Tag: Garrett Hardin

The Generalized Specialist: How Shakespeare, Da Vinci, and Kepler Excelled

“What do you want to be when you grow up?” Do you ever ask kids this question? Did adults ask you this when you were a kid?

Even if you managed to escape this question until high school, then by the time you got there, you were probably expected to be able to answer this question, if only to be able to choose a college and a major. Maybe you took aptitude tests, along with the standard academic tests, in high school. This is when the pressure to go down a path to a job commences. Increasingly, the education system seems to want to reduce the time it takes for us to become productive members of the work force, so instead of exploring more options, we are encouraged to start narrowing them.

Any field you go into, from finance to engineering, requires some degree of specialization. Once you land a job, the process of specialization only amplifies. You become a specialist in certain aspects of the organization you work for.

Then something happens. Maybe your specialty is no longer needed or gets replaced by technology. Or perhaps you get promoted. As you go up the ranks of the organization, your specialty becomes less and less important, and yet the tendency is to hold on to it longer and longer. If it’s the only subject or skill you know better than anything else, you tend to see it everywhere. Even where it doesn’t exist.

Every problem is a nail and you just happen to have a hammer.

Only this approach doesn’t work. Because you have no idea of the big ideas, you start making decisions that don’t take into account how the world really works. These decisions ripple outward, and you have to spend time correcting your mistakes. If you’re not careful about self-reflection, you won’t learn, and you’ll make one version of the same mistakes over and over.

Should we become specialists or polymaths? Is there a balance we should pursue?

There is no single answer.

The decision is personal. And most of the time we fail to see the life-changing implications of it. Whether we’re conscious of this or not, it’s also a decision we have to make and re-make over and over again. Every day, we have to decide where to invest our time — do we become better at what we do or learn something new?

If you can’t adapt, changes become threats instead of opportunities.

There is another way to think about this question, though.

Around 2700 years ago, the Greek poet Archilochus wrote: “the fox knows many things; the hedgehog one big thing.” In the 1950s, philosopher Isaiah Berlin used that sentence as the basis of his essay “The Hedgehog and the Fox.” In it, Berlin divides great thinkers into two categories: hedgehogs, who have one perspective on the world, and foxes, who have many different viewpoints. Although Berlin later claimed the essay was not intended to be serious, it has become a foundational part of thinking about the distinction between specialists and generalists.

Berlin wrote that “…there exists a great chasm between those, on one side, who relate everything to a single central vision, one system … in terms of which they understand, think and feel … and, on the other hand, those who pursue many ends, often unrelated and even contradictory, connected, if at all, only in some de facto way.”

A generalist is a person who is a competent jack of all trades, with lots of divergent useful skills and capabilities. This is the handyman who can fix your boiler, unblock the drains, replace a door hinge, or paint a room. The general practitioner doctor whom you see for any minor health problem (and who refers you to a specialist for anything major). The psychologist who works with the media, publishes research papers, and teaches about a broad topic.

A specialist is someone with distinct knowledge and skills related to a single area. This is the cardiologist who spends their career treating and understanding heart conditions. The scientist who publishes and teaches about a specific protein for decades. The developer who works with a particular program.

In his original essay, Berlin writes that specialists “lead lives, perform acts and entertain ideas that are centrifugal rather than centripetal; their thought is scattered or diffused, moving on many levels, seizing upon the essence of a vast variety of experiences and objects … seeking to fit them into, or exclude them from, any one unchanging, all embracing … unitary inner vision.”

The generalist and the specialist are on the same continuum; there are degrees of specialization in a subject. There’s a difference between someone who specializes in teaching history and someone who specializes in teaching the history of the American Civil war, for example. Likewise, there is a spectrum for how generalized or specialized a certain skill is.

Some skills — like the ability to focus, to read critically, or to make rational decisions — are of universal value. Others are a little more specialized but can be used in many different careers. Examples of these skills would be design, project management, and fluency in a foreign language.

The distinction between generalization and specialization comes from biology. Species are referred to as either generalists or specialists, as with the hedgehog and the fox.

A generalist species can live in a range of environments, utilizing whatever resources are available. Often, these critters eat an omnivorous diet. Raccoons, mice, and cockroaches are generalists. They live all over the world and can eat almost anything. If a city is built in their habitat, then no problem; they can adapt.

A specialist species needs particular conditions to survive. In some cases, they are able to live only in a discrete area or eat a single food. Pandas are specialists, needing a diet of bamboo to survive. Specialist species can thrive if the conditions are correct. Otherwise, they are vulnerable to extinction.

A specialist who is outside of their circle of competence and doesn’t know it is incredibly dangerous.

The distinction between generalist and specialist species is useful as a point of comparison. Generalist animals (including humans) can be less efficient, yet they are less fragile amidst change. If you can’t adapt, changes become threats instead of opportunities.

While it’s not very glamorous to take career advice from a raccoon or a panda, we can learn something from them about the dilemmas we face. Do we want to be like a raccoon, able to survive anywhere, although never maximizing our potential in a single area? Or like a panda, unstoppable in the right context, but struggling in an inappropriate one?

Costs and Benefits

Generalists have the advantage of interdisciplinary knowledge, which fosters creativity and a firmer understanding of how the world works. They have a better overall perspective and can generally perform second-order thinking in a wider range of situations than the specialist can.

Generalists often possess transferable skills, allowing them to be flexible with their career choices and adapt to a changing world. They can do a different type of work and adapt to changes in the workplace. Gatekeepers tend to cause fewer problems for generalists than for specialists.

Managers and leaders are often generalists because they need a comprehensive perspective of their entire organization. And an increasing number of companies are choosing to have a core group of generalists on staff, and hire freelance specialists only when necessary.

The métiers at the lowest risk of automation in the future tend to be those which require a diverse, nuanced skill set. Construction vehicle operators, blue collar workers, therapists, dentists, and teachers included.

When their particular skills are in demand, specialists experience substantial upsides. The scarcity of their expertise means higher salaries, less competition, and more leverage. Nurses, doctors, programmers, and electricians are currently in high demand where I live, for instance.

