Sunday, March 2, 2014

The Importance of Error

NOTE: Extensive as that last batch of reposted articles was, I still managed to forget one I wanted to include. Thus, I am posting this essay separately.

I have written many times about the significance of our view of our fellow men, arguing that once one starts to view our fellow men as incompetent or evil it leads to an inherently authoritarian view of government1. Having argued this so many times, I am sure that some imagine I have a pollyanna view of mankind, seeing everyone as inherently good natured and incapable of error. But the truth is, I think I am actually more aware of error than those who view man as inherently flawed. You see, while they think of man as inherently incompetent, they also posit the flip side, an elite who are themselves nearly incapable of error, an inherently perfect ruling class2. On the other hand, I am well aware that, competent as he may be, errors are a constant part of the human experience and need to be considered in any system3.

Let me start with some truths that everyone recognizes, but that most ignore when drawing up political systems. The first, and most fundamental truth is that no one is without error. One can theorize that there is nothing inherently impossible about someone who never makes a mistake, but in reality I can think of no one who has never made the wrong decision.  Even if we ignore that simple truth, let us make a second statement to which there are even fewer possible objections. Every individual values things differently, so what one sees as the optimal decision is not necessarily optimal for others. 

That second is important because it actually makes the first irrelevant. You see, given a number of possible choices, what would be optimal for any given individual may be different from what is optimal for others. So even an individual who choose perfectly at all times, who picks what is best for himself, may still seem wrong to another, as his choice is not optimal for that other. And thus, even someone who is without fault in his own eyes may be imperfect in the eyes of another. Thus, it is logically impossible for anyone to be perfect for all who observe him unless all decisions are such that every possible observer agrees on the best possible outcomes.

So, it is logically impossible for any individual to make the optimal choice for all people in all situations. Which means that any theory must deal with the possibility of error, that any given decision made by any individual may be incorrect, either in some absolute sense or at least in the sense of being less than optimal for some set of individuals.

This is why I argue that power must be as widely distributed as possible. By concentrating power, by centralizing decision making in fewer individuals, we allow for fewer decisions and for individual decisions to effect more people. And both are undesirable.

In the first case, that of fewer decisions, the problem is simple. When there are multiple cases, with many decisions being made, say in the case of a federation where each state makes its own policy, or even more relevant, where a decision is made by each individual rather than a central authority, we have more likelihood that the "right" decision will be made, whether we define right as objectively correct or suitable for a given set of individuals. Since it is likely the right decision will be made, that gives all other individuals the chance to observe the correct decision in action and then either adopt it themselves or move tot he locale where it is law. If there are fewer decisions, then there is less likelihood the right decision will be made, and so it is far more likely error will persist. In addition, it means individuals will have no chance to move to an area where the decision is more suitable for them, as such locales will simply not exist.

In the second case, the same decision effecting more people, we run into problems primarily with differing valuations. As each individual sees the value of things differently, the more people who are controlled by a single decision, the greater the number who will be disappointed. When there are many decisions effecting small numbers of people, those decisions are both far more likely to please the individuals and also give the option of changing the law under which one lives by moving. On the other hand, when decisions are made for a large group, it is likely that more people will be disappointed, and will also be left with no alternatives.

And that is one of the greatest problem with powerful, centralized government. Through centralization, you reduce the number of decisions and remove decisions from the localities which are likely more responsive. And by making the state mroe powerful, you put more decisions in the hands of the central authority and take them from the individual, which is the smallest and most responsive decision maker of all. Which means that the more centralized and powerful a state is, the more damaging any given error might be, and the more essential it is that only "good people" hold office.

But, as we showed above, there is no one who is without fault, and so, it is inevitable errors will occur. That being the case, centralized government will always end up causing more harm through errors than a more decentralized, less powerful state would4.

This points out a second implication of the fact that all humans are prone to error, that government should be kept to the minimal functions needed5. The argument is essentially the same as that for federalism, though with a few differences. 

First, because errors are inevitable, it is important to keep to as small a number as possible those harmed by any given error. By keeping government decisions to a very local level, you both make that government more responsive and reflective of the preferences of those it represents, but you also ensure that any given error will harm the smallest number possible. But if it is good to keep governmental power to the smallest unit possible, does it not follow that it is even better to leave powers in private hands and avoid government entirely? If a decision does not need to be made by a government, then why not leave it up tot he individual? Not only does it reduce the scope of errors to a single individual6, but it has the added benefit of being quite just, as only the individual making the decision suffers from his poor choice7.

Which leads me to my final point. By leaving power in individual hands, not only do you minimize harm and ensure justice by limiting harm to the person making the decision, but you also have a much better chance of preventing future errors.

How so?

Well, when a decision is made on a massive scale, say nationwide, it is often possible to hide an error., Many times a bad decision will harm many, yet they will not even recognize the source of the harm. For instance, our monetary policy creates inflation which harms many8, yet most do not recognize the source, much less take the blame for it. In addition, by having no point for comparison, it is often easy to blame national decisions on another cause. When decisions can be compared to similar choices made elsewhere9, it is is harder to hide the harm, which is why I favor federalism. But even on a federal level we often have people who do not suffer for their own bad decision. Many politicians have made ruinous decisions yet managed to avoid blame.

