason that hugely popular concert tickets don't sell for more. But it's probably also the case that popular individual restaurants that adopted this policy unilaterally would place themselves at a disadvantage against other popular restaurants that chose not to charge a booking fee. In all likelihood, this is why reservations do not have the kind of prices that would allocate diners with restaurants more optimally, and create extra societal value in doing so.

It's Rare To See This Much Confusion About Trade

If the UK steel situation has taught us one thing this week, it's that most UK citizens, and apparently many politicians too, do not understand the benefits of trade. In wanting to protect British industry with barriers to foreign imports these people are showing economic ignorance of the worst kind. Take this article in The Guardian, for example - it is staggeringly rare to find so much economic illiteracy in one piece of writing. Rather than going through a point by point rebuttal of all the individual errors, I'll just explain the benefits of import/export trade and the way trade barriers harm both sides.

Suppose it costs a UK plant £120 to produce a tonne of steel, and a Chinese plant £100. And suppose the reverse is true for pharmaceutical products: while it costs a Chinese pharmaceutical company £120 to produce 1kg of a particular medicine, it costs a UK company £100. If there are no barriers to trade, the British will buy Chinese steel and the Chinese will buy British medicine.

But suppose the UK government wants to protect the British steel by imposing a tariff of £40 per tonne of imported steel, pushing the price up to £140 per tonne, this is good for British steel providers, but it's bad for British steel buyers who must pay more. But it's also bad for other British companies too, because some of that money would have been spent in their industry.

On the whole, it's fairly easy to see that Brits are worse off from the tariffs, because they hamper the process of best value based on market clearing rates. It's equally obvious how subsidising our own industrial exports has a further damaging effect. Suppose that the UK government subsidised British steel to the value of £40 per tonne - this would advantage British steel producers and the foreigners to whom they sell, but it would disadvantage everyone else.

This kind of economic ignorance is rife - so much so that I'll bet if you asked everyone in the UK if it's true that imports benefit the UK whereas exports take away some of that benefit and give it to other countries, a lot would say they agree.

But, alas, in agreeing they have their reasoning backwards, because what we consume (goods and services) is the true measure of the value created. If we export a product, people outside our country consume it; if we import a product, we consume it. If we export more than we import, our consumption is not in surplus in relation to what we produce. It's true that a trade surplus means there is more money coming into the country from foreign buyers, but money has value only in what is consumed from it - without consumption it is merely 1s and 0s in a bank account. It is only when consumption occurs that the real benefits of money are brought to bear, which means it ought to be more obvious that you do not need a surplus of imports over exports to be better off, and you certainly do not need import tariffs to make your country better off.

What They Forget To Ask About Recycling

When it comes to the issue of recycling, there is an important question we in the UK should be asking, but apparently are not:

Are we recycling too little, the right amount, or too much?

Bound up in this question are the issues of cost, time, the environment, and the question of which products we should recycle and which we should not. As far as I can tell, you won’t find this out by consulting any research papers, because from what I can see there hasn’t been any research done on this (if anyone finds evidence to the contrary, do let me know).

Never mind, even without the research, we know that millions of people spend extra time and money each week sorting, washing out and recycling their different products, which amounts to billions of extra hours and pounds consumed by these recycling projects over several decades.

Given that time is just about the only precious resource that we cannot get back, it is irresponsible to not enquire whether we are recycling too little, the right amount, or too much. Even in my lifetime there has been a seismic shift in our attitude towards recycling. The pro-recycling lobby has gathered rapid momentum over the past few years - much like an aggressively propagated religion gathers momentum. Given its similarities to a fundamentalist religious cult, this leads me to suspect that we are probably recycling too much, and that the political powers are just getting warmed up in the extent to which they'll impose their green-centric mandates on us. This kind of Gaia liturgy is quite commonplace now:

"Every home in the country will have to cope with compulsory rubbish recycling schemes by next year, according to papers released by ministers yesterday. Instructions prepared for councils have revealed a move to bring in separate collections of paper, metal, plastic and glass in order to meet recycling targets set by Brussels"

The bureaucrats in Brussels desire for our future recycling targets to be around 70% or 80%. Of course, recycling isn't a new phenomenon - market forces have been dictating its efficacy for a long time. The most obvious example is metal: gold, steel, aluminium, copper and brass - they can be recycled for profit. This means that if you had an old ring, or a car engine block, or a catalytic converter it would be worth your while recycling it because of the profit obtained (profit here meaning not against the original purchase price, but against the time consumed in the task of recycling it). Recycling tasks that add value make us better off as a society. Recycling tasks that do not add value have the opposite effect. Most things can be recycled - you could even have cement turned back into concrete if you so wished - but that doesn't mean there would be any value in doing it.

What is the right amount of recycling?

In asking this, we've acknowledged something that should be obvious to everyone, but clearly isn't. There can be too little recycling in the world, the right amount of recycling, and too much recycling. If we recycled nothing, that would be too little, if we recycled everything that would be too much; so the task of good recycling is to find the optimum amount. The optimum amount is the amount of recycling that adds the most value to society. When I see Brussels setting future recycling targets of 70% or 80% I get anxious, because they seem to be operating under the mistaken assumption that the more we can recycle, the better. Have they stopped to ask whether 50% is a good amount? On what grounds is their 70% or 80% better than 50%? As far as I can see, they never tell us. I'm always very suspicious of people who declare an agenda without justifying how they arrived at that decision. They give the impression that they believe on moral grounds that it is our ethical duty to recycle. But even if that's true, it is dangerous. If you believe that recycling is the right thing to do, you are almost certainly going to recycle too much. If in doing too much recycling you feel you're making a moral contribution to society, you're very unlikely to pay much attention to the economic arguments against excess recycling.