Specialists get to be passionate about what they do — not in the usual “follow your passion!” way, but in the sense that they can go deep and derive the satisfaction that comes from expertise. Garrett Hardin offers his perspective on the value of specialists: 

…we cannot do without experts. We accept this fact of life, but not without anxiety. There is much truth in the definition of the specialist as someone who “knows more and more about less and less.” But there is another side to the coin of expertise. A really great idea in science often has its birth as apparently no more than a particular answer to a narrow question; it is only later that it turns out that the ramifications of the answer reach out into the most surprising corners. What begins as knowledge about very little turns out to be wisdom about a great deal.

Hardin cites the development of probability theory as an example. When Blaise Pascal and Pierre de Fermat sought to devise a means of dividing the stakes in an interrupted gambling game, their expertise created a theory with universal value.

The same goes for many mental models and unifying theories. Specialists come up with them, and generalists make use of them in surprising ways.

The downside is that specialists are vulnerable to change. Many specialist jobs are disappearing as technology changes. Stockbrokers, for example, face the possibility of replacement by AI in coming years. That doesn’t mean no one will hold those jobs, but demand will decrease. Many people will need to learn new work skills, and starting over in a new field will put them back decades. That’s a serious knock, both psychologically and financially.

Specialists are also subject to “‘man with a hammer” syndrome. Their area of expertise can become the lens they see everything through.

As Michael Mauboussin writes in Think Twice:

…people stuck in old habits of thinking are failing to use new means to gain insight into the problems they face. Knowing when to look beyond experts requires a totally fresh point of view and one that does not come naturally. To be sure, the future for experts is not all bleak. Experts retain an advantage in some crucial areas. The challenge is to know when and how to use them.

Understanding and staying within their circle of competence is even more important for specialists. A specialist who is outside of their circle of competence and doesn’t know it is incredibly dangerous.

Philip Tetlock performed an 18-year study to look at the quality of expert predictions. Could people who are considered specialists in a particular area forecast the future with greater accuracy than a generalist? Tetlock tracked 284 experts from a range of disciplines, recording the outcomes of 28,000 predictions.

The results were stark: predictions coming from generalist thinkers were more accurate. Experts who stuck to their specialized areas and ignored interdisciplinary knowledge faired worse. The specialists tended to be more confident in their erroneous predictions than the generalists. The specialists made definite assertions — which we know from probability theory to be a bad idea. It seems that generalists have an edge when it comes to Bayesian updating, recognizing probability distributions, and long-termism.

Organizations, industries, and the economy need both generalists and specialists. And when we lack the right balance, it creates problems. Millions of jobs remain unfilled, while millions of people lack employment. Many of the empty positions require specialized skills. Many of the unemployed have skills which are too general to fill those roles. We need a middle ground.

The Generalized Specialist

The economist, philosopher, and writer Henry Hazlitt sums up the dilemma:

In the modern world knowledge has been growing so fast and so enormously, in almost every field, that the probabilities are immensely against anybody, no matter how innately clever, being able to make a contribution in any one field unless he devotes all his time to it for years. If he tries to be the Rounded Universal Man, like Leonardo da Vinci, or to take all knowledge for his province, like Francis Bacon, he is most likely to become a mere dilettante and dabbler. But if he becomes too specialized, he is apt to become narrow and lopsided, ignorant on every subject but his own, and perhaps dull and sterile even on that because he lacks perspective and vision and has missed the cross-fertilization of ideas that can come from knowing something of other subjects.

What’s the safest option, the middle ground?

By many accounts, it’s being a specialist in one area, while retaining a few general iterative skills. That might sound like it goes against the idea of specialists and generalists being mutually exclusive, but it doesn’t.

A generalizing specialist has a core competency which they know a lot about. At the same time, they are always learning and have a working knowledge of other areas. While a generalist has roughly the same knowledge of multiple areas, a generalizing specialist has one deep area of expertise and a few shallow ones. We have the option of developing a core competency while building a base of interdisciplinary knowledge.

“The fox knows many things, but the hedgehog knows one big thing.”

— Archilochus

As Tetlock’s research shows, for us to understand how the world works, it’s not enough to home in on one tiny area for decades. We need to pull ideas from everywhere, remaining open to having our minds changed, always looking for disconfirming evidence. Joseph Tussman put it this way: “If we do not let the world teach us, it teaches us a lesson.”

Many great thinkers are (or were) generalizing specialists.

Shakespeare specialized in writing plays, but his experiences as an actor, poet, and part owner of a theater company informed what he wrote. So did his knowledge of Latin, agriculture, and politics. Indeed, the earliest known reference to his work comes from a critic who accused him of being “an absolute Johannes factotum” (jack of all trades).

Leonardo Da Vinci was an infamous generalizing specialist. As well as the art he is best known for, Da Vinci dabbled in engineering, music, literature, mathematics, botany, and history. These areas informed his art — note, for example, the rigorous application of botany and mathematics in his paintings. Some scholars consider Da Vinci to be the first person to combine interdisciplinary knowledge in this way or to recognize that a person can branch out beyond their defining trade.

Johannes Kepler revolutionized our knowledge of planetary motion by combining physics and optics with his main focus, astronomy. Military strategist John Boyd designed aircraft and developed new tactics, using insights from divergent areas he studied, including thermodynamics and psychology. He could think in a different manner from his peers, who remained immersed in military knowledge for their entire careers.

Shakespeare, Da Vinci, Kepler, and Boyd excelled by branching out from their core competencies. These men knew how to learn fast, picking up the key ideas and then returning to their specialties. Unlike their forgotten peers, they didn’t continue studying one area past the point of diminishing returns; they got back to work — and the results were extraordinary.

Many people seem to do work which is unrelated to their area of study or their prior roles. But dig a little deeper and it’s often the case that knowledge from the past informs their present. Marcel Proust put it best: “the real act of discovery consists not in finding new lands, but in seeing with new eyes.”

Interdisciplinary knowledge is what allows us to see with new eyes.

When Charlie Munger was asked whether to become a polymath or a specialist at the 2017 shareholders meeting for the Daily Journal, his answer surprised a lot of people. Many expected the answer to be obvious. Of course, he would recommend that people become generalists. Only this is not what he said.

