This Should Create Mass Anger, But Instead It Creates Mass Joy

With the recent introduction of the living wage the red socialist in blue conservative clothing chancellor George Osborne made it clear once and for all that he is just as careless about basic economics as the opposition parties, that he has scant concern for the economic well-being of the people of this country, and that pre-Prime Ministerial popularity is his main agenda.

The living wage price floor is now £7.20, up from £6.70 under the old minimum wage, and within four years it will be over £9. I have written repeatedly about all the ways this is a terrible idea, but I have not gone into as much depth as I'm now going to about how politicians play on this public credulity in such a shameful way. And I'm sorry to have to be the one to tell you, but it is shameful - it's shameful because it's driven by falsity and conceit, and I hope after reading this you'll understand more about why this is the case.

I lamented in a recent Blog post about how the people that govern us make decisions of popularity, not of prudence, based on the fact that the majority of the people they govern prefer popular myths over prudent truths. Consequently, when you have an electorate that is in this position it is incredibly easy to sell them things they think are good for them but are actually not. To understand this, we need to go over the basic economic fallacy that underpins almost all other related fallacies - it's what Bastiat summed up in his seminal essay "That Which is Seen, and That Which is Not Seen" - which is basically about how economic decisions have far-reaching effects beyond the immediacy of our perceptions, and that any idea or policy has to factor in everyone who is affected (It's what I like to call the tangible costs, the tangible benefits, the intangible costs and the intangible benefits, touched on in this Blog post).

It is no exaggeration to say that just about every bad economic idea or imprudent policy in politics is down to the fallacy of only thinking about the immediate effects on an easily identifiable group rather than thinking about the effects on everyone, in the immediate and long term too. The art of a prudent policy is in tracing its consequences everywhere, not just in one easily identifiable place (for more on that, see this Blog post of mine). It is because the vast majority of the public only think of policies in terms of one easily identifiable place that politicians so readily impose these imprudent policies on us. Only when the populace wises up will there be selection pressure on politicians to wise up too.

This State-mandated living wage of £7.20 an hour benefits a select group of people (a proportion of low skilled workers) but harms just about everyone else (employers, the people that lose their jobs because their employer has to let some staff go, the consumers who have to pay higher prices, the hundreds of thousands of people whose labour is not worth £7.20 an hour to a prospective employer, and at a broader level, the nation as a whole as State-mandated price fixing makes other places more attractive places to invest).

To see why labour price controls are always bad, we first have to understand what labour is. Labour is a commodity - it is a substantially marketable sale of work sold to create value. Its price is dictated by supply and demand, which involves the aggregation of billions of choices, wants, needs and desires going on in the world at any one time. There is no such thing as a 'fair day's pay' or a wage someone 'deserves' or a 'just' wage - they are completely alien to a proper understanding of economics. They are emotive terms uttered only be people who don't have a full picture of how prices are dictated.

Who benefits from labour? The answer is everyone. The person selling his labour, let's call him Fred, benefits because he chose that option over the next best option. The employer benefits too because it's that labour that helps him make a profit, as do all the places Fred spends his money, as do all consumers generally.

How do you know if you are of value to your employer? Easy – your value can be measured by what’s called the marginal revenue productivity of wages, which is basically the benefits your employer earns from employing you. If your wages are more than your marginal revenue productivity then you earn more than the sum total of value you bring to your company.

On the back of that, two things set wage levels, primarily. Firstly wage levels are determined by the skill level of the job in terms of how easy it would be for the next person in line to come in and do the job. A McDonald's burger flipper or a Sainsbury's shelf stacker do not command high prices for their labour because it is easy to replace them in the job centre queue as the job is easy. Lawyers and surgeons command high prices for their labour because it is not easy to replace them in the job centre queue, and their jobs require lots of studying and training.

Secondly, wage levels are determined by which other job opportunities the worker has. Business owners are not just competing with the goods or services they sell, they are also competing in the labour market too. Suppose Sainsbury's has the profit-scope to open several more stores. To do this they need to buy labour, which means either hiring people currently unemployed, or hiring probably better people already doing similar work. To do the latter they must offer higher wages (or some other benefit) in order to attract these workers. So wages are set not just by who is next in line relative to the skill level of the job, but also by how many rival competitors want to buy your labour too. Your pay working for x will be contingent on what y and z are willing to pay you, because x, y and z are in competition not just for bread, milk and cereal, but for the labour upon which their profits are based.

Osborne's popularity-over-substance Living Wage price floor ignores all this, plus it ignores all the harm done to small businesses, to currently unemployed people, and all the soon to be unemployed people. Why aren't the people cheering the Living Wage thinking of these hundreds of thousands of people - the 'unseen' in Bastiat's equation? How come no one thinks about all the elderly people or already struggling people that get hit in the pocket by the higher prices that businesses introduce to pay for this? These are the people that proper economic considerations demand that you factor in too.

The hotel workers and waitresses and bar staff enjoying their extra £20 a week owe their gains to consumers, including students, the elderly and unemployed people, who are forced to pay the higher prices that fund those gains. The net gains to the winners are dwarfed by the net costs suffered by the rest of the population (most of the businesses affected by the Living Wage don't actually make very much profit, by the way).

If George Osborne wants a genuinely prudent solution, why won't he do the good thing for low earners that also isn't the bad thing for employers and consumers and the unemployed, but is somewhat less popular - take low earners out of tax and national insurance, thus making their wage more like a living wage, but not increasing consumer prices and jeopardising employment levels and penalising employers of low-skilled workers? Oh yeah, question asked, question answered, it's somewhat less popular - and he does want to be Prime Minister, of course.