What about the financial implications?

As I said, I can find no comprehensive financial data to consult. But to give you an idea of how data can be skewed, have a look at this from the Green Alliance:

"The UK spends £1 billion a year in landfill costs just to dispose of plastics, wood, textiles and food – and in the process destroys these valuable commodities. If a landfill ban was introduced just on these products and materials, £1 billion worth of costs would be avoided and a further £2.5 billion of value would be recovered"

This is a good example of letting an ethical conviction blind you to the economics. Just because the UK spends £1 billion a year in landfill costs disposing of plastics, wood, textiles and food, this doesn't mean it's an argument against landfills. We'd need to know comparative costs for recycling those materials, which are not provided - and these are costs that would need to factor in all the hidden costs (transportation, congestion and, most importantly, time). The other clear anomaly is that if there really is a further £2.5 billion of value in the materials being put into landfills people would be making money out of those materials. The basic error the Green Alliance is making is in counting the value of the materials (which may well be worth £2.5 billion) but ignoring the cost of processing those materials into profit. If it costs more than £2.5 billion to process the materials (which the scarcity of a market for them suggests it does) then their intrinsic value is irrelevant.

Which products should we recycle?

You may think it's hard to determine whether something should be recycled or not. But it isn't. Consider an illustration that will demonstrate why. Suppose you're unemployed and you want to determine what you could do to put your time to good use and earn a bit of cash in hand. What would determine 'good use' in terms of a financial exchange for your efforts? The answer is that something would be considered to be good use in the market if someone will pay you to do it. Someone will pay you if the value of what your labour produces exceeds the cost in pounds and pence. You might be able to get some people to part with cash to have their car washed or their weeds pulled up and disposed of. But you won't get anyone to pay you to count the pieces of shingle in their driveway or brush the dust off their garden wall.

Recycling follows a similar rule. Suppose you have an item you want to dispose of. To determine whether that item is rubbish or a resource you'd have to find out if anyone wants it and will pay you for it. If someone will buy it from you, or if you or someone else can re-use it somehow in a cost-efficient way, then it is a resource. If no one will take it, and it is not re-usable, and you have to pay someone to dispose of it (either directly or through taxation) then it's usually rubbish. Therefore the right level of recycling should be this: recycle all the resources and dispose of all the rubbish. If we recycle resources of utility then in terms of overall resources we'll see a net gain. If we recycle rubbish then in terms of overall resources we'll see a net loss.

Writing for BusinessGreen, columnist Jessica Shankleman argues that that increasing landfill tax improves the argument for more recycling. No it doesn't. If you charge people more for one thing they will buy more of something else. If the price of apples doubles, people will buy more oranges, pears and bananas. That wouldn't mean that apples are not over-priced. Similarly, landfill taxes encourage more recycling, but that doesn't mean an increase in recycling efficiency, it means people are being coerced into recycling because of the inflated expense in landfill (an expense which, incidentally, encourages illegal dumping and burning rubbish). The facts wouldn't support Jessica Shankleman anyway - the cost of recycling (which includes collecting, transporting, handling, sorting, cleaning, repackaging then re-transporting again) exceeds the cost of landfills.

Lastly, there are other spillover effects to recycling too - one of which is our complacent wastefulness when we know something is being recycled. Take things like kitchen roll and paper towels. If you use them with the knowledge that the paper is going to be recycled you will use more paper than if you know it won't be (you might also like to know that recycling paper means there are fewer trees in the world now, not more).

The free market of supply and demand is the ideal arbitrator of our actions. It is the most efficient mechanism we have for adjusting for human mistakes. If you make mistakes in the market, the driving forces of that market will see you punished financially. Sadly, because of the ethical duress everyone is under, societal forces deem it the right thing to do to recycle as much as we can, which means that questions about cost-effectiveness become moot. Such duress is only likely to distort the truth about how much we should be recycling, and cause us to err by recycling too much. At the very least, it is utterly shambolic to fail to ask how much recycling is a good amount, and just assume that more = better.

* Photo courtesy of rcsrecycling.co.uk

The Left Hate Grammar Schools Because They Don't Want You To Become Middle Class

I was pleased to read that the first grammar school in 50 years is to be approved (well, it's actually an annexe, as grammar schools are banned by law). Education secretary Nicky Morgan is one of the less bright cabinet members (by a long way), but this is a good move, and let's hope many more grammar schools appear in the future. While they are not perfect, they can provide a good environment for bright children to do well in ways that the too often poor standards of education in comprehensives currently cannot. While this country rightly works hard to help children with less scholastic potential, one gets the sense that some of this ethos comes at the expense of bright children, and this is where grammar schools come into their own.  

By the way, in case you hadn't thought to ask, banning them is disgraceful you know - it is rather like banning Shakespeare and Herodotus because too many people are only at the reading level of Nick Hornby and Audrey Niffenegger; or banning expensive cars because some people can only afford cheap ones. The cult of fabricated equality is the one of the most socially noxious things humans have ever invented.