Munger remarked:

I don’t think operating over many disciplines, as I do, is a good idea for most people. I think it’s fun, that’s why I’ve done it. And I’m better at it than most people would be, and I don’t think I’m good at being the very best at handling differential equations. So, it’s been a wonderful path for me, but I think the correct path for everybody else is to specialize and get very good at something that society rewards, and then to get very efficient at doing it. But even if you do that, I think you should spend 10 to 20% of your time [on] trying to know all the big ideas in all the other disciplines. Otherwise … you’re like a one-legged man in an ass-kicking contest. It’s not going to work very well. You have to know the big ideas in all the disciplines to be safe if you have a life lived outside a cave. But no, I think you don’t want to neglect your business as a dentist to think great thoughts about Proust.

In his comments, we can find the underlying approach most likely to yield exponential results: Specialize most of the time, but spend time understanding the broader ideas of the world.

This approach isn’t what most organizations and educational institutions provide. Branching out isn’t in many job descriptions or in many curricula. It’s a project we have to undertake ourselves, by reading a wide range of books, experimenting with different areas, and drawing ideas from each one.

Still curious? Check out the biographies of Leonardo da Vinci and Ben Fraklin


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The Fairness Principle: How the Veil of Ignorance Helps Test Fairness

“But the nature of man is sufficiently revealed for him to know something of himself and sufficiently veiled to leave much impenetrable darkness, a darkness in which he ever gropes, forever in vain, trying to understand himself.”

— Alexis de Tocqueville, Democracy in America

The Basics

If you could redesign society from scratch, what would it look like?

How would you distribute wealth and power?

Would you make everyone equal or not? How would you define fairness and equality?

And — here’s the kicker — what if you had to make those decisions without knowing who you would be in this new society?

Philosopher John Rawls asked just that in a thought experiment known as “the Veil of Ignorance” in his 1971 book, Theory of Justice.

Like many thought experiments, the Veil of Ignorance could never be carried out in the literal sense, nor should it be. Its purpose is to explore ideas about justice, morality, equality, and social status in a structured manner.

The Veil of Ignorance, a component of social contract theory, allows us to test ideas for fairness.

Behind the Veil of Ignorance, no one knows who they are. They lack clues as to their class, their privileges, their disadvantages, or even their personality. They exist as an impartial group, tasked with designing a new society with its own conception of justice.

As a thought experiment, the Veil of Ignorance is powerful because our usual opinions regarding what is just and unjust are informed by our own experiences. We are shaped by our race, gender, class, education, appearance, sexuality, career, family, and so on. On the other side of the Veil of Ignorance, none of that exists. Technically, the resulting society should be a fair one.

In Ethical School Leadership, Spencer J. Maxcy writes:

Imagine that you have set for yourself the task of developing a totally new social contract for today's society. How could you do so fairly? Although you could never actually eliminate all of your personal biases and prejudices, you would need to take steps at least to minimize them. Rawls suggests that you imagine yourself in an original position behind a veil of ignorance. Behind this veil, you know nothing of yourself and your natural abilities, or your position in society. You know nothing of your sex, race, nationality, or individual tastes. Behind such a veil of ignorance all individuals are simply specified as rational, free, and morally equal beings. You do know that in the “real world,” however, there will be a wide variety in the natural distribution of natural assets and abilities, and that there will be differences of sex, race, and culture that will distinguish groups of people from each other.

“The Fairness Principle: When contemplating a moral action, imagine that you do not know if you will be the moral doer or receiver, and when in doubt err on the side of the other person.”

— Michael Shermer, The Moral Arc: How Science and Reason Lead Humanity Toward Truth, Justice, and Freedom

The Purpose of the Veil of Ignorance

Because people behind the Veil of Ignorance do not know who they will be in this new society, any choice they make in structuring that society could either harm them or benefit them.

If they decide men will be superior, for example, they must face the risk that they will be women. If they decide that 10% of the population will be slaves to the others, they cannot be surprised if they find themselves to be slaves. No one wants to be part of a disadvantaged group, so the logical belief is that the Veil of Ignorance would produce a fair, egalitarian society.

Behind the Veil of Ignorance, cognitive biases melt away. The hypothetical people are rational thinkers. They use probabilistic thinking to assess the likelihood of their being affected by any chosen measure. They possess no opinions for which to seek confirmation. Nor do they have any recently learned information to pay undue attention to. The sole incentive they are biased towards is their own self-preservation, which is equivalent to the preservation of the entire group. They cannot stereotype any particular group as they could be members of it. They lack commitment to their prior selves as they do not know who they are.

So, what would these people decide on? According to Rawls, in a fair society all individuals must possess the following:

  • Rights and liberties (including the right to vote, the right to hold public office, free speech, free thought, and fair legal treatment)
  • Power and opportunities
  • Income and wealth sufficient for a good quality of life (Not everyone needs to be rich, but everyone must have enough money to live a comfortable life.)
  • The conditions necessary for self-respect

For these conditions to occur, the people behind the Veil of Ignorance must figure out how to achieve what Rawls regards as the two key components of justice:

  • Everyone must have the best possible life which does not cause harm to others.
  • Everyone must be able to improve their position, and any inequalities must be present solely if they benefit everyone.

However, the people behind the Veil of Ignorance cannot be completely blank slates or it would be impossible for them to make rational decisions. They understand general principles of science, psychology, politics, and economics. Human behavior is no mystery to them. Neither are key economic concepts, such as comparative advantage and supply and demand. Likewise, they comprehend the deleterious impact of social entropy, and they have a desire to create a stable, ordered society. Knowledge of human psychology leads them to be cognizant of the universal desire for happiness and fulfillment. Rawls considered all of this to be the minimum viable knowledge for rational decision-making.

Ways of Understanding the Veil of Ignorance

One way to understand the Veil of Ignorance is to imagine that you are tasked with cutting up a pizza to share with friends. You will be the last person to take a slice. Being of sound mind, you want to get the largest possible share, and the only way to ensure this is to make all the slices the same size. You could cut one huge slice for yourself and a few tiny ones for your friends, but one of them might take the large slice and leave you with a meager share. (Not to mention, your friends won’t think very highly of you.)