It's The Politicians That Need Some Steel

The people that run our country worry me, but the people that want to run our country (Labour, the Lib Dems, the Greens) worry me far more. Despite the fact that, apparently, China has produced more steel in the past two years than the entire UK has since the 19th century (and wow, what a fact that is if it's true!), and the fact that the British steel industry is losing over £1million a day as a result of the collapse in steel prices (can they not spot the obvious supply and demand link between the two facts?), they still want to flirt around with the idea of nationalising British steel - not because it's the prudent thing to do (even the most blockheaded politicians must be able to undertake this basic arithmetic), but because it's popular with UK voters.

I wonder if any of those calling for nationalisation of costly, failing industries ever gave a thought to the concomitant losses in other parts of the public sector (health, social services, defence, police officers on the beat, old age pensions, etc) required to pay the price. Probably not.

One thing they definitely don't give a thought to is the notion that when a business or even a whole industry dies in the free market, it is not only a good thing in the long run, but a necessary thing too. Not only is a death in the market a sign that others are providing the good or service more competitively and efficiently, it is also a necessary departure that makes room for new industries to grow. Imagine if the companies that produced video tapes hadn't died or moved to newer technologies, or suppose people were still trying to make a living producing telephone boxes or designing gramophones - it is easy to see why they wouldn't be solvent anymore.

When obsolete industries shrink or discontinue this helps free up new capital for fresh industries. If we had tried to artificially keep alive the video tape industry, we wouldn’t be enjoying so quickly the improved movie watching experience of DVDs or On Demand TV: if we had tried to artificially to keep alive the old telephone industry, we would have slowed down the growth of the burgeoning mobile phone industry that has seen so many other auxiliary gadgets included on our hand held devices too.

It is just as necessary for a healthy economy to allow providers of extraneous goods and services to shrink or die as it is new ones to emerge. The former is essential to the latter, as there always needs to be fresh capital freed up for new and improved industries. Trying to artificially preserve the British steel industry over more competitive steel production elsewhere is not very different to trying to artificially preserve fax machines at the expense of emails - it is only a more immediate and reactionary example of the same thing.

Alas, it is true that all this does have a negative short-term effect on the workers in the British steel industry, and in some cases on local communities, but artificially propping up an industry that is being outcompeted by a more competitive industry abroad is not the right thing to do, for all the reasons just explained (By the way, if you're still having emotional home-grown difficulty with this point, let remind you of a previous article I wrote for the Adam Smith Institute in which I explain how artificially propping up failing British industries also hurts other British industries in the process).

The reality is, there is a horrible and harmful co-dependency between the masses of our population - who are so Anglo-centric that they fail to understand how competition works, and how stifling competition harms us as well as everyone else - and the pliable politicians that rely on their vote to survive in their roles. The people that govern us, and the people in the shadows wanting to govern us, are toxic to our economy, because they make decisions of popularity, not of prudence, based on the fact that the majority of the people they govern prefer popular myths over prudent truths. As George Orwell once famously said: "In times of universal deceit telling the truth is a revolutionary act", and this nation badly needs a lot more truth injected into the political mainstream.

Why I Think It's Impossible To Replicate Our Brains

In my view, the author and computer scientist Ray Kurzweil is one of the most interesting people around. Kurzweil is a bold futurist who has every confidence in the law of accelerating returns, a phenomenon that predicts a continual exponential increase in technologies in ways that will keep improving and enhancing human well-being. There is plenty of evidence to suggest he is likely to be right, although for various reasons, many of which are unpredictable, apparent exponential growth patterns can quite easily level out, and probably will in some areas of technology.

On a more specific note, in his book The Singularity Is Near, Kurzweil has made a very interesting prediction: that by the year 2040 we will be able to build the equivalent of human intelligence by scanning the brain from the inside using nanobots. Once we know the precise physical structure and connectivity information, Kurzweil says we will be able to produce functional models of sub-cellular components and synapses and replicate whole brain regions.

Kurzweil talks of "uploading" a specific human brain with every mental process intact, to be instantiated on a "suitably powerful computational substrate". Rather than an instantaneous scan and conversion to digital form, Kurzweil thinks humans will most likely experience gradual conversion as portions of their brain are augmented with neural implants, increasing their proportion of non-biological intelligence slowly over time. Quite how much time, he's not sure, although he offers a suggestion of 10¹⁶ calculations per second (cps) and 10¹³ bits of memory, plus the possible additional detail that such uploading requires, which could be as many as 10¹⁹ cps and 10¹⁸ bits.

This all sounds intriguing, but for my mind there is a possible problem that underwrites the above scenario - it doesn't seem possible to me to replicate the 'you' that you know as your first person selfhood, and ditto that for any unique human, for reasons I'll explain.

First, don't get me wrong, future advancements will astound us in all sorts of ways we cannot currently imagine, and there probably will be forms of artificial intelligence that we can interface with at a level similar to the human-human interface we enjoy. But I personally think that the 'you' and 'me' we each know to be our own mind is something of such unique complexity and evolutionary finesse that it will never be able to be precisely reconstituted in any kind of artificial intelligence. In a nutshell, the 'you' that makes up your first person selfhood is an utterly unique aggregation of mental machinery that can probably only be retained in the biological apparatus that you call your brain. I will explain why with a thought experiment.

Any time AI program writers try and extend the world of brain cells into the world of transmitter molecules they would then have to try and simulate hormones. And these, in turn, depend on genetic instructions which are themselves only partially programmed and highly adaptable. Simulating the human brain is not just about replicating the hardware that we see in the form of neurons and synapses, it is about replicating a lengthy evolutionary process that goes right back to the origins of biology itself. For example, some of our genes involved in the development of our cognition (even at the embryonic stage in the womb) are genes that go right back to the very beginning of all life forms billion of years ago - and these are genes and hormones that form the substrate of cognition prior to the point at which neurons and synapses become involved.