This surely ought to be obvious to most, but the 1960s Labour comprehensive school experiment clearly hasn't worked, but it's the reason why it hasn't worked that doesn't get enough attention. Labour's comprehensive school experiment was underpinned by the woolly idea that a mixture of bright and less-bright children would be good for lifting up the bright children to a higher potential. Doubtless there are plenty of cases where that does happen: I'm sure most of us can recall enjoying positive influences from other bright children at school.

But at a wider level, our evolutionary legacy of being rank ordering primates put paid to the general efficacy of 50 years of comprehensive school aspirations, because the main driving force of the majority of human beings, even at a young age, and admittedly often subliminally, is to get ahead of their peers. Status and relative achievement are big preoccupations with humans, and that very likely produces more stratification between pupils within the same comprehensive schools than the stratification between grammar school and comprehensive school pupils.

I know you will have read that diverse schools perform best, and it's true that diversity of ethnicity, culture and religion confers significant benefits on groups, but our rank ordering proclivities see to it that ability is a highly self-serving and egocentric thing, and social mobility is likely to be better when, alongside providing big help for kids with lower ability, bright kids are given the best chances to fulfil their potential.

It has long become clear to me that the majority of people on the economic left are not that interested in facts and truths, they are largely only interested in what they want to believe and in sustaining the pride of the tribalistic 'in-group' mentality.

The reality is, the spurious Marxist proletariat vs. the bourgeoisie stratification has never gone away - the working classes (the proletariat) are still seen as the labourers under the thrall of the capitalist pigs that own the means of production (the bourgeoisie - the social class that holds economic supremacy, supposedly riding roughshod over the working classes).

That was why the perceptions about grammar schools being elitist and favouring middle class children were propagated, when of course the opposite was true - the grammar school environment was precisely the place where bright disadvantaged pupils could stand a better chance of reaching their potential.

But that was exactly what the working classes didn't want - for the same reason they are always banging on about the evils of capitalism - their in-group anti-bourgeoisie tribalism could not bear to think of working class kids actually doing well and joining the group (the wealth creators) to which they were so fervently opposed. It's rather like when a talented footballer leaves the local club you support (say, Tottenham) and joins a rival club (like Arsenal) with better prospects - the Tottenham supporters are never glad for the player that he's going to fulfil his potential, earn more money and win more trophies - they are full of vitriol and resentment that he's left their group and joined the rivals.

The working class attitude is too often like that of Tottenham supporters, and it's pretty evident that it has played a significant part in their egalitarian dislike of grammar schools, because ultimately when tribalism rules your discourse you care more about people not betraying their proletariat routes than you do their successful journey into the bourgeoisie.

The anti-grammar school ideologues demand that they want diversity fully represented in the comprehensive system. How ironic that a nation that can generate terrific diversity with a full menu of schools - grammar schools, state comprehensive schools, private schools, public schools, academies, free schools, and special schools - is something that causes the left to scoff. Deep down I fear we know why; they never really wanted the kind of diversity whereby those at the bottom had the best chance of climbing up the social ladder - they only want the kind of class warfare where people stay loyal to their roots and remain on side in the enduring 'Them vs. Us' battle of wills.

Evidential Correlation Between Freedom & Prosperity

It won’t surprise you to know that there is a significant correlation between economic

freedom and economic prosperity. I was pleased to see that Ian Vásquez of the Cato Institute and Tanja Porčnik of the Visio Institute have put together The Human Freedom Index. Here are some of the findings:

"The Human Freedom Index... presents a broad measure of human freedom, understood as the absence of coercive constraint. It uses 76 distinct indicators of personal and economic freedom... The HFI covers 152 countries for 2012, the most recent year for which sufficient data is available. ...The United States is ranked in 20th place. Other countries rank as follows: Germany (12), Chile (18), Japan (28), France (33), Singapore (43), South Africa (70), India (75), Brazil (82), Russia (111), China (132), Nigeria (139), Saudi Arabia (141), Venezuela (144), Zimbabwe (149), and Iran (152)."

At 116 pages it's a hefty read - and one that I've only skim-read - but all the evidence is that there is a strong correlation between freedom and prosperity. One interesting exception is Singapore, which ranks 2nd for economic freedom, but only 75 for personal freedom, suggesting that it is one of the few countries that has thrived economically while curtailing many of the personal freedoms more liberated countries enjoy. The other stand out fact is that only two countries made the top 10 for both economic freedom and personal freedom - and they are Switzerland and Finland. Well worth a look if you get a few minutes.

An Absurd Claim From Psychologists About Matching & Mismatching

An interesting claim has been made in the Journal of Personality and Social Psychology that finding a partner that will make you happy isn't so much about finding a well-matched person, but about being a happy person yourself and finding someone who is generally a happy person too. Although the claim is interesting, it is also absurd:

"Three very large, nationally representative samples of married couples were used to examine the relative importance of 3 types of personality effects on relationship and life satisfaction. … Using data sets from Australia (N = 5,278), the United Kingdom (N = 6,554), and Germany (N = 11,418) … Actor effects accounted for approximately 6% of the variance in relationship satisfaction and between 10% and 15% of the variance in life satisfaction. Partner effects (which were largest for Agreeableness, Conscientiousness, and Emotional Stability) accounted for between 1% and 3% of the variance in relationship satisfaction and between 1% and 2% of the variance in life satisfaction. Couple similarity consistently explained less than .5% of the variance in life and relationship satisfaction after controlling for actor and partner effects."