Another means of appreciating the implications of the Veil of Ignorance is by considering the social structures of certain species of ants. Even though queen ants are able to form colonies alone, they will band together to form stronger, more productive colonies. Once the first group of worker ants reaches maturity, the queens fight to the death until one remains. When they first form a colony, the queen ants are behind a Veil of Ignorance. They do not know if they will be the sole survivor or not. All they know, on an instinctual level, is that cooperation is beneficial for their species. Like the people behind the Veil of Ignorance, the ants make a decision which, by necessity, is selfless.

The Veil of Ignorance, as a thought experiment, shows us that ignorance is not always detrimental to a society. In some situations, it can create robust social structures. In the animal kingdom, we see many examples of creatures that cooperate even though they do not know if they will suffer or benefit as a result. In a paper entitled “The Many Selves of Social Insects,” Queller and Strassmann write of bees:

…social insect colonies are so tightly integrated that they seem to function as single organisms, as a new level of self. The honeybees' celebrated dance about food location is just one instance of how their colonies integrate and act on information that no single individual possesses. Their unity of purpose is underscored by the heroism of workers, whose suicidal stinging attacks protect the single reproducing queen.

We can also consider the Tragedy of the Commons. Introduced by ecologist Garrett Hardin, this mental model states that shared resources will be exploited if no system for fair distribution is implemented. Individuals have no incentive to leave a share of free resources for others. Hardin’s classic example is an area of land which everyone in a village is free to use for their cattle. Each person wants to maximize the usefulness of the land, so they put more and more cattle out to graze. Yet the land is finite and at some point will become too depleted to support livestock. If the people behind the Veil of Ignorance had to choose how the common land should be shared, the logical decision would be to give each person an equal part and forbid them from introducing too many cattle.

As N. Gregory Mankiw writes in Principles of Microeconomics:

The Tragedy of the Commons is a story with a general lesson: when one person uses a common resource, he diminishes other people's enjoyment of it. Because of this negative externality, common resources tend to be used excessively. The government can solve the problem by reducing use of the common resource through regulation or taxes. Alternatively, the government can sometimes turn the common resource into a private good.

This lesson has been known for thousands of years. The ancient Greek philosopher Aristotle pointed out the problem with common resources: “What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others.”

In The Case for Meritocracy, Michael Faust uses other thought experiments to support the Veil of Ignorance:

Let’s imagine another version of the thought experiment. If inheritance is so inherently wonderful — such an intrinsic good — then let’s collect together all of the inheritable money in the world. We shall now distribute this money in exactly the same way it would be distributed in today’s world… but with one radical difference. We are going to distribute it by lottery rather than by family inheritance, i.e, anyone in the world can receive it. So, in these circumstances, how many people who support inheritance would go on supporting it? Note that the government wouldn’t be getting the money… just lucky strangers. Would the advocates of inheritance remain as fiercely committed to their cherished principle? Or would the entire concept instantly be exposed for the nonsense it is?

If inheritance were treated as the lottery it is, no one would stand by it.

[…]

In the world of the 1% versus the 99%, no one in the 1% would ever accept a lottery to decide inheritance because there would be a 99% chance they would end up as schmucks, exactly like the rest of us.

And a further surrealistic thought experiment:

Imagine that on a certain day of the year, each person in the world randomly swaps bodies with another person, living anywhere on earth. Well, for the 1%, there’s a 99% chance that they will be swapped from heaven to hell. For the 99%, 1% might be swapped from hell to heaven, while the other 98% will stay the same as before. What kind of constitution would the human race adopt if annual body swapping were a compulsory event?! They would of course choose a fair one.

“In the immutability of their surroundings the foreign shores, the foreign faces, the changing immensity of life, glide past, veiled not by a sense of mystery but by a slightly disdainful ignorance.”

— Joseph Conrad, Heart of Darkness

The History of Social Contract Theory

Although the Veil of Ignorance was first described by Rawls in 1971, many other philosophers and writers have discussed similar concepts in the past. Philosophers discussed social contract theory as far back as ancient Greece.

In Crito, Plato describes a conversation in which Socrates discusses the laws of Athens and how they are responsible for his existence. Finding himself in prison and facing the death penalty, Socrates rejects Crito’s suggestion that he should escape. He states that further injustice is not an appropriate response to prior injustice. Crito believes that by refusing to escape, Socrates is aiding his enemies, as well as failing to fulfil his role as a father. But Socrates views the laws of Athens as a single entity that has always protected him. He describes breaking any of the laws as being like injuring a parent. Having lived a long, fulfilling life as a result of the social contract he entered at birth, he has no interest in now turning away from Athenian law. Accepting death is essentially a symbolic act that Socrates intends to use to illustrate rationality and reason to his followers. If he were to escape, he would be acting out of accord with the rest of his life, during which he was always concerned with justice.

Social contract theory is concerned with the laws and norms a society decides on and the obligation individuals have to follow them. Socrates’ dialogue with Plato has similarities with the final scene of Arthur Miller’s The Crucible. At the end of the play, John Proctor is hung for witchcraft despite having the option to confess and avoid death. In continuing to follow the social contract of Salem and not confessing to a crime he obviously did not commit, Proctor believes that his death will redeem his earlier mistakes. We see this in the final dialogue between Reverend Hale and Elizabeth (Proctor's wife):

HALE: Woman, plead with him! […] Woman! It is pride, it is vanity. […] Be his helper! What profit him to bleed? Shall the dust praise him? Shall the worms declare his truth? Go to him, take his shame away!

 

ELIZABETH: […] He have his goodness now. God forbid I take it from him!

In these two situations, individuals allow themselves to be put to death in the interest of following the social contract they agreed upon by living in their respective societies. Earlier in their lives, neither person knew what their ultimate fate would be. They were essentially behind the Veil of Ignorance when they chose (consciously or unconsciously) to follow the laws enforced by the people around them. Just as the people behind the Veil of Ignorance must accept whatever roles they receive in the new society, Socrates and Proctor followed social contracts. To modern eyes, the decision both men make to abandon their children in the interest of proving a point is not easily defensible.