Let us suppose, though, that we overcame all those hurdles and developed the scientific wherewithal to attempt brain replication in an external agent - a computer or an android, as Kurzweil suggests. Here’s why I still think your own ‘self’ will remain unique to you. Suppose at this stage we can produce a short-cutting algorithm that enables us to reduce the human brain atom by atom and then reconstitute the exact atomic configurations of the original mind, reproducing the conscious cognition. What would that entail?  In the human brain there are 10^11 brain cells (that's 100 billion), and 10^14 atoms (that’s 100 trillion) in each brain cell - that makes 100 billion x 100 trillion atoms, which is 10^25 atoms (or 10,000,000,000,000,000,000,000,000). 

Now, suppose we were to replicate the brain at the rate of 1 trillion atoms per second. Even at that rate it would still take us 317,097 years to reconstitute the full brain. It sounds like all talk of reducing at the atomic level is too far, but it shouldn't be – after all, Alzheimer's sufferers experience degeneration atom by atom, one at a time, and babies are formed in the womb atom by atom, so evidently these effects do impinge on physical states, they are just processes of natural development that happen really fast.

It was once thought that consciousness was a precise configuration of proprietary parts, and that in assembling a brain from scratch there would come a point at which the first person perspective of consciousness would be switched on - rather like assembling a circuit board of cognition that lights up when all the proper connections are made.  But our aforementioned knowledge of degenerative diseases like Alzheimer’s shows that this isn’t the case – at least, it shows that atomic reduction can occur bit by bit and that the cognitive abilities of that mind operate with different degrees of composite integrity. 

The problem I see (in relation to compromising the ‘self’) is that if in our thought experiment we reassembled a brain from scratch one trillion atoms at a time we could not reconstitute the unique first person perspective because the first person self would at some point become aware of cognita being partially reconstituted, at which point (and from then on thereafter) a new set of conceptions and experiences would be taking place during the restoration process. So the simulated ‘you’ being uploaded would at some point begin to take on thoughts of its own before the real you in its entirety was uploaded - meaning that a partial you had begun to generate new and unique thoughts.

Ok, let's speed up the process. Even if you doubt the effects of atomic reduction, and we instead chose brain cells as our object of replication, and replicated them at the rate of 1000 per second (a feat that would take unimaginable technological sophistication), it would still take over 3 years to do the whole brain. In that 3 years, such an activity is bound to cause the simulated ‘you’ to take on thoughts of its own before the real you in its entirety was uploaded. However much we can reduce the execution time - months, weeks, even days, it seems impossible to replicate the unique 'you' or 'me' that make up the totality of that first person selfhood, because during the uploading process there surely will come a point at which the original you and the copied you each start to develop new and unique first person cognita - cognita, in fact, that is being caused by the experience of the replication process itself, as well as all the interference at a neurological level.

Most Football Managers Don't Make Much Difference, You Know!

I noticed some Liverpool fans in a sports forum eagerly anticipating next season under new manager Jurgen Klopp. They were hopeful that the Klopp-factor would bring success where other managers had failed. I’m afraid I was a Cassandra figure who pointed out to them that in all likelihood Klopp’s arrival won’t make much difference to Liverpool’s success, because managers generally don’t have much of a bearing on a team’s success (for more data on this, Google the studies done by the Dutch economist Dr Bas ter Weel). Notable exceptions in Premier League history are probably Alex Ferguson, Arsene Wenger and Jose Mourinho, which is interesting given that one has retired, one is under constant pressure to be sacked and the other was actually sacked earlier in the season.

I'm sure anyone vaguely interested in football will recall times when a new manager comes in and apparently works his magic, supposedly turning things around for the better. It happened at Manchester City with the arrival of Roberto Mancini, and it's happening now at Chelsea with the arrival of Gus Hiddink. It's certainly true that some new managers have a honeymoon period on arrival, but I think they are rarer than you imagine. And even when they do occur, something else is actually happening - something more to do with probability than magic managers, as I'll explain.

In simple terms, if you're a team doing worse than expected, the chances are you are soon going to improve, irrespective of whether you sack the current manager or not. For the best example of this, take Chelsea, the club most notorious for sacking managers halfway through a season. A quick check on Chelsea’s results since the year 2000 shows that they average 1.7 points per game. As you’d expect, if you take Jose Mourinho’s bad string of results this season they fall a bit below the average, whereas if you take Gus Hiddink’s (the manager who replaced him), they rise a bit above the average.

Mourinho was sacked due to a poor run of results, but even if we overlook the most important fact – that Mourinho is a world class manager with a proven track record of success – had he not have been sacked and replaced by Hiddink one would have expected his next set of results to be better than the last. This is called the regression to the mean. If you a measure a series of results (say Mourninho’s) and they are lower than Chelsea’s average then it is expected that measuring the next series of results should see them tend closer to the average. In other words, Hiddink's relative success is about his being the beneficiary of regressing to the mean after Mourinho’s poor run of results – it is highly unlikely that his arrival had any major overall effect on performance, save for the inevitable short-term ‘work hard to impress the new manager’ phenomenon which lasts no more than about 3 games.

Given that most managers don’t have much of a bearing on a team’s performance, sacking them is obviously a costly exercise. Not only is there the expense of paying off the sacked manager, and the extra expense of employing a new one, there is also additional expense as new managers inevitably want to be given a spending pot in order to sign new players and build their new team with players they've bought.

If this is so costly, why then do football clubs sack their managers with such regularity? The obvious reason is that sacked managers are an ideal scapegoat, which gives everyone someone to blame for the failures, and it gives the fans renewed optimism (albeit false optimism) after a slump. The truth is, in most cases there is little to be optimistic about when a new manager comes in, as most won't make much of a difference to your team's results, and will, in fact, probably cost a lot more than the overall value they bring.  

The Big Question About Future Intelligence

Science fiction is largely about ideas, which means good science fiction is about good ideas. For this reason there aren't many really terrific science fiction films made, because there aren't that many real science fiction films. For every 2001: A Space Odyssey, there are countless sci-fi-flavoured yarns that serve as okay entertainment, but are not what one would call good expositions of ideas.