What makes it absurd is that there is an obvious error of reasoning here. In surveying only married couples there is a large and substantial omission of all those potential couples that never got together due to not being well matched and not having the kind of character qualities the study is considering. Consequently, then, this survey does not demonstrate that being well-matched is unimportant.

Suppose the psychologists are wrong and being well-matched really does matter - surveying only married couples is not going to confirm this because it omits all the instances (instances you'd find in a random survey) where potential marriages broke up because of mismatched personalities.

The other problem is that even among married couples there are going to be many who are (still) together not because of wonderfully matched personalities, but because of other mutually attracting forces such as physical attraction, religious commonality, children, money, or convenience that override personality mismatching. Furthermore, there are, doubtless, many mismatched couples who got together because of ticking biological clocks, fear of being single and concern about whether either of them will ever find someone to settle down with.

The upshot is, the results of the Journal of Personality and Social Psychology survey quoted above are perfectly consistent with a world in which ideal matching of personality isn't all that important, but they are also perfectly consistent with a world in which ideal matching of personality is very important, which means the survey isn't telling us what is being claimed.

Does The Term 'Moral Law' Have Any Practical Relevance?

Throughout his writings Thomas Aquinas believed that moral awareness is a kind of natural law that inheres in the nature of things, due to our being made in the image of God. C.S. Lewis, in his The Abolition of Man, posited a variant on the natural law idea (what he called the "Tao”) - appending the idea of a moral law as having a real, objective platonic existence independent of human evolution

Now as regards the idea of a moral law, it might be easier to posit a set of maxims that convey universal wisdom if everyone agreed on every moral issue – but as you probably have noticed, they do not. In some cases it is difficult to find a universally applicable set of truths on which humanity can have coalescence of ideals, whereas in other cases there are consistent consensus-views pretty much right across the board. 

 

If we wish to state some moral truths as being near-universal, and by that we mean that they apply to humanity in general by virtue of the evidential ways we can strive to live as peacefully as we can in co-existence, or even simply as evolved mental compositions out of which human minds are made, then I have no objection. Even if a universal consensus is too difficult to obtain, this would at least make the concept of the 'moral law' a semantic utility with which we can create targets and goals to which individuals would find it beneficial to aspire. 

So regarding morality, instead of it being a 'law' in the sense that Newton's law of gravitation is a law, what we have is more of a set of universal maxims for humanity; they are, in a sense, universal ideas we have constituted that benefit the survival, propagation and quality of life of the human race.

A fairly obvious corollary ought to follow – morality is describable in terms of ‘laws’ in the same way that, say, human physiology is describable in terms of ‘laws’ – a moral law like ‘it is good if we do no intentional harm to innocent people’ is comparable to something like ‘it is good for our bodies if we take on optimum liquid, eat healthily, and have optimum exercise’. The reason they can be called ‘laws’ is not because they convey universal truths about nature – nature is fallen like us and has no absolute strategy when it comes to humans – it is because they show a highly consistent probability of returning positive outcomes much more frequently that negative ones. 

Such laws do not have to be absolutely true in every given scenario, they only need relate to a series of tangibly accurate hypotheses and associated rules that are accepted as being the best ideological or methodological systems for a particular set of phenomena related to humanity.

If Amazon Behaved Like A Friend

I must have bought over one hundred books from Amazon since its inception - but, alas, I don't know what is up with Amazon's book recommendation algorithm. Apart from the obvious low-hanging fruit it seems to be pretty mediocre at suggesting books for me based on past purchases.

When you're round someone's house their bookshelves are a great way to gauge information about them - you can get a fairly good idea of their education, interests, passions, tastes, beliefs and background - and more importantly here, you can use those observations to suggest books for them with consummate ease.

This leads me to believe either that Amazon's data mining is not as proficient as it could be, or that it's another good example of how there is, and will always be, a significant qualitative discontinuity between computers and the intuitively perceptive abilities of the human brain.

I had an idea a while ago about how interesting a book recommendation of *opposites* or *thematic alternatives* would be for, say, one day a week, where through data mining sellers don't suggest all the same kind of books, but deliberately suggested radically different ones to diversify your tastes and experiences.

So instead of saying, "Hey I see you bought Steven Pinker, Jared Diamond and Malcolm Gladwell, why not try Matt Ridley and Steven J Dubner and Oliver Sacks?" - they'd instead say "Hey I see you bought Jackie Collins, Ricky Gervais and Andy McNab, why not try Soren Kierkegaard, Charlotte Bronte and Thomas Aquinas?"

 

If Amazon behaved like a friend, and really wanted the best for you rather than simply trying to sell you more of what you've already bought, it would throw up a few of those opposites and thematic alternatives to help you keep your thinking fresh and diverse.  

If Jeremy Corbyn Managed A Restaurant......

If Jeremy Corbyn took over the restaurant (country) that David Cameron and George Osborne are currently running, would the customers have a fairer dining experience? Let's find out. I recall seeing a neat little illustration in an American paper about a year ago, which I can't quote verbatim, but the writer was using a pub illustration to show what the American tax system would be like in terms of a round of drinks. I've borrowed the idea, and tweaked it a bit to represent the British tax system, and replaced the pub with a restaurant.