Immanuel Kant wrote about justice and freedom in the late 1700s. Kant believed that fair laws should not be based on making people happy or reflecting the desire of individual policymakers, but should be based on universal moral principles:

Is it not of the utmost necessity to construct a pure moral philosophy which is completely freed from everything that may be only empirical and thus belong to anthropology? That there must be such a philosophy is self-evident from the common idea of duty and moral laws. Everyone must admit that a law, if it is to hold morally, i.e., as a ground of obligation, must imply absolute necessity; he must admit that the command, “Then shalt not lie,” does not apply to men only, as if other rational beings had no need to observe it. The same is true for all other moral laws properly so called. He must concede that the ground of obligation here must not be sought in the nature of man or in the circumstances in which he is placed, but sought a priori solely in the concepts of pure reason, and that every other precept which is in certain respects universal, so far as it leans in the least on empirical grounds (perhaps only in regard to the motive involved), may be called a practical rule but never a moral law.

How We Can Apply This Concept

We can use the Veil of Ignorance to test whether a certain issue is fair.

When my kids are fighting over the last cookie, which happens more often than you'd imagine, I ask them to determine who will spilt the cookie. The other person picks. This is the old playground rule, “you split, I pick.” Without this rule, one of them would surely give the other a smaller portion. With it, the halves are as equal as they would be with sensible adults.

When considering whether we should endorse a proposed law or policy, we can ask: if I did not know if this would affect me or not, would I still support it? Those who make big decisions that shape the lives of large numbers of people are almost always those in positions of power. And those in positions of power are almost always members of privileged groups. As Benjamin Franklin once wrote: “Justice will not be served until those who are unaffected are as outraged as those who are.”

Laws allowing or prohibiting abortion have typically been made by men, for example. As the issue lacks real significance in their personal lives, they are free to base decisions on their own ideological views, rather than consider what is fair and sane. However, behind the Veil of Ignorance, no one knows their sex. Anyone deciding on abortion laws would have to face the possibility that they themselves will end up as a woman with an unwanted pregnancy.

In Justice as Fairness: A Restatement, Rawls writes:

So what better alternative is there than an agreement between citizens themselves reached under conditions that are fair for all?

[…]

[T]hreats of force and coercion, deception and fraud, and so on must be ruled out.

And:

Deep religious and moral conflicts characterize the subjective circumstances of justice. Those engaged in these conflicts are surely not in general self-interested, but rather, see themselves as defending their basic rights and liberties which secure their legitimate and fundamental interests. Moreover, these conflicts can be the most intractable and deeply divisive, often more so than social and economic ones.

 

In Ethics: Studying the Art of Moral Appraisal, Ronnie Littlejohn explains:

We must have a mechanism by which we can eliminate the arbitrariness and bias of our “situation in life” and insure that our moral standards are justified by the one thing all people share in common: reason. It is the function of the veil of ignorance to remove such bias.

When we have to make decisions that will affect other people, especially disadvantaged groups (such as when a politician decides to cut benefits or a CEO decides to outsource manufacturing to a low-income country), we can use the Veil of Ignorance as a tool for making fair choices.

As Robert F. Kennedy (the younger brother of John F. Kennedy) said in the 1960s:

Few will have the greatness to bend history itself, but each of us can work to change a small portion of events. It is from numberless diverse acts of courage and belief that human history is shaped. Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current which can sweep down the mightiest walls of oppression and resistance.

When we choose to position ourselves behind the Veil of Ignorance, we have a better chance of creating one of those all-important ripples.

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Why Fiddling With Prices Doesn’t Work


“The fact is, if you don't find it reasonable that prices should reflect relative scarcity,
then fundamentally you don't accept the market economy,
because this is about as close to the essence of the market as you can find.”

— Joseph Heath

***

Inevitably, when the price of a good or service rises rapidly, there follows an accusation of price-gouging. The term carries a strong moral admonition on the price-gouger, in favor of the price-gougee. Gas shortages are a classic example. With a local shortage of gasoline, gas stations will tend to mark up the price of gasoline to reflect the supply issue. This is usually rewarded with cries of unfairness. But does that really make sense?

In his excellent book Economics Without Illusions, Joseph Heath argues that it doesn't.

In fact, this very scenario is market pricing reacting just as it should. With gasoline in short supply, the market price rises too so that those who need gasoline have it available, and those who simply want it do not. The price system ensures that everyone makes their choice correctly. If you're willing to pay up, you pay up. If you're not, you make alternative arrangements – drive less, use less heat, etc. This is exactly what market pricing is for – to give us a reference as we make our choices. But it's still hard for many well-intentioned people to understand. Let's think it through a little, with Heath's help.

***

As Heath points out in the book, the objection to so-called “price gouging” goes back at least to the Roman Emperor Diocletian, who in AD 301 imposed an Edict of Maximum Prices:

If the excesses perpetrated by persons of unlimited and frenzied avarice could be checked by some self-restraint—this avarice which rushes for gain and profit with no thought for mankind; or if the general welfare could endure without harm this riotous license by which, in its unfortunate state, it is being very seriously injured every day, the situation could perhaps be faced with dissembling and silence, with the hope that human forbearance might alleviate the cruel and pitiable situation.

And with that, Diocletian set a hard cap on the price of over a thousand different items. Some were tangible, like wheat and barley, and some were intangible, like farm labor and barber services.

This was, of course, very dumb and did not last very long as people realized that one barber and another were not equal, that wheat and barley might have local supply constraints, and that an arbitrary government price was not the fair one for most of the 1000+ items.

Inflation vs. Supply

As Heath points out in his book, there are two separate issues to untangle when we talk about “price-gouging” — general inflation and constraints on supply. The two are very different, and confusing a supply issue for general inflation leads to a lot of wrong thinking:

If you wander into a Polish supermarket and discover that a kilo of carrots is selling for four zlotys, you probably haven't learned very much. It's only once you find out what a pound of potatoes costs, and a chicken, and a pint of beer, that you begin to discover whether carrots are expensive or cheap.

As a result, the price of everything going up is analytically equivalent to the price of nothing going up. It follows that if the price of everything seems to be going up, it must be because the price of at least one thing is (inconspicuously) going down. Usually that inconspicuous item with the falling price is hidden in plain sight — money. We tend to overlook money because it's not directly consumed; it simply circulates, thus we forget that it has a price. We think of “four zlotys per kilo” as the price of carrots, expressed in zlotys, while forgetting that it is also the price of zlotys, expressed in carrots.