 

Given that it's such a compelling subject, both scientifically and philosophically, some of the best science fiction films I've seen have been about artificial intelligence (AI), and the relationship between humankind and machines. The first two Terminator films and Spike Jonze's Her are prime examples, as is Ex Machina, which I saw very recently and thoroughly enjoyed.

 

Ex Machina tells the story of a young programmer who is selected to lodge in the abode of AI designer Nathan, and participate in the evaluation of potential human qualities in one of his created androids to see if she passes the Turing test (that is, exhibit intelligent behaviour equivalent to, or indistinguishable from, that of a human). For fear of a movie spoiler, I won't say any more about the plot - but if you haven't seen it, I thoroughly recommend you do.

 

There is, though, one big question that I think the movie gets wrong. In one scene Nathan tells us how he sees human history as one tiny passage of time on a lengthy and complex evolution of mind, informing us that, in his view, artificial intelligence is the future intelligence that's going to live far beyond the human intelligence that created them:

 

"One day the AIs are going to look back on us the same way we look at fossil skeletons on the plains of Africa. An upright ape living in dust with crude language and tools, all set for extinction."

 

I doubt this very much. This view seems to be a projected future based on the reality of the past. It's easy to see why. 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.

 

But whatever form the evolution of mind takes, it won't be 'us' as thinking beings that is all set for extinction, because the most important thing that survives is the cognita (and its representation) on which any future technology is based. The human mind is the most sophisticated aggregation of matter in the entire universe (that we know of), and as such, it seems to me that machines we create cannot be any more intellectually sophisticated than the minds that create them (just as machines cannot be more wicked than the wickedness of the minds that create them). That's obviously not to deny that we can create machines that are more sophisticated than us at tasks, and computers that can undertake tasks in execution time at far more advanced levels than us, because clearly we can.

 

We are picking up pace in this modern age as we reach new heights and new depths in shorter passages of time. My prediction is we'll one day evolve into creatures of pure thought, that require no monetary currency, no food or drink, probably even no heart, lungs, hands and feet. Our cognition probably will be sustained by software far beyond our present imagination. But I very much doubt it's ever going to be the case that the AI we create is going to assume dominion of its own to the extent that it becomes the supreme species at the expense of the sophistication of the human mind and its proposed extinction.

 

I believe that humans will always be implicitly involved in the evolution process of our own cognita, to enable us to retain a co-operative with any machines we create, however advanced, and however powerful. We are not going to create anything that, by comparison, turns us into the proverbial "upright apes living in dust with crude language and tools, all set for extinction", because all future innovation and advancement is itself going to be part of the evolutionary process of the human mind, not distinct from it in a way that we'd allow to threaten the existence of the minds that engendered it.

The News You Lose Is The News You Don't Choose

The above image is a meme doing the rounds. Personally, the most obvious response I have is that for evolutionary reasons that served us well in our ancestry, we humans are primed to have a greater interest in certain groups over others, whether that's caring more about family and friends than strangers, caring more about whether burglaries are rife in your neighbourhood than a neighbourhood 250 miles away, or paying more attention to terrorist events relative to geographical proximity - there's no reason to be surprised that this is what happens. Strong and weak ties are in our DNA.

The other perhaps slightly less obvious factor is that whether we like it or not, the media is driven by human feeling and viewpoints far more than it drives them - it reflects the interests of the demographic to whom it is trying to sell its news stories. This means that, for good or for bad (and I personally think for bad a lot of the time), they are less likely to feature a news story on a terrorist attack in the Ivory Coast or Somalia if they can't in some way connect it to the perceived interests of their demographic. Instead they will too often opt for news stories that involve more local interests at the expense of what their readers deem to be less important or too distant news.

As much as I wish it weren't the case, the often toxic co-dependency between media provider and the public is not too dissimilar to the one between politicians and the electorate that votes them in - it is bound to lead to sub-standard results. We have so many misjudged members of the public that demand their wishes and views are represented by politicians. As Bastiat pre-empted in his great 'seen and unseen' essay, most people only have (or allow themselves) enough intellectual wherewithal to focus on how things affect an easily identifiable group, rather than how things affect all groups. 

Consequently, then, the selection pressure for politicians to be socially, politically and economically astute is diminished by their knowledge of the electorate's lack of astuteness in these areas. The same can be said for the media - the selection pressure on how they inform their consumers is largely driven by the consumers themselves. The antidote to any of the ethnocentrism and parochialism that exists as conveyed in the above image is to be discerning about where one gets one's news. There are plenty of media outlets that are more likely to ensure they cover a terrorist attack in the Ivory Coast or Somalia at the expense of news items about who won the Brit Awards and whose wife John Terry is currently shagging.

As this blog title alliteratively suggests: the news you lose is the news you don't choose, which is another way of saying that the quality of information you receive is roughly commensurate with the quality of the search, and the extent to which you care about other human beings irrespective of ethnicity, skin colour and geography.

Why We Don’t Get Many Decent Politicians

Considering that in the shape of the shadow Labour cabinet they have only an economic laughing stock as opposition at the moment, it's odd to see the Conservatives in such a shambles, what with the EU party divisions, Iain Duncan Smith's resignation over the disability cuts, and the fact that the chancellor George Osborne is really little more than a crypto-socialist awaiting his chance to be at the helm of the party in the public relations role of Prime Minister. When the opposition is so weak, it speaks poorly of the Tories that they appear so weak as well. Perhaps they think they can afford to be complacent.