Suppose that a group of ten people go out for a slap up three course meal and lots of drinks (for simplicity let's call them A-J), and at the end of the night the bill comes to £1000. Let's be creative and suppose that the restaurant manager charged them in the same way that the government taxes us. By my last check on the UK tax system, here's how the £1000 bill would be divided up, with A being the poorest person and J the richest, consistent with scale over the whole UK population.

A pays nothing

B pays nothing
C pays nothing
D pays nothing
E pays £10
F pays £30
G pays £70
H pays £120
I pays £180
J pays £590

As you can see, J, the richest person, picks up nearly 60% of the entire bill all by himself, with the four poorest diners paying nothing at all.

Now try this on for size. After the bill is paid, the owner decides to offer them a deal. On their next trip he will give them a 20% discount. On their next visit they consume the same again and receive a bill for £800. Once again, the restaurant manager charges them in the same way that the government taxes us. What has changed? Here's the new bill - it makes quite interesting reading:

A pays nothing

B pays nothing
C pays nothing
D pays nothing
E pays nothing
F pays £20
G pays £50
H pays £90
I pays £150
J pays £490

As you can see, E now joins A-D in paying nothing, F pays £20 instead of £30 (a 33% reduction), G pays £50 instead of £70 (a 28% reduction), H pays £90 instead of £120 (a 25% reduction), I pays £150 instead of £180 (a 17% reduction), and J, the richest diner, now pays £490 instead of £590 (a 16% reduction). When the bill is paid the diners discuss how the 20% discount has benefited them. After a lot of squabbling, J brings the table to silence by pointing out that the discount has disproportionately favoured the poorer diners, as each personal reduction was by a higher percentage the lower the earnings. E, who did pay £10 but now paid nothing enjoyed a 100% saving, whereas J who did pay £590 but now paid £490 only received a 16% saving.

Unfortunately we live in a society in which many of the population are more likely to complain the absurd - that these unfair tax breaks mean poor E only saved £10 whereas rich J saved £100, instead of looking at the situation with the proper context and perspective: that J's reduction was 84% smaller than E's, but even more noteworthy, that the only 'saving' J enjoyed was from paying just under 60% of the bill down to just under 50%.

I'd like you to remember this restaurant illustration the next time you feel compelled to shout that the rich get all the tax breaks. Especially remember the conclusion we just reached that if J doesn't turn up for the meal, the other nine diners couldn't even cough up enough for half the bill between them.

The scenario I just described is what the dining experience is like with David Cameron as the restaurant manager. I hope it doesn't require too much of your imagination to consider what the dining experience would be like if Jeremy "The Conservative restaurant is unfair" Corbyn took over as manager and tried to make things 'less unfair'.

Racism, Nationalism, And Why Britain Has Too Few Working Immigrants

Last night on BBC3 there was a programme called Is Britain Racist? It had all the predictable exhibitions of prejudiced behaviour, plus the reiteration of already quite well know facts about how we harbour subliminal racism based on an evolutionary legacy of groupism (the tendency to think and act as members of a group, and conform to group patterns).

Clearly, although we are evolutionarily primed for groupism, the best way to diminish human prejudices is to integrate, be kind and accepting, and look to mutually understand one another. Mobs that are overtly nationalistic have their priorities the wrong way around - they supplant ordinary acceptance of others in favour of prioritising country, when they should be supplanting passion for country in favour of acceptance of others. I'm talking here not of the divisive topic of immigration, about which I've blogged before and probably will again, but about how to treat people who are in this country.

Those that are overly-natavistic should give up this insidious nationalism: it is an unworthy demi-god that seductively calls for our allegiance by playing on our worst fears and insecurities. It is using 'nation' as a projection of the many ways humans can feel marginalised and hostile towards past issues they've never dealt with - most notably their inferiority complexes. Because you know really, what we attack is that which we hate, and what we hate is that which we fear - it is what Evelyn Waugh eloquently called 'The concealed malice of the underdog'.

All around us we see the United Kingdom becoming less united by the year. We have a Scotland whose citizens are getting more and more enchanted with independence, and surely will soon be breaking away. We have Wales, whose assembly is not independent, but many of whose citizens are enjoying the devolution of powers that will likely grow and grow into eventual independence too (unlike Scotland, however, the majority of people in Wales do not currently want independence, as they know they rely too much on money from central government, and are fully aware that they would be hopelessly poor without it). And lastly, we mustn't forget Northern Ireland - which, while much more peaceful in this present period, is still a hotbed of division and dissension, and is very hard to govern. Even England is experiencing a stratification between north and south, with London and the South East enjoying far more growth than other regions in the country.

To top it all, in this rather Disunited Kingdom, at least in terms of nation states, the speech today from Home Secretary Theresa May hasn't gone down too well due to her stirring up various divisive sentiments in terms of immigration. The reality is something you'll not hear a Tory say, but there is an awful lot of pressure on this country in terms of immigration, not because we have too many working immigrants, but because we actually have too few, coupled with an over-regulated economy that fails to enable market supply infrastructure to keep up with market demand infrastructure.  