As Garrett Hardin would well recognize, part of the problem is the way language misleads us. When the price of stuff is going up, we don't always make the equivalent connection that the value of our money is going down. And thus, we can often confuse a rising price environment for greedy so and so's who are simply reacting to the declining value of money.

Often, governments hurt the value of money purposely. In Diocletian's time, a denarius coin went from being made entirely of silver to being made of about 2% silver and 98% base metals – the origin of the term currency debasement. In a world of inflation, what seems like greed is often an illusion caused by money losing its value generally (a complex phenomenon in its own right).

To see the flow-through effects of this, imagine that all wage-earners were given a significant raise next month. Sounds good, right? Problem is, the increased cost of labor would be passed through in the form of higher prices for everything, or alternatively, businesses would figure out how to operate with fewer workers altogether. The owners of society's capital don't just sit back and lose money — they figure out a new plan or reallocate their resources elsewhere.

Thus, a wage increase would put us right back to where we started. This is why the minimum wage debate isn't simply a humanitarian “business versus workers” issue — there are no easy answers. (In other words, The consequences have consequences.)

Prices are simply signals which allow us to make decisions on how much we really need that thing. If each of us was handed $5,000 to spend each month, we could choose to spend X amount on food, Y amount on housing, and Z amount of organic 97% cacao chocolate. The alternative would be a state planner sitting in a high tower trying to fix prices based on how he or she thought everyone should make their food/housing/chocolate allocation for the month. The history of planned economies would show this to be a majorly bad idea.

This leads us to our next point which is that, of course, our income allocations are not the same. Might price-fixing help level the playing field?

Fixing What, Exactly?

Heath quotes the economist Abba Lerner who once said that the problem for the poor is not that prices are too high, but that they don't have enough money. (“The solution of poverty lay not with the manipulation of prices but with the distribution of money income.”)

On this, Heath turns to the example of electricity prices, an occasional hot-button issue which leads to subsidies because high electricity prices are seen as regressive — poor people spend a larger percentage of their money on electric power than those more well-off. Why not subsidize electricity prices to help?

The problem is that it's a massively inefficient way to help, and puts a lot of dollars into pockets of those who don't need it. Citing Canadian statistics on the use of subsidies to keep electricity prices down, Heath writes:

The middle-income quintile spends an average of $1,117 per year (2.4% of income), while the upper quintile spends $1,522 per year (1.1% of income). This means that the $250 million annual gift being bestowed upon the poor is coupled with a $408 million gift to the middle class and a $556 million gift to the richest 20% of the population. Needless to say, a welfare program that required giving $2 to a rich person for every $1 directed to a poor person would hardly be regarded as progressive (despite the fact that, when expressed as a percentage of income, the poor person is receiving “more”).

Of course, finding a way to get the entire $1.2 billion to the people who truly need it, through a deserving program, would be a far better solution, and one that would also avoid encouraging people to use more electricity than they need (which artificially lower prices can do).

This kind of thing happens, but worse, when it comes to rent control, the system of fixing rental prices for apartments in cities. In addition to subsidizing some of the wrong people, who also have access to rent-controlled housing, the lower prices tend to distort the market for apartment and housing construction.

With apartments so affordable, people who might otherwise have purchased a house now choose to rent, crowding out some people who could never afford a home at all. And with prices artificially low, fewer apartment houses are built! Not a great outcome for the people rent control hopes to help.

To understand why think about the massive spike in energy prices leading up to the 2008 financial crisis. At one time, oil neared $140 per barrel and natural gas reached $13 per MMbtu. The result was somewhat predictable: A massive investment went into the energy complex, leading to new resources and new technologies, while demand quickly abated. Almost no one correctly predicted that 8 years later, oil would be sitting below $50 per barrel and natural gas around $2 per MMbtu. This is, of course, how pricing markets are supposed to work. The signals did their job. Artificial prices for metropolitan apartments don't allow the market to do this job effectively.

Relative Scarcity: The Key to Understanding Market Prices

The main problem with manipulating and fixing prices is a misunderstanding of what determines prices. What usually determines prices in a true market is relative scarcity, the intersection between how much you want a particular good relative to another one, and the availability of that good. As our wants and needs change, and available supplies change, prices go up and down (ignoring, for now, speculative factors, which play a huge role in some price markets).

What exactly are we paying for when we buy an item?

Clearly, it's not just the cost of the physical thing being produced. A cup of coffee costs a lot more than a few beans and some water. The total cost is something Heath calls the “social cost” of the good, which includes the entire chain of costs and opportunity costs in producing it:

Whenever someone consumes a good (say, a cup of coffee), this can be thought of as creating a benefit for that individual, combined with a loss for the rest of society (all the time and trouble it took to produce that cup of coffee, now gone). Paying for things is our way of compensating all the people who have been inconvenienced by our consumption. (Next time you buy a cup of coffee at Starbucks, imagine yourself saying to the barista, “I'm sorry that you had to serve me coffee when you could have been doing other things. And please communicate my apologies to the others as well: the owner, the landlord, the shipping company, the Columbian peasants. Here's $1.75 for all the trouble. Please divide it amongst yourselves.)

“Social cost” represents the level of renunciation, or foregone consumption, imposed upon the rest of society by each individual's own consumption. This is a fairly abstract notion, since it's not just that the good could have been consumed by someone else, but that the labor and resources that went into making that good could have been used to produce something else, which then could have been consumed by someone else. (So when I drink a cup of coffee, I am not only taking away that cup of coffee from all those who might like to have drunk it, but taking away vegetables from those who might like to have used the land to grow food, clothing from those who might like to have employed the agricultural workers in a garment factory, and so on.)

[…]

If the price of coffee tracks changes in supply and demand, it will tend to reflect this level of hardship. If the rest of us really want coffee, then we will be prepared to pay more for it, and so the price will rise. Coffee will become more “dear” (as the British would say), reflecting the fact that the person who drinks it is denying the rest of us something we really want. Thus the coffee-drinker had better really want it in order to justify depriving us of it. His willingness to pay the higher price is precisely what ensures that he does, in fact, really want it.

