Wednesday, June 29, 2005

Learning to see the invisible incentive structures that pre-determine our institutions

Do-gooders need to learn about the nefarious and byzantine ways in which government destroys life.

Often a policy debate is cast entirely in terms such as: Should there or should there not be a law against smoking in bars? Should we or should we not teach creativity and critical thinking in schools? Should we or should we not be living in smaller houses? Should we be saving more? Etc.

These passionate political arguments, for and against, are generally blind to the ways in which the invisible incentive structures in our society, which to a considerably extent determine what institutional options are available to us, pre-determine outcomes. We need to learn to pull ourselves out of existing pro- and con- debates, and learn to observe the ways in which incentive structures have created a situation in which only certain kinds of institutions are viable.

With respect to the example of smoking vs. non-smoking bars: If there were fewer obstacles to opening a bar, there would be more bars, smoking and non-smoking. It would be easier and less costly to try out a new kind of bar. Moreover, it has been suggested that because there are fewer restrictions on opening a bar in Britain, and that therefore there is a pub on almost every corner in certain neighborhoods, that there is less drunk driving than in the U.S. I don't know if this is true or not, but I do know that people who argue about bans on smoking in bars never consider this approach to solving the problem.

Often a claim is made that markets won't solve a problem spontaneously, an argument develops in which both sides argue about whether or not the market could solve the problem, and the reality is that there is an enormous underlying distortion that is preventing the market from solving the problem.

This is analogous to the fact that government schools prevent the development of a market in schools that teach creativity, critical thinking, health, and well-being.

Or to the fact that the mortgage interest deduction promotes large houses on big tracts of land in the suburbs while destroying life in the inner cities and reducing the American savings rate (by encouraging large sums to go into the consumption of housing rather than into investments).

Or to the fact that homelessness in the U.S. is correlated with rent control policies in urban areas. Zoning laws that eliminated Single Room Occupancy hotels in many cities also may have contributed to homelessness.

It is my hunch that, the more we learn how to see the world in this way, the more we will discover that well-intentioned political initiatives have resulted in truly damaging limitations of possibility. Did well-intentioned laws intended to reduce the number of bars, and thus drinking, actually result in more deaths from drunk-driving? Did well-intentioned efforts to provide public education for all actually result in a world in which the most shallow appetites for consumption and addition dominate our teen years and thus our society? Did a well-intentioned effort to make it easier to own a home result in suburban sprawl and the destruction of our inner cities? Did a well-intentioned effort to protect poor renters increase homelessness?

Those who aspire to improve the world need to begin to take these issues seriously.

FLOW aspires to be a much more economically-sophisticated do-gooder movement; a quantum leap forward in how to actually make the world a better place, in how to be a realistic visionary.


Anonymous michael v said...

But Michael, aren't you doing just what you are telling others not to do, e.g. saying that people "should" know X or think in a particular manner rather than examining the incentives causing them to think in that manner? Han Huang would ask what manner of thinking will give them the most money and mating opportunities (broadly construed)?

I really wish, along with you, that there were no public schools, but just as its usually more effective to solve problems through enterpreneurism rather than government action, its also probably more effective to circumvent destructive government than to try to change it.

It sounds like you had a great thing going with your Socratic schools. Such schools compete against public schools on a Massively unfair playing field, but they can still win ground and grow exponentially. Just show that their graduates have more money and mating opportunities (broadly construed).

7:30 AM  
Blogger jon said...

compare price textbook are so expensive. I agree, We have been looking for compare price textbook all night for a new compare price textbook class but havent been able to track down used compare price textbook that I can afford. Anyway, I enjoyed looking at you compare price textbook blog...


9:44 PM  
Blogger Rich Molumby said...

I have an Entr site/blog. It pretty much covers making large amounts of money on the web.

Come and check it out if you get time :-)

7:32 AM  
Anonymous Anonymous said...

Hey, you have a great blog here! I'm definitely going to bookmark you!

I have a cisco gardening
site/blog. It pretty much covers cisco gardeningrelated stuff.

Come and check it out if you get time :-)

4:51 AM  
Blogger De Post Man said...

Informative post. Take a look at my credit site ( ) f you can. Thanks credit check collection agency

4:30 PM  
Blogger Silvianne said...

I just came across a great gardening website called*. Not only does it feature articles for the gardening enthusiast, but has become a great gardening product
resource for me in my landscaping effort. The webmaster of this site has recently added a book section that seemed to expand everytime I go there.
What I like about it is that I get instant access to the book and don't have to wait for the book(s) to arrive which of course saves me shipping charges.... in some cases. Great idea. I love it. You must check it out today. Let me know what you think.

8:59 PM  
Blogger Natwho said...

Our legal network has experienced attorneys standing by to assist you with any legal matter that you may be faced with. We specialize in bankruptcy at bankruptcy
Visit our site for a FREE local referral to a qualified highly experienced attorney who can work with you to make sure you are represented in the most favorable way possible. Come to bankruptcy today for a complete no obligation consultation.

6:23 PM  
Blogger natwhoed said...

I was Natwhoed
This is in response to the so called business opportunity offered from NWC (National Wholesale Company) and Natwho. I bought in to one of their website leases 2 years ago. They claimed it was an excellent opportunity to start a small business and earn money selling electronic products online. They also claimed to offer me these products at wholesale prices.
To date I've had over 14,000 visits to my site. However, I have yet to produce a single sale. My total sales to date is $0.00 while my total expenses are $4,000.00 plus and counting.
I still have nearly a year to go on my lease.
Now I'm not saying someone isn't making money with NWC. It just isn't me for sure. As for other people with NWC websites I cannot say weather they had any profits or not. Every NWC site owner I have contacted has not responed. I've tried my hardest to sell their products to family, friends, co-workers, and have used mass email but no takers. It's not like I haven't tried.
So, you may want to investigate before you sign a lease. Think it over real good. Compare their wholesale prices with other sites, get a detailed expense sheet of all the services that apply to the lease, and make sure you get what is promised.
My site can be seen at check it out.

5:09 PM  

Post a Comment

<< Home