The reason we have too few working immigrants is because we are going to keep needing a high immigration of low-skill workers to cope with the supply-side needs of the growth of large businesses, and also because the civil service desperately needs as many people as possible paying taxes in order to sustain the welfare payments to the rapidly increasing number of elderly folk and the welfare payments to the steadily increasing number of young people without the requisite education, literacy and numeracy skills to compete in the current labour market - people who are, I'm sad to say, likely to remain marginalised and forgotten in a subterranean subculture of welfare-dependency to which the government has no realistic antidote, and may never have.

Is Your Partner The Right One?

Did you make the right decision being with the partner you’re now with, or should you have chosen differently? After a bit of thought, this is the best question I’ve come up with that might get close to providing an answer. It’s a question you don’t even have to ask out loud – just ask yourself quietly and honestly, and I think you’ll know.

One more thing before we get to the question, if you are parents, it’s important that you ask it without any children in mind – you have to pretend they never existed, because if you are to accurately get the true answer, you have to ask the question about your partner with it being intrinsically about them and them only.

The Question

If you could go back to the beginning of high school and live your life again, but you can resume that life journey with the retention of all you currently know, would you do everything you could to ensure that you eventually found and end up with the beloved you are currently with?

I'd say those that can positively and definitely answer 'yes' are probably the ones with no regrets, fully satisfied with the person they chose to be with. And those that answer 'no' are probably not with the right person, and appear to have deep regrets about who they’ve ended up with.

That's the kind of seat of the pants reality testing you're going to get when my book on love is ready for human consumption! J

Why Islamic State Is Politically Unsustainable

So Islamic State leader Abu Bakr al-Baghdadi wants to establish the Caliphate of all Caliphates, unleashing terror everywhere he can, and ruling Islamic State nations under the thrall of their terror-inducing regime. Ah, if only he was a bit more familiar with the works of Plato and Aristotle, or even a bit more cognisant of historical antecedents, he and his fellow Jihadi thugs would see that their aspirations of nation-ruling are unrealistic.

A general pattern throughout the history of military or political coups is that even when they are brutal and catastrophic for the citizens, they soon reach a point of levelling out, not least because it's nigh-on impossible to rule a country under continual internal barbarism and eradication of human rights for a sustainable period of time.

 

In other words, good conquerors, even Caliphs, totalitarian as they were, still allowed at least a semblance of autonomy and harassment-free administration of people. That's why, even though it is likely that these horrible terrorist groups will continue to pop up, the idea of ruling nations consistent with the backward, totalising, barbaric, freedom denying methods of Islamic State is wholly unrealistic.

 



No, Britain Absolutely Should Not Pay Reparations For The Slave Trade

Jamaica's Prime Minister Portia Simpson Miller has called on David Cameron to personally apologise for Britain's role in the slave trade, and to even consider paying reparation money too. It was good that David Cameron uttered the words 'Jog on!', or words to that effect, because the idea of contemporary nations apologising or paying reparations for our ancestors' role in the historic slave trade is an ugly and egregious notion.

Now let's be absolutely clear: the slave trade was horrific, despicable and a truly abhorrent legacy for which some of our ancestors ought to have felt much shame, regret and contrition. But that sentiment must apply to - and only apply to - people who were personally involved, and people around at the time who didn't do enough to stop it - it is certainly not David Cameron's duty to apologise or offer financial restitution for these past crimes against humanity.

The very basis of contrition, regret and atonement is that we are moral agents who must take responsibility for our own actions, not the actions of people we've never met and to whom we have no personal connection.

But there is another point to this opprobrious news story: in asking us to live in the past, the valuable notion of 'moving on' and acknowledging the progress that has been made in the intervening time is being diminished, which to me smacks of treating the current people of Jamaica a little too trivially and disrespectfully. It sees to me rather patronising to talk of the citizens of Jamaica as being people so stuck in the past that they haven't moved on and are still preoccupied with righting the wrongs of history.

Perhaps they are, but I would like to think not: for if there is one valuable thing to be learned from being human it is that harbouring resentments from the past is rather like pouring hot coals on your own head and expecting it to burn the scalp of your enemy. Imagine how much that truism is magnified when the people who've done the wronging did so at a time when your grandparents weren't even born.

Contracting Birth Rates Mean The Gradual Fading Out Of The State

Numerous people in history have uttered the maxim that the measure of a civilised society is how it treats its weakest and most vulnerable members. The elderly are perhaps the best case in point, because children with all their life ahead of them are seen to have plenty of future value, whereas a society that maltreats elderly people may do so on the basis that they have little perceived societal worth.

We used to treat the elderly in ways that would make your blood boil. When we were in hunter-gatherer groups the elderly soon became a burden on the party, taking up resources, slowing them down, and being unable to contribute much by way of hunting or gathering. Consequently, it wasn't uncommon for older folk in the tribe to be starved to death, killed with a sharp or heavy object, left behind to die, or even eaten by some of the tribes with cannibalistic proclivities.

Nowadays we're doing better - we have a social services system that ensures there is adequate treatment for the elderly, and in places like Spain and Italy you'll often find the elderly living with the rest of the family, being cared for until they die. One day we might even allow people the dignity of assisted suicide - a present solecism for which future generations will surely look upon us with horror.