At the price where the hardship of creating a certain amount of some good meets the desire for a good, a price emerges. It's this “market clearing” price which efficiently allocates most of society's resources the way we need them allocated.

If prices are systematically lower than they should be, consumers benefit from society's hard work in a way that might be better allocated elsewhere, where some other group would happily pay more for the same level of “social costs” imposed, and the producers would receive more for all their work.

Conversely, if prices are too high, then consumers don't really get to be as happy as they should be relative to the modest “social cost” they've imposed. Each outcome is inefficient and produces less happiness and material wealth. A well-established pricing mechanism does the job of sending the right signals about wants, needs, and supplies.

Income Over Pricing

Heath makes a final important point about the inequality of income in society, and that in many cases, people who have had a rough hand dealt to them do deserve help. It's just that playing with the pricing mechanism is usually the worst way to do it — as we saw above, you hand people money who don't need it while distorting an efficient allocation of resources throughout society. Heath calls this the just price fallacy — the idea that some alternative level of prices are more “fair” and that we should intervene to ensure them. The “just price fallacy” fails because it doesn't ask the crucial question: And then what?

Returning to the dictum that poor people simply don't have enough money (ridiculous as it sounds), the better method is to attack the other side — income — through the system of taxation and other mechanisms, things which we do in great heaps in modern society, but will always be argued over. If market prices tend to efficiently signal suppliers about the wants and needs of society, we can usually help the less fortunate best by giving them more “claim checks” rather than distorting the very thing that works.

***

Still Interested? Try reading more from the wonderful book Economics Without Illusions, where Heath takes on some fallacies from the left and some fallacies from the right in the economic debate.

For more from Farnam Street, check out Charlie Munger's speech on what could make the economics profession work a little better or check out economist John Kay's recommendations on books about economics in the real world.

Hans Rosling’s Important Truths about Population Growth and the Developing World

Garrett Hardin's Living Within Limits had a huge influence on how I thought about population.

In the book, he convincingly demonstrates the folly of allowing human population to grow unchecked over a long enough timeframe. Even a small rate of compound would add up to large figures. Hardin's argument can be summed up fairly simply: An exponentially expanding population in a world with defined limits creates a problem. (An example of where scale has an effect on values.)

Hardin was clear to acknowledge that he wasn't sure where the limits actually were. As supporters of Thomas Malthus have found out over the years, agricultural and other technology can and has outpaced population growth. But it was a certainty that some limits can not be overcome as long as we're a single planet species — things like natural beauty, energy consumption, water consumption, fertilizer, living space, and other things mostly have limits. (Again, where those limits are is up for debate, and a certain Mr. Musk would like to make us multi-planetary as well.)

Hardin also gave us the terminology of a longage, as opposed to a shortage. Our terminology refers to a population without enough to eat as having a shortage of food. Hardin claimed it was equally correct to say there was a longage of people relative to the available resources.

Mostly, this was all I knew on the topic. Enter Hans Rosling to continue that education.

***

Hans Rosling is a Swedish academic and scientist who came to popular fame as a TED speaker. Among his talks are discussions on poverty, HIV, and the developing world. A few minutes tell you that man has a way with statistics and data presentation. (One of his talks is titled Let My Dataset Change Your Mindset.)

Rosling's favorite twin topics are ones of population growth and the truth about what's happening in developing countries — a truth the developed world doesn't know much about. Are the world's poorer nations like India, Bangladesh, Nigeria, and Mozambique going to go on exploding world population forever? What does this mean for the world? What are they living like now, what is their future? How does that affect the future of the developed world?

In the wonderful hour-long video above, Rosling blows up some misconceptions and misunderstandings, and convincingly makes the following points:

  • Population growth should hit a limit around 11 billion within the next hundred years, as the world equalizes in health outcomes.
  • In developed countries, a ratio near 2 parents to 2 children mostly exists and developing nations are getting closer and closer as their childhood health outcomes continue to improve. (And they have improved drastically.)
  • Stated another way, as a result of equalizing health outcomes, low child mortality, and family planning, family sizes go down, and population growth slows in a predictable way.
  • Current population trends are strong enough that by 2100, only ~10% of the world population will be in Western nations (North America, Western Europe) — Africa will quadruple in population and Asia will increase about 25%. It will be a very different world.
  • After an explosion of births in the second half of the 20th century, the number of children worldwide has already leveled off at around 2 billion, and should stay there at least through the century, barring a major development. Population growth from here will mostly be determined by more 30-85 year olds existing in the future than now. (In other words, births are nicely leveling off, but population growth must continue for a while anyways as the current crop of children grow up and have 2 children each. We currently have a very young world.) Watch from minute 22:00 or so for this counter-intuitive conclusion.
  • There are three or four income “groups,” roughly defined, across the planet — most of you reading this are in the $100/day or more income bracket. We're extremely fortunate. Then, a major swath in the $10/day bracket. And then the world's poorest, around $1/day. There's also a big group with less than that. (Of course, there are also the super rich in the $1000/day+ bracket — it works in a power-law like fashion). One problem for those of us at the top is that when we look down, we see the people living one order of magnitude down ($10/day) and two orders of magnitude down ($1/day) as the same. The difference between the two groups is at least as big as the difference between you and someone who makes 10x as much money as you. (And probably larger.)
  • An interesting way for “rich” Westerners to think about the above, which Rosling demonstrates in a genius way: The absolute poorest in the world, nearly a billion people, would love a good pair of shoes with which to walk. The people living around two orders of magnitude down from us (~$1/day) are struggling to afford a bicycle. Those living one order of magnitude down (~$10/day) are working to afford one car for the family. The richest billion fly in airplanes, and the super-wealthy fly in their own airplanes. It's an interesting way to conceive of the stratas of the world and where we all stand.

Of course, one of Rosling's more interesting points is that, when polled, most Westerners are fairly clueless about all of this.