But I wonder if the problem runs deeper. When it comes to listening to many of our politicians, I'm afraid often the primary thing the public has to consider is whether their rhetoric is the result of incompetence or dishonesty. I have to confess, sometimes I genuinely don't know. Take the minimum wage, which as I've shown before repeatedly in numerous past Blog posts lacks so much pull that it couldn't even shift the skin off a rice pudding. The number of politicians who call for its endorsement and incremental increase is astounding. Whether it's on Newsnight, Question Time, The Big Questions or Free Speech, you'll find they are all at it. And not just the minimum wage - price freezes, artificial protection of British industry through subsidies or bailouts - all of these things over which the State has far less control than the public realises. 

It's hard for anyone to believe that Oxbridge educated people don't know the erroneousness of their claims, so I must assume that they are simply telling lies that they know will make them popular. But they are rarely outright lies, of course - more akin to manipulative language that speaks a half-truth but is in actual fact half-empty too, making it frequently beyond the scope of the political influence that is being claimed.

Because politicians have to win votes they have to tell the public what they want to hear. They must also make claims they cannot justify - that they will create jobs (with additional value, that is), reduce unemployment, oversee growth in the economy, etc, - which means promising to do things over which they know full well they have much less influence than the public imagines.

But assumedly not all politicians are duplicitous opportunists; there are no doubt some that mean well and have genuinely good intentions. Yet most of the ones that mean well also come out with this same absurd rhetoric too - it's pretty contagious in Westminster. This leads me to think that the ones that mean well have actually been taken in by the rhetoric of those around them and those that preceded them, and the ones that don't mean well are just simply good actors who have simply perfected the art of deceiving. Given the foregoing, I think politicians can be divided roughly into two groups.

GROUP 1: Those that know much of their rhetoric is nonsense but are good at deceiving enough people to get away with it.

GROUP 2: Those that really do mean well and have noble intentions but are actually unwise enough to believe some of the things they say.

Let's call group 1 the Snakes and group 2 the Puppies.

What we long for are politicians who are well meaning with good intentions, but also smart enough to be able to see through the rhetoric and say a few candid things, bringing some refreshing wisdom as they do so. But consider what being in such surroundings would do to such a person - they would see clearly enough to all-but lose faith in the political circus, and perhaps lose a little bit of faith in humanity too. Even if we had a few rare gems, they would be the exception - and they would be swamped by the majority of Snakes and Puppies that outnumbered them.

These rarities sound like they'd be a breath of fresh air - but, alas, the truth is, the political system, coupled with the toxic relationship of co-dependency the politicians and the electorate have with each other, is not a system that is set up for truthful and candid expositions. Most of the electorate just aren't ready to digest the fact that economies, labour, house-prices, wages, supply and demand are largely beyond the control of the government (save for a few light and necessary regulations) - which means they also aren't ready to accept that a lot of the government involvement is not going to be well-informed or successful.


EDIT TO ADD: I briefly alluded to the toxic co-dependency between politicians and the electorate that votes them in - I think it's another factor as to why we have so many misjudged politicians; we have so many misjudged members of the public that demand their wishes and views are represented by politicians. Moreover, economics is about the most misunderstood subject around, largely because, as Bastiat pre-empted in his great seen and unseen essay, most people only have (or allow themselves) enough intellectual wherewithal to focus on how things affect an easily identifiable group, rather than how to affects all groups. Consequently, then, the selection pressure for politicians to be economically astute is diminished by their knowledge of the electorate's lack of astuteness.  
  

A Strange Argument About Whether Prison Is A Deterrent

Some of you may be interested in my response to an IEA writer’s peculiar argument for why Prisons do not act as a deterrent to crime. Some of you may not. 

I have to take issue with the claim that “Prisons do not act as a deterrent to crime”. There is a small group for whom that is the case – and that group is the recidivists who, as you say, have a high re-offending rate, and are being sub-optimally helped by the prison system. But saying that prison isn't fit for purpose because of high re-offending rates is an absurd complaint, and a peculiar error of reasoning. It's a bit like complaining that sea defences aren't fit for purpose because occasionally there are extreme coastal conditions that break those barriers.

It would be good if the sea defences prevented all flooding, but their primary job is to protect the land from the ordinary thrust of the sea on a daily basis. Similarly, prison's primary function is to reduce offending (by deterrence and by keeping criminals out of society), not re-offending. If it reduces re-offending then all well and good, but that is not its primary function. It's preposterous to consider whether prison is fit for purpose by only considering the recidivism rates. It's as preposterous as considering how many men in the UK take steroids by only interviewing weight-trainers in gymnasiums.

Such a biased research method would drastically skew the overall figures, and this is what is happening with Vicky Pryce’s “Prisons do not act as a deterrent to crime” claim, as recidivists are people who've already been convicted of a crime, so they are people for whom the threat of prison was no real deterrent first time out. Consequently, they are the biased sample of the population for whom prison is the least likely to be a deterrent second time around. The only proper way to enquire whether prison is fit for purpose is to ask how much of a deterrent it is for the vast majority of people in the UK - those who haven't found themselves outside of the orbit of the law. As far as we can gather, the threat of prison, loss of liberty, loss of employment, and so forth has been a very successful deterrent for a majority of the population.

This is compounded by the fact that when it comes to the change in social status from being an ordinary citizen to a convicted criminal, the first cut really is the deepest. That is to say, the first time a recidivist became a criminal was the worst time for him (or her). It was on that first occasion that he became incarcerated, when up until then he had only been used to freedom, and it was then that he first experienced the change in status that would give him a social stigma and make him harder to employ. If that wasn't a sufficient deterrent, we shouldn't be too surprised that criminals are even less likely to be deterred second time around. I should finish by saying that it’s only on that point I have a quibble – I agree with the rest of the article.

Best 

James

Er, No, Cannabis Legalisation Will Not Raise £1bn In Extra Taxes

There was a claim in the UK's Independent newspaper paper recently that Cannabis legalisation in UK would raise £1bn a year in taxes – and they are not even talking about gains to the economy in terms of reduced costs in law and enforcement – they only mean a projected view of the approximate value of the black market drugs trade and the extra tax they think the treasury would get by taxing those transactions. We are told that this conclusion is the result of getting together a so-called 'panel of experts' who apparently came up with 'the most detailed plans ever drawn up for the liberalisation of UK drug laws'.