Yet in spite of best intentions, and all the progress we make ethically, there is still something that will cause us big problems in the future, and is starting to already. The problem in question is a financial discontinuity between the tax that can be gathered and the money needed to be gathered to sustain State-funded institutions like the NHS and pensions. When state pensions were first introduced there was an 8 to 1 worker to pensioner ratio. Currently there is a 3 to 1 ratio, but at some point that will be reduced, perhaps even to the point where there is just 1 worker for every pensioner. For this reason alone the NHS is only going to survive if it is fully privatised, which it pretty much will be in a few decades.

But the problem deepens because most developed countries have systems of welfare that depend on a growing population to sustain their workforce. Apparently, though, we're told that after a steady growth since 2001, the past three years have seen birth rates fall quite sharply (that's not to say this trend will continue). If birth rates continue to fall and life expectation continues to rise (both of which seem quite likely) then there will be relatively fewer workers paying taxes towards the NHS and pensions.

Because of this, taxes have been way too high, which negatively affects total revenue from earnings. Also the tax threshold for low earners is far too low, which means people in the lowest quintile are often not keeping enough of their wages, and some finding it is not worth their while being in work at all. There is no question about it: things cannot go on as they are - the State is going to have gradually unload its most costly institutions - institutions that were once affordable, but due to a very different ratio of workers to pensioners, no longer is.

Conflict Of Interest

One of the most important things anyone can master about economics is that prices are not just numbers, they are vital information carrying signals too. Prices are the result of billions of transactions all over the world, and while they are always in states of fluctuations, they are the only reliable mechanism for exhibiting economic value in society.

If the supply of oranges rises or falls relative to the demand for oranges, then the price of oranges will fall or rise accordingly. That falling or rising orange price is a signal to suppliers that they might be wise switching their business to something else or perhaps that they should augment their business. Governments are not very good in the supply and demand market, because any price fixing they do is bound to be either too low or too high (it is almost always too high).

Interest rates, like oranges, are subject to these fluctuations too. If savings are in scarce supply but there is a high demand for borrowing, then interest rates will rise. This will reduce demand for borrowing (because with compound interest borrowing is expensive) but it will also increase the incentive for savers (because people who save will get a better return on their money). As more money is saved, more capital becomes available to be loaned out, and the price (that is, the interest rate) will fall, making borrowing more enticing, and increasing demand for loans. Just like with oranges, the price of borrowing fluctuates in order that as closely as possible it matches savings supply with the credit demand.

Consequently, interest rates provide signals regarding the extent to which people are willing to forgo something in the present for something more desired in the future. So interest is basically a tax on borrowing, but you should know too that interest rates do not mean the 'price' of money as most people seem to think. They think in those terms because interest rates are mostly attached to borrowed sums of money (for a mortgage, a car, a university degree, and so on).

Remember though that although a bank loan appears in the form of money, it is usually spent within a few hours or days - and whoosh, it is back in the banking system in somebody else's account. Interest rates, then, are not to do with the price of money - they are to do with the price of consumption - what you buy with the money. The rate you pay in interest is the price of consumption now against future consumption. As an example, suppose you have £25,000 in your account and you buy a new kitchen tomorrow for £5000. You're left with £20,000, and you haven't had to borrow anything, so you've paid no surcharge on your consumption. But suppose instead that you have no savings but you want a new kitchen right away. You can borrow the £5000 with a 5% yearly interest rate and pay back £5250. The £250 surcharge is the price you've paid for consumption in the here and now.

Most people don't realise this - they see that the Bank of England sets interest rates and they assume it's to do with the price of money not the price of consumption. Interest rates are determined by banks, but they are based on the supply and demand related to consumption. Banks don't control people's supplies and demands, so ultimately they don't control interest rates, only at a proximal level. A ship's captain is in control of the ship, but he's not in control of the weather that controls the state of the ocean.

When interest rates are lowered a lot of keen borrowers come along to capitalise. To satisfy this demand the Bank of England must increase the money supply, which drives up prices. As people are borrowing to consume goods, not to store money, they will need more money, which the Bank of England must respond to with a further increase in the money supply, which further drives up prices, and round and round we go. To avoid hyperinflation the Bank of England raises interest rates again.

Suppose the government wastes £50 billion on a building a whole new railway project that never comes to fruition. The key of the cost is not the £50 billion in monetary terms - money is just an abstract concept - it is the cost of the materials and the labour that went with the project. The materials and the labour amount to a £50 billion deficit that could have been used elsewhere; building aircraft or improving sea defences, for example - so with fewer materials and labour available the British public has a deficit in what can be consumed - a £50 billion deficit to be precise. With 63 million people in the UK, the £50 billion costs each person just over £790.

Imagine you have some money you want to invest - in what should you invest: in consumable goods or services? Say it's in consumable goods, then ok, what kind? After all, car investment is a different investment to a sweet shop. In countries where governments mess around with interest rates, they distort the allocation of capital – investment doesn't consistently go to the optimal stages of production, which means we don't get ideal production of goods. That, in a nutshell, is why we shouldn't desire that governments set interest rates. For all his faults, Gordon Brown granted the Bank of England operational independence over monetary policy, which meant that politicians were no longer setting interest rates.

A lot of people hailed this move, but the trouble is it was only a step in the right direction, it didn't go far enough. It's better that banks set interest rates than politicians, but it's even better if interest rates are determined by the market rather than by the Bank of England.