That does not work on a personal level. Personal decisions carry immediate consequences, and the individual must deal with them. People might try to avoid recognizing their own role in their misfortunes, but they do so at their own peril, and they have to suffer the consequences of that action (ignoring the real causes) as well. By suffering the immediate consequences of their actions, individuals are discouraged form repeating the same errors in a way the government usually is not. By leaving choices to individuals and by making them suffer the consequences of those decisions10, we encourage better behavior.

Of course there are those who will argue against this, for any number of reasons. Some will argue it is heartless to force people to suffer just to teach them a lesson (though I think it more heartless to allow them to continue making the same bad decisions over and over). Others will argue that people are still too insulated from the consequences of their errors, or too unrealistic to recognize them. And still others will argue that man is not as rational as I describe. I am sure there are a dozen more arguments. But trying to anticipate objections is rather futile, as likely whatever I guess will be completely unlike the objections actually raised.

So, rather than try to disprove arguments that have yet to be raised, I will simply leave my argument a sit is and wait to see what others say against my arguments and then address the arguments actually used.

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1. This argument is made most clearly in  "The Citizen Dichotomy", "Man's Nature and Government" ,"In A Nutshell", "Cognitive Dissonance Part 2" and "Utopianism and Disaster".

2. I pointed out this contradiction, between a generally incompetent or malevolent mankind and the need for a perfect, benevolent ruling elite in "Arrogance and Gun Control", "Appealing to Arrogance" and "Two Kinds of Liberal".

3. I make this argument most explicitly in "Planning For Imperfection", though that is hardly the only place.

4. I recognize that some decisions must be made nationally, that there are issues with a nationwide impact. However, that truth does not mean that we need to accept central, national decision making for all governmental functions. Just because the national authority must be involved in declarations of war, civil courts for interstate matters, questions of interstate trade and other similar issues, it does not follow that there should be nationwide criminal laws or a national education agenda. If national decisions are potentially harmful, then we should keep to a minimum the decisions made on a national level. We may need to make some decisions on that level, but keeping them to the bare minimum just makes sense.

5. I describe my thoughts on government structure in "My Vision of Government", "My Vision of Government Part II", "The Benefits of Federalism" and "Why I Am Not A Libertarian".  I argue in favor of unrestricted markets in "Greed Versus Evil", "Fairness and the Free Market" and "Planning For Imperfection".

6. Some will argue that a single individual's choice can harm others, for example a drunk may harm his family as well as himself. And that is a valid point in some senses. However, ignoring minors, others are associated with such individuals by choice, and so they are suffering, in part, because of their own bad decisions. Admittedly, when we involve children the waters become slightly muddier, but the intricacies of child custody and the effect of parental decisions on children is too much to deal with here. So let us leave that for another essay.

7. Some will raise the objections mentioned in the note above. Others will point out that bad decisions by business owners, for example, also harm the employees. And that is true. However that does not truly present an argument against my point. I grant that sometimes an individual's bad decision may harm others, but nothing approaching the scope of a government's bad decisions. While a business owner who bankrupts himself may harm some employees, a bad federal policy harms tens of millions. And, more importantly, it is an unusual individual decision which can harm others, while every government decision touches the lives of others, so the handful of exceptions is hardly comparable to the general rule.

8. I describe this in some detail in  "Inflation and Uncertainty", "Explaining Past Crashes", "Not Entirely to Blame", "The Inflation Engine", "A Thought on the Clinton Surpluses" and "Place Blame Fairly, Regardless of Party", among others. 

9. For examples of how this would work under federalism, read "The Benefits of Federalism" and "Why I Am Not A Libertarian".

10. This is why I disagree with efforts to indemnify individuals against bad decisions. As I wrote in "Subsidizing Irresponsibility and Poor Planning", "Perverse Incentives", "Why Borrower Forgiveness is Both Wrong and Dangerous" and  elsewhere, by keeping individuals from suffering the consequences of their actions, we encourage more of the same mistakes. Only by allowing them to feel the harm their mistakes cause will individuals be persuaded to avoid the same mistakes.

Originally posted in Random Notes on 2009/08/18.

NOTE (2014/03/03): When I wrote this, I may not have made clear the distinction I was trying to make between "errors" and decisions that were displeasing to others. By "errors" in this essay I intend those decisions which try to achieve a given result, but fail to do so, that is, choices which, on their own terms, are failures. I made this distinction in order to make clear that government can fail in two distinct ways. First, it can try to impose decisions which are pleasing only to some subset of individuals, thus displeasing the remainder. Second, even if the choice made is pleasing to a given individual, it is possible the government might choose a method which fails to achieve that goal, or, at best, which opts for a less efficient means of reaching that goal than would be provided by an alternate decision. By dividing up government into many small units we minimize both problems. The first by making each decision cover as few individuals as possible, resulting in the most responsive government possible. The second by ensuring that any given decision effects only a small group, so that a mistake will harm only a small group. In addition, because the same choice will be made many times by many groups, it is quite likely the best possible choice, or at least a better choice, will be made by one such group, allowing others to emulate their decision and achieve better results. I do not know if I made this sufficiently clear, so I decided to add this note.


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