Friday, May 30, 2014

Keyhole Thinking


NOTE: These seventeen essays were reproduced from my now defunct former blog, Random Notes, as they are going to be cited in an upcoming essay. For the most part they deal with three subjects, "common sense" and pragmatism, organics and GMO foods, and the belief in the inherent purity and superiority of all things "primitive". A few are on other topics, but I think those three cover most of them.

I have promised several times to describe a phenomenon I have termed "keyhole thinking", but looking back, I realize I have never yet done so. So, without farther ado, allow me to do so.

Let's start with a strange example. Do you recall being in eighth or ninth grade? Some guys in your class were considered really cool because they hung out with a kid from the next grade? And, on the other hand, a few kids in your grade were dorks because they hung out with kids a year younger? Well, that is keyhole thinking. You see, if you thought about it, those kids a year older are just the dorks of their grade, hanging out with younger kids. So you envied someone for hanging out with the dorks a year older than you. But as your vision was entirely based on the perspective of your age group, you could never consider that the older kids might be losers among their peers, they were just OLDER, and so inherently cooler.

Of course that hardly helps explain what I mean using the term for politics or philosophy, but it gives you a good idea of how widespread the phenomenon is.

Keyhole thinking is simple, though avoiding it is quite hard sometimes. The basic problem is taking in only a limited perspective. For instance, the "Cash for Clunkers" program. Many saw that it raised sales in a given month and called it a success, not imagining that those sales came at the expense of the coming months' sales. By looking only at the immediate moment, they were engage din keyhole thinking.

Or, to give a more common example, activists interested in affordable housing often propose rent control as a solution. In their eyes, the biggest impediment to the poor finding adequate, affordable housing is high rents. However, their perspective, looking from only the buyer's perspective, fails to take into account that doing this may cause landlords to either sell their properties as single family homes, convert to condos, or just abandon them entirely, as we saw in New York and elsewhere. By not considering the incentives the system gives to the landlords, the "solution" ends up causing unexpected problems.

None of this is new. I described it quite well in my essays on pragmatism ("The Shortcomings of Pragmatism", "Pragmatism Revisited", "Pragmatism Revistied, Again") and elsewhere, but it is such a common shortcoming of much political and economic thought that it needs to be mentioned as often as possible. From the FairTax to Keynesian economics to the Obama stimulus, many plans have been "proved" workable only because those promoting them failed to examine all the factors*. Sometimes this is intentional, many times it is accidental, but always it is dangerous. You see, when one person overlooks a factor, it is bad, but once he is published and lauded as a visionary, then his analysis will likely be accepted by many others, which means his omission is likely to be shared by many others, until, over time it becomes common practice to forget the same factors**. Thus not only does keyhole thinking lead to improper conclusions, but it has an annoying tendency to spread.

Then again, it is not an easy problem to remedy. The essence of good analysis is to restrict the argument to the essentials, and so abstracting is part of all valid arguments. No one can consider everything***. But there is a difference between good and bad abstraction, between legitimate and illegitimate exclusion, and that is the difference between keyhole thinking and valid understanding.

The trouble is drawing that line. 

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* Before I get angry comments from FairTax proponents, one thing which is overlooked is that the 22% embedded taxes are not uniformly distributed, so the 23% tax will hit different goods and services differently, which destroys assumptions of revenue neutrality, which assumed near uniform distribution of embedded taxes. Similarly, the FairTaxers never consider that current taxes keep some industries alive, so the collapse of those industries when taxes are made uniform will likely also have an impact on revenue neutrality. Finally, the assumption that state tax agencies could handle tax collection, validation of prebate payments, issuance of checks and so on at almost no cost, and without need for a federal coordinating body is naive in the extreme. There are more arguments, but these alone make me question many claims put forward by the FairTax advocates. For more see "An Interesting Analogy",  "The Runaway Stagecoach" and the articles to which they link.

** For example, the Keynesian habit of confusing monetary and real values, or dealing solely in aggregates while forgetting the many details they obscure has spread to many in the economic community thanks to the ubiquity of Keynesian analysis. People who should know better often overlook the purely monetary nature of some phenomena because of the Keynesian habit of muddying the distinction between monetary and real measures. ("The Rubber Yardstick")

*** This is actually a good argument against the government involving itself in all but the most essential roles, as it IS impossible to consider all consequences. As any action is bound to have unforeseen repercussions, and government actions effect far more people than individual acts, the government should likely act only when necessary. (See "The Limits of "Scientific" Management") It is also a good argument for gradualism in reform as well. ("My Mistake") Even the most urgently needed changes can bring about unforeseen consequences, especially while a mixed statist and libertarian system is in place, so making changes very slowly provides the best chance to head off negative effects before they get out of hand.

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POSTSCRIPT
Clearly what is keyhole thinking and what is not is often a judgment call, though sometimes the keyhole thinking should be obvious to anyone. (Eg. Price caps on pharmaceuticals to reduce costs, without thought of the impact on supply or future research.) This is a topic I intended to define some time ago, so I decided to do that, but I would have to write a book, or several, to define it in all cases. As I am under the weather and rather worn out today, I will just provide a basic definition for now, and come back with specific examples as the come up in the news.


Originally posted in Random Notes on 2009/10/06.

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