The problem with governments or de facto government agencies like the Bank of England setting interest rates is that they don’t have the information signals they need to set the price correctly, any more than they would with oranges or kitchens. Because interest rates are prices for borrowing, they should be determined by the supply and demand market in exactly the same way that oranges and fridges are. It's only because most people don't see the 'price' factor of interest rates in the same way they see the 'price' factor of oranges and kitchens that see them differently. But the same principle still applies as in my opening paragraph: artificially setting prices, even interest rates, means things like consumer preferences, quantity of resources and risk levels are distorted.

In the banking sector, saving is simply the supply of new capital, and investment is the demand for new capital. They need to be equalised by market price mechanisms just as much as oranges or kitchens. What equalises the supply and demand for savings and investments is interest rates - it is simply the name for the price of borrowed capital. So when we read articles like this one in The Telegraph about how the Bank of England may need to push its interest rates into negative territory to fight off the next recession, we get a glimpse of one of the many problems that occurs when governments or government agencies mess around with the price system.

If interest rates are kept artificially low, this will increase the demand for government supplied capital and reduce supply of actual capital, which will increase levels of borrowing and discourage saving. Similarly, if interest rates are artificially high it distorts the levels of borrowing and savings the other way. Moreover, the injection of more money into the economy through quantitative easing creates the illusion of more capital only in the same way a bartender could create the illusion of more Jack Daniels by pouring some water in the half empty bottle.

 

What's The Optimum Income Tax Rate? It Probably Will Surprise You To Know That It Is Zero

In a period of time in which Corbynomics has gained much electoral sway, and the man behind it, Richard Murphy, is talking about raising top rates of tax to the disastrously high levels we saw in the 1970s, it would be good to bring things back to reality by reminding everyone that the idea of taxing ourselves to prosperity is a ridiculous one that's been discredited at every turn in history. 

This is often brought up because of Chancellor Nigel Lawson's great reforming tax budget in 1988 where he famously cut top rates of tax from 60% down to 40% and saw increased economic growth and generated more tax revenue in the process. As you can see, in 1986-87 when the top rate was 60p, the richest 1% contributed just 14% of all income tax, whereas once the top rate was reduced from 60p to 40p, the proportion paid by the richest 1% soared to 21% where it stayed.

This is all about what's known as the Laffer curve, which shows the relationship between tax rates and the amount of tax the government collects. Obviously with the current system of fairly large government, 0% and 100% would bring in no income at all, with the optimum amount being somewhere in between. So if you start to increase it from 0% upwards you see an increase in tax revenue, but after a certain point the line will flatten and it will reach a point of declension when too high a tax rate discourages work and innovation, and encourages avoidance and evasion, makes some people leave the country, stops others from investing, and increases black market transactions too.

In this blog post I explained why the government tends to behave a bit like the mafia running a protection racket - they try to extract out of their victims as much as they can without extracting so much that they ruin their business and can no longer collect any money. Incidentally, the last time I checked, the Centre for Economics and Business Research (CEBR) calculated an optimal top tax rate of 36% - even lower than Lawson's great reforming tax.

No one knows, under the present system, exactly what the optimum top tax rate is, but all the evidence shows that high rates in the region of 60%-80% are ridiculously off the mark. We know that fairly recently when the top tax rate was reduced from 50p to 45p the Treasury received an extra £1.3 billion in income tax from the top earners. The ratio saw the top 1% contributing over 29% of the nation's income tax. Not only was it less when the rate was 50p, we can contrast it with the ratio in the 60p mid-eighties top rate when we had the top 1% contributing only 14% of the nation's income tax. You may also be interested to know that as things stand with the 45p tax rate, the tax gained from the top 1% is apparently at a record high. They earn 13% of the income but now pay 30% cent of income tax collected.  Even the top 0.1% (stress that's nought point one percent, not one percent) pay a comparably astronomical 14% of the total income tax paid, which is an increase by a factor of 140.

Consequently, the way the system is set up at present, my best guess for the optimal top tax rate would be somewhere between the CEBR's 36% and the current 45% rate - although in actual fact, I suspect that as the government continues to get smaller and smaller in the coming decades even 36% will seem unthinkably high - particularly if a little known and abstruse mathematical proof called the Chamley-Judd Redistribution Impossibility Theorem ever becomes more well known, as it demonstrates a proof that the optimum capital tax rate is zero, because it’s actually impossible to make the workers in an economy better off by taxing capital.

Finally, Arthur Laffer, on whose wisdom the aforementioned Laffer curve is based, looked thoroughly at specific US state tax policies against economic growth. It's no surprise that the USA saw the same kind of results that we saw in the UK:

"Laffer compared the nine states with no income tax with the nine states with the highest income tax rates over the last 10 years. The nine with no income tax have experienced higher revenue growth rates, higher productivity growth and lower unemployment growth. Similarly, he looked at the 11 states that have introduced a progressive income tax in the last 50 years. Each of those states has experienced a decline in gross state product as a share of the total U.S. product and a decrease in revenue as a share of the total state tax receipts. Laffer concluded that a tax structure that includes a progressive income tax “not only causes a state economy to grow more slowly, but leads to a lower standard of living, lower productivity growth, and thwarts expectations of revenues.”

Laffer, like most people who understand economics, advocates a low flat tax with no deductions as the best tax structure for economic growth. If only our politicians had the courage to put growth ahead of votes.