Alas, if only they'd invited someone who understands economics to join their panel, they would have had a better chance of realising that the headline is, at best, misleading, and at worst, plain nonsense. What they mean when they tell us this is that the economy will be better off to the tune of about £1 billion once the government gets all the tax from what would be legalised drug sales. But the reality is very different. What they've done is simply over-inflate the figure by not understanding the economics of how tax and money are generated. Let me explain.

Of course the economy wouldn't be £1bn better off in taxes with the legalisation of cannabis. The tax generated from drugs involves a lot of tax that would have come in via some other route - it's not going to be a huge net gain. In other words, the tax the drug sellers paid through drug purchases when drug dealing became legalised is simply money that the participants would have paid through spending it by some other means when drug dealing was illegal.

Although there will be some gains to the economy in terms of reduced costs in law and enforcement, and in the reduced cost of production and sales (there will now be no costs in avoiding detection) which will as a result also increase consumer surplus, any money that is spent is tax revenue for the government, whether it is on drugs, food, car parts, or whatever.

What the article writer doesn't get is that legalising drugs will increase tax revenue as a proportion through drug sales, but it will be offset by a proportional reduction elsewhere, as people spending taxable money on drugs will be spending less elsewhere.

Perhaps an illustration will help. Tom is a drug dealer, and Dick buys currently illegal drugs from him at a cost of £100 per week. As things stand, when Dick gives Tom £100, there is no drug-buying tax, because the sale is a black market one. The government legalises drug-buying and slaps a 20% tax on drug sales. Now when Dick gives Tom £100, Tom has to give the government £20, meaning the Treasury is £20 better off, right? Not quite.

Prior to drug-buying becoming legal, it's true that when Dick gives Tom £100 the treasury doesn't collect its 20% tax from the drug deal. But it still collects its tax the next time Tom spends some of that £100. So Tom, having £100 instead of £80, uses the money to buy food, drink, petrol or clothes, at which point the treasury gets its tax. There is certainly no big net gain, it's just that the new law would mean the treasury gets its tax from Tom via the drugs sale, instead from Tom via the sale of food, drink, petrol or clothes. Or suppose, as may happen, Tom doesn't spend it yet, but hides it under the floorboards. Well, then, any 'black market money' that stays hidden under drug dealers' floorboards is money that keeps prices down, until that money is eventually spent, at which point it is taxed.

There is not going to be a £1 billion net gain, or anything like it. Increased tax revenues almost never amount to net gains for the economy - they are simply money transferred from some people’s pockets to other people’s pockets. To show how silly this is, imagine if everyone whose surname begins with A to M gave five pounds to everyone whose surname begins with N to Z. Sure Mr Zimbardo would be better off than Mr Adams in the transaction, but no one sensible would argue that the economy as a whole is better off. There is no net gain, only a transfer of resources.

When it comes to drugs and taxes, once you factor in that drug users will end up paying most of those taxes anyway when they spend the money outside of drug use, and the fact that the transfer almost certainly has administrative and deadweight costs to the economy, it's laughable how much of a mess of the argument the article writer makes.

Great Discovery: But Most People Seem To Miss What This Actually Says About Mathematics



If, like me, you're a bit of a numbers nerd, you'll have been excited by the recent news that a new largest ever prime number has been discovered - one that exceeds 22 million digits. The operative word here is 'discovered', and the article explains how:

"The search for new and bigger prime numbers is conducted using software developed by the GIMPS team, called prime95—it grinds away, day after day, until a new prime number is found."

 

It may be a subtle point that's so often missed, but the fact that mathematics has unknown properties that we need to discover empirically ought to tell us an awful lot about the primary nature of mathematics - a primacy, as I argued last July in this blog post, that indicates that even the entire physics of our universe is only a tiny representation of mathematics as a whole. Or to put it in terms your grandma would understand, not only is mathematics more than just a human invention, it actually gives every indication that its truths exist over and above anything that exists in the physical universe.

 

As well as being an exciting finding in the field of mathematics, the discovery of this new prime number also, to me, serves as a subtle reminder that mathematics is both a creation and a discovery, and that it's in David Hume that we can see the astounding way that this plays out philosophically (as I write about here in this blog post - Why We Never Have, & Never Will, Predict Anything New). Some of you may be inclined to read it later if you have time. Some of you may not. For the latter group, to illustrate the point in that blog, I said that if you find one day that a fundamental law of nature gets changed (such as we no longer can have a magnetic field through the application of electricity), the only way to discover this would be through experience.

 

The reason being, we are learning something new about nature by the process of discovery. As I will expound below, it is with prime numbers we can see how we are doing the same thing with numbers - a fact which enables us to understand just how complex and other-worldly mathematics actually is. It is here that we can see the important difference between physical discoveries and mathematical discoveries. With physical properties there comes a point when there is no longer anything new to discover about them. Suppose you have a plank of wood in front of you. Once you try to discover new things about the wood you find that it is made up of smaller constituents: atoms, electrons, protons, and perhaps even small elements as yet undiscovered. But there will come a point when there is nothing more we can discover about the wood - we will be left with the bare bones of mathematics.

 

Things are very different, though, with numbers - we never reach the point at which we have discovered everything about them - and prime numbers are a wonderful illustration of this. Given that almost every fact about numbers is not known by humans, it’s pretty obvious that they are far more than mere human inventions (think about it: by its very nature, mathematics is so infinitely complex that however much we know about numbers we will still only know a tiny fraction of all the possible things there is to know). How can anyone expect us to believe that we invented something that we don’t know most things about?  Prime numbers give us a great indication that our construction of integer symbols is the construction of a map that relates to a much wider territory of undiscovered mathematics.

