Wednesday, July 8, 2015

Incorrect Reasoning

I was reading some articles in the Guardian and found what has to be the world's most invalid argument.

It seems commentator Matt Ridley at some time prior to 2010 became one of the directors of some variety of semi-private bank*, which failed and later applied for a government bailout. Mr. Ridley then wrote a book in 2010 which extolled the virtues of the free market and argued against government involvement in economics.

Now, the usual pop criticism would be to argue that he is a bit of a hypocrite in arguing against government intervention while seeking a bailout. As I argued in "Hypocrisy?", this is actually incorrect, as he may honestly believe government intervention is wrong, yet fail to live by his own ideals. That would mean he has failed to live up to his ideals, nothing more. It is not hypocrisy for an imperfect man to extol perfection, though in this case it is a bit unseemly.

However, the Guardian actually took a different approach, and one which I think is completely absurd. They argued that he must be foolish as his failure in banking should have taught him the free market does not work.

This is an absurd argument. The argument for the free market is not that every unregulated business succeeds, but rather that by allowing failed managers, approaches and other bad ideas to fail, in the end it produces a more robust and efficient economy. In fact, the fact that Ridley failed when he undertook investments that were too risky is a vindication of the free market, it shows how bad ideas die in a free market, while in this regulated market they are allowed to continue under the same management that brought about the original failure.

Yet, several times I have seen British blogs link to this article, arguing it is a sound refutation of free market "rhetoric". Far from it. Just as every warm day does not prove global warming ("Global Warming Watch, Again", "Global Warming Watch", "Odds and Ends"), the failure of a man in business, even a proponent of the free market, does not prove the value of regulation, it simply shows that man is not a good manager.

Allow me to make two analogies. I can say "smoking is bad for your health", yet we all know I am a smoker. Does that mean my message is false and smoking is healthy? Or does it mean I have failed to live up to my ideals?

Even more apt, what if I said "It is a good idea to learn to swim, especially if you go out on the water." but was later to drown? Does that prove swimming is of no value?

In each case, the argument is no less foolish than the idea that the business failure of a free market proponent somehow proves the inadequacy of the free market.


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* I do not know much about the current state of British banking laws, so do not know to what degree privatization has taken hold, though I doubt that any British private bank would be any less regulated than a US bank. For better or worse, our two nations seem to have relatively similar perspectives on bank regulation, with England generally being more strongly regulated, with the US adopting British regulatory measures after a lag of several decades, sometimes more -- for example, our Federal Reserve being created centuries after the Bank of England. (Though that last may be unfair, as the Bank of England was one of the earliest central banks.)

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POSTSCRIPT

I shall be revisiting Mr. Ridley in a future essay as well, as he is also apparently a proponent of genetic determinism of some sort. As I have been quite critical of many of these beliefs, I will be looking at an essay about his genetic ideas very soon.

UPDATE (2015/07/18): I realized my argument about hypocrisy may actually be read the wrong way quite easily, and so I need to clarify a bit. If he argued that government aid was wrong, for everyone but him, then yes, that is somewhat hypocritical. On the other hand, if he truly believed government aid was wrong, but thanks to his monumentally bad management, saw no way to save the money of his investors but to accept government aid, he would be failing to live up to his ideals, but would not necessarily be hypocritical. Hypocrisy is, for lack of a better description, extolling a virtue in which one does not believe. Say, Clinton extolling the virtue of marital fidelity, or Nixon extolling government openness. But even in those cases, one could argue both believe in those ideals, but due to circumstance, personal weakness or what have you, failed to live up to their ideals. It is why I tend to view claims of hypocrisy very skeptically. Though often tossed out to criticize anyone who failed to meet their professed ideals, that is both a misuse and a dangerous one. After all, as someone once pointed out, by so defining hypocrisy, it means those who espouse no virtues, or only the most pathetically modest ethics, essentially come out better than those who try for much loftier goals and sometimes fail. In short, this pop usage of hypocrisy allows the amoral greater freedom than those who have ethics but sometimes fail to meet them, which is, to my mind, the opposite of what we should advocate. But I have said this before, and much better, so I will cut myself off before repeating myself even more.


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