 

In 1989 mathematicians discovered that between the 2 consecutive prime numbers 90874329411493 and 90874329412297 there is an astounding 803 composite numbers. We didn't know that fact back in 1889 or 1789, because in 1889 and in 1789 the fact “there exists 803 composite numbers between prime numbers 90874329411493 and 90874329412297” was a fact still awaiting discovery. There would have been a time when no one knew that wood was made up of atoms, electrons, protons, and so forth, but the difference between wood and prime numbers is that there is guaranteed to always be a time when no one knows about most prime numbers.

 

The reason being; we discover facts about numbers in the same way that we discover facts about nature – through experience (as per the Hume blog I linked earlier), and many numbers are just too vast to be experienced. Prime numbers is a perfect example of the consistency of mathematics combined with our having to deal with the subject probabilistically as we increase in complexity. 

 

One famous modelling of the primes is the Riemann map, which consists of the distribution of the primes in the shape of a staircase (showing the steps as each prime is higher than the last). Then running a Gaussian curve through it Riemann composed it into a sum of simple waves, which are graphed with positive and negative discrepancies. 

 

The complexity of the natural numbers lies not in generating the numbers per se, but in generating true statements about those numbers. The complexity of a set as a measure of how hard it would be to generate that set is a good indicator. On complexity alone, generating all the natural numbers isn't too difficult, although it is infinitely time consuming.  You could spend the rest of your life counting integers if you like …1..2..3..4..and so on, and not much will stand in your way. But generating all the prime numbers is harder to do because you need more than simple bit by bit addition - you need vast division. The checking of whether a very large natural number is actually a prime before including it in the set is a measure of complexity that increases as the task increases in size. If it wasn't then the discovery of a 22 million digit prime number wouldn't make the news at all.

 

Let’s look further at how this relates to knowledge and probability. We can plot the primes as a binary sequence; that is as 11101010001.  In this sequence I have plotted a "1" wherever a position in the sequence is a prime number (you'll notice that a '1' appears in positions 1, 2, 3, 5, 7 and 11 - denoting the primes). The Riemann hypothesis about primes states that an infinite number of frequencies is needed to define this sequence of primes in their entirety. In other words, he is telling us that it is not possible to use short-cutting compression to reduce the sequence of primes to a finite form. This translates as; an infinite amount of data is needed to specify the primes in terms of frequencies - but this is not to be confused with the term 'infinite' which necessitates that primes will go on and on infinitely just like the natural numbers will. In actual fact, just as we can specify all the natural numbers with a very short counting algorithm, we can also define all the primes using a very short prime number generation algorithm.

 

The infinite number of frequencies Riemann conjectures to be needed to specify the primes is not because they go on infinitely - it is because the only known prime number generation algorithm that generates primes with certainty involves the vast and lengthy task of factorising. Factorising is a very long winded task which means working through all the possible ways a number might be confirmed as a prime number - which basically means that after a very large prime number in a sequence one has to check each large number that follows it in the sequence and work out whether it can be divided by a number other than 1 and itself, and carry on doing that until another prime number is reached in the sequence. That is how a prime number is identified. If we are only interested in the length of the data string then the infinite prime number sequence can be defined with a finite amount of data. What it cannot be is specified with a finite amount of data because no periodicities exist in this sequence that we can exploit to help us calculate primes with certainty using any quicker method than factorising.

 

The way it relates to knowledge and probability is because of this need to factorise. To predict the next prime one has to keep factorising the numbers ahead until one strikes a number that won't factorise - but this comes at a huge computational cost because the numbers one is targeting are very unrepresentative compared with the numbers one has to compute and discard. Riemann tried to stumble upon a more succinct method of calculating (predicting) primes using the perceived organisation of their layout in the integer sequence. But he found that this couldn't be done because purely from the patterned layout point of view it is not possible to predict primes with certainly - one can only predict them probabilistically (which is better than chance predictions). 

 

As interesting as this is, more generally, I think this is interesting as a template for knowledge in general, as least by way of analogy. Just as prime number sequences in binary form (11101010001 ...etc) sit between the spectrum of being a maximally disordered sequence yet retaining enough order predictable with a range of outcomes, so too is knowledge much like that. In fact, if you can paint yourself a fairly clear picture of what factorising for primes is like, you’ll see that it is a beautiful illustration for knowledge of the complex world in more generalised terms. The main difference between numbers and information about the physical world is that with the latter we are discovering knowledge of what we can add to our map, whereas with the former we are discovering more about the territory to which those maps relate.

 

 

 

The Global Map Of Where It's Good & Bad To Be Gay

I was interested to stumble upon this page which speaks of a global map of homophobia. Unsurprisingly the two big findings were that sub-Saharan African and Muslim-majority countries are the least accepting of homosexuals, and Western and Latin American countries are the most accepting.

While, as you'd expect, you're better off being gay in a country in which Islam hasn't had very much political influence, you're also much better off being gay in a country that's wealthy and prosperous.

On first glance the article writer seems to be favouring the idea that wealthy nations are more open and accepting of homosexuality, and more willing to institutionalise it in marriage. In my view, that proposed causality is slightly adrift of the truth - it's more probably the case that many of the same things that helped the nations' prosperity just happen to be the same things that make them open to homosexuality - that is, respect for the rights of individuals, a stable society, and high value of freedom and tolerance - all of which are what helped those nations become prosperous.

It's also worth adding that the more a country is influenced by Islam* the less likely it is to be broadly tolerant and open to individual freedom, which means not only is it more likely to be unaccepting of homosexuality, it is also less likely to be wealthy and prosperous.

The upshot is, if you're going to be the sort of society in which gay couples can win the freedom and tolerance they require to foster acceptance of homosexuality, you're going to need to be the sort of society that values freedom and tolerance anyway. So my hunch is that it's not that economic prosperity has made homosexual acceptance possible, but rather that the same qualities that engender economic growth are also the qualities that engender the qualities required for acceptance of homosexuality.

* Sadly, I'm sorry to say, there are a few parts of the world (some African countries, for example), in which Christian homophobic intolerance is pretty rife.

This Could Be The Most Interesting Programme On Television All Year

I was just watching some catch-up TV, and the show I was most looking forward to was the Channel 4 documentary about the hitherto 'undiscovered' tribe of Amazonians, centred on the studies of the Brazilian anthropologist Carlos Morellis, and the first meeting of a tribe that were ostensible hunter-gatherers.

To begin with the tribe were very fearful of white men, and it took Morellis a whole year and a practical understanding of their language and mannerisms to realise that these Amazonian hunter-gatherers had been treated very badly by white fortune-seekers looking for gold, by illegal loggers, and by those who enslaved native men to tap rubber trees. In fact, in one of the most startling moments, a photo was shown of such a group from yesteryear with chains round their necks and wrists.

After Morellis had spent some time patrolling up and down the river, sussing them out, there was a meeting, which was sufficiently successful enough to ensure the Amazonians no longer feared all white men. When both parties finally learned to put their guards down, there were some very moving scenes between the two groups.

Some will be perturbed by the fact that more advanced people have come along and disturbed a tribe of people otherwise living in virtual isolation from the rest of the world's population. But the Amazonians weren't exactly having a blast there - their daily existence was a continual struggle for survival, and always with the spectre of being attacked by poisonous snakes and jaguars, and, particularity interestingly if you're someone who knows your Bible, experiencing repeated feelings of shame for being mostly naked.

This programme was a rare chance to experience something terrifically fascinating and unique - a real life present-day social experiment back to our hunter-gatherer past (even more intriguing given the fact that rainforests are not the most natural habitat of hunter-gatherers). As well as getting to observe the behaviour of people one is never going to meet in virtually all other places in the world, there were for me two other notable things. Firstly, the Amazonians had no obvious status ornaments, yet there was evidently a hierarchy. And secondly, despite no socialised views of religion or the divine, they believed in heaven and the afterlife.

The programme was compelling viewing for virtually every minute of its duration. But perhaps the standout thing I observed is this. It's quite possible that in just one hour of observing these Amazonian hunter-gatherers we have clear exhibition of an analogue to the precursors of all the world's religions: that homo-sapiens have evolved the hardware to experience awe and wonder in a way that appears to make us worshipfully inclined (something the writer of Ecclesiastes noted in chapter 3 verse 11), and that we have always possessed all the blueprints for hierarchicalism, which makes the organised religions that have emerged from our evolved hardware not in the least bit surprising, and perhaps even somewhat inevitable.  

It's So Easy To Lose Interest

I doubt I've ever made this known, but in a life that is so abundantly demanding of any interested person's mind, I am highly unlikely to attempt to read or get very much out of hugely long articles or lengthy papers - I just want the back of the envelope version pretty much all the time.

 

Don't get me wrong, if there are books or papers I really want to devour, I can easily enjoy digesting them in the comfort of a relaxing armchair, but online you're unlikely to pique my interest with interminably long-winded blogs, articles or papers. To use a food analogy, when I'm online I don't want to be eating big meals, I want to be nibbling at little tidbits

 

I'm sharing this not as any kind of act of prescription, but just because it's a realisation that has become more and more prominently acute in my own awareness of myself, and I was starting to wonder why I didn't used to feel it with quite so much vigour, and whether it's because the internet now makes more demands on our attention, or whether, as I think is the case, most of us prefer the back of the envelope version but differ in the extent to which we own that desire.

 

 

The Economics Of Valentine's Day & Other Related Matters

Economists are always being accused of trying to reduce everything to money and mathematics. Critics will make assertions such as: "You can't put a price on love" and "There are more ways to analyse life than mathematically" and so on. But as one of the most well known quotes from any economic text book reminds us, economics is even grander in its claims:

"Economists are often accused of believing that everything — health, happiness, life itself — can be measured in money. What we actually believe is even odder. We believe that everything can be measured in anything."

David Friedman

When it comes to matters of the heart, perhaps the key thing that underpins it is information. Romance is about discovering more and more of a person, rather like how an explorer discovers more and more of a new country. Discovering more and more of a person is about obtaining more and more information.

A friend once asked me for some advice about a guy she was seeing: do I stick with him or cut and run? I neglected to answer, as I didn’t feel it was my place - plus I lacked most of the relevant information couples require to decide whether to stay together.

Information, of course, is the key thing about their relationship that couples have and outsiders don’t. At the point of asking for advice my friend had a trade-off between what she presently knew and what she might go on to know in the future. Being in a relationship means learning new things about your beloved every day, and this new information is bound to have an effect on whether any decision to stay or go was the right one. Given that at present she was unsure about whether her partner was the one she wanted to stay with, her dilemma was really down to one question: will future information change things for the better or the worse?

If she thought the former she may well be inclined to stick it out for longer; if the latter, now would be the time to say goodbye. The trouble is, of course, future information is by definition unknown in the present, as the present merely gives us probability indicators about future stages of a relationship.

Because information is key, and because relationships are dynamical, your relationship with your partner is, like most things in life, based on a series of probability estimates. A Valentine's Day card to your partner is, from your point of view, a way of signalling that at this moment in time the probability of staying together is greater than not. And unless you're married, the probability that you'll repeat the process next year is conditioned primarily by the information you'll obtain between now and Feb 14th 2017. In the meantime, if you want a test that's a bit edgier and intrepid, you could always try this one on for size.

 * You can, of course, send a Valentine's Day card to a prospective beloved - an act designed for those who can't charm the pants off anyone they fancy.