For example, over 50% of Brits think that the average Bangladeshi mother births around 5 children — the actual answer is 2.5 (and declining). When they were asked what percentages of adults in the world are now literate, about half the Brits thought it was 40% or less — the actual answer is over 80% (and rising). (Not to pick on Brits — I doubt most Westerners would have done any better.)

He concludes with a discussion on energy: As billions are lifted out of poverty by improvements in health, education, and infrastructure, as is happening and seems likely to continue, their energy use goes up dramatically. Think about the stratas we discussed above: Bicycles to a car to airplanes to private jets. As hundreds of millions look to improve their lot, and are now able to do so, human power is replaced by machine power, which takes great amounts of energy. With 80% of it currently coming from fossil fuels, what will we do?

Rosling doesn't really provide an answer and we too must quitclaim this problem, but simply admonishing Westerners to “chill out with your energy use” is probably not going to be effective. We'll probably have to solve it with great engineering — and, in some, ways, we already are.

***

Returning to the question of population growth and limits, it's hard to say where we'll end up with all this. Hard to say. Technology will have to solve many of the largest problems: Energy, emissions, water, and food. Not to mention the survival of the species we co-habitate with. Cheap solar energy will go a long way towards alleviating some strains. (Hurry up, Elon!)

But in the end, it's a subject worth spending some time learning about. We can't think about the problems unless we understand their parameters, or as some smart wag once said: “A problem well-defined is half-solved.” 

Life Changing Books (New Guy Edition)

Back in 2013, I posted the Books that Changed my Life. In doing so, I was responding to a reader request to post up the books that “literally changed my life.”

Now that we have Jeff on board, I've asked him to do the same. Here are his choices, presented in a somewhat chronological order. As always, these lists leave off a lot of important books in the name of brevity.

Rich Dad, Poor Dad – Robert Kiyosaki

Before I get hanged for apostasy, let me explain. The list is about books that changed my life and this one absolutely did. I pulled this off my father's shelf and read it in high school, and it kicked off a lifelong interest in investments, business, and the magic of compound interest. That eventually led me to find Warren Buffett and Charlie Munger, affecting the path of my life considerably. With that said, I would probably not recommend you start here. I haven't re-read the book since high school and what I've learned about Kiyosaki doesn't make me want to recommend anything to you from him. But for better or worse, this book had an impact. Another one that probably holds up better is The Millionaire Next Door, which my father recommended when I was in high school and stuck with me for a long time too.

Buffett: Making of an American Capitalist/Buffett's Letters to Shareholders – Roger Lowenstein, Warren Buffett

These two and the next book are duplicates off Shane's list, but they are also probably the reason we know each other. Learning about Warren Buffett took the kid who liked “Rich Dad, Poor Dad” and watched The Apprentice, and might have been on a path to highly leveraged real estate speculation and who knows what else, and put him on a more sound path. I read this biography many times in college, and decided I wanted to emulate some of Buffett's qualities. (I actually now prefer The Snowball, by Alice Schroeder, but Lowenstein's came first and changed my life more.) Although I have a business degree, I learned a lot more from reading and applying the collected Letters to Shareholders.

Poor Charlie's Almanack – Peter Kaufman, Charlie Munger et al.

The Almanack is the greatest book I have ever read, and I knew it from the first time I read it. As Charlie says in the book, there is no going back from the multi-disciplinary approach. It would feel like cutting off your hands. I re-read this book every year in whole or in part, and so far, 8 years on, I haven't failed to pick up a meaningful new insight. Like any great book, it grows as you grow. I like to think I understand about 40% of it on a deep level now, and I hope to add a few percent every year. I literally cannot conceive of a world in which I didn't read this.

The Nurture Assumption – Judith Rich Harris

This book affected my thinking considerably. I noticed in the Almanack that Munger recommended this book and another, No Two Alike, towards the end. Once I read it, I could see why. It is a monument to clear and careful thinking. Munger calls the author Judith Rich Harris a combination of Darwin and Sherlock Holmes, and he's right. If this book doesn't change how you think about parenting, social development, peer pressure, education, and a number of other topics, then re-read it.

Filters Against Folly/Living within Limits – Garrett Hardin

Like The Nurture Assumption, these two books are brilliantly well thought-through. Pillars of careful thought. It wasn't until years after I read them that I realized Garrett Hardin was friends with, and in fact funded by, Charlie Munger. The ideas about overpopulation in Living within Limits made a deep impression on me, but the quality of thought in general hit me the hardest. Like the Almanack, it made me want to become a better and more careful thinker.

The Black Swan – Nassim Taleb

Who has read this and not been affected by it? Like many, Nassim's books changed how I think about the world. The ideas from The Black Swan and Fooled by Randomness about the narrative fallacy and the ludic fallacy cannot be forgotten, as well as the central idea of the book itself that rare events are not predictable and yet dominate our landscape. Also, Nassim's writing style made me realize deep, practical writing didn't have to be dry and sanitized. Like him or not, he wears his soul on his sleeve.

Good Calories, Bad Calories / Why We Get Fat: And What to do About it – Gary Taubes

I've been interested in nutrition since I was young, and these books made me realize most of what I knew was not very accurate. Gary Taubes is a scientific journalist of the highest order. Like Hardin, Munger, and Harris, he thinks much more carefully than most of his peers. Nutrition is a field that is still sort of growing up, and the quality of the research and thought shows it. Taubes made me recognize that nutrition can be a real science if it's done more carefully, more Feynman-like. Hopefully his NuSi initiative will help shove the field in the right direction.

The (Honest) Truth about Dishonesty – Dan Ariely

This book by Ariely was a game-changer in that it helped me realize the extent to which we rationalize our behavior in a million little ways. I had a lot of nights thinking about my own propensity for dishonesty and cheating after I read this one, and I like to think I'm a pretty moral person to start with. I had never considered how situational dishonesty was, but now that I do, I see it constantly in myself and others. There are also good sections on incentive-caused bias and social pressure that made an impact.

Sapiens – Yuval Noah Harrari

This is fairly new so I'm still digesting this book, and I have a feeling it will take many years. But Sapiens has a lot of (for me) deep insights about humanity and how we got here. I think Yuval is a very good thinker and an excellent writer. A lot of the ideas in this book will set some people off, and not in a good way. But that doesn't mean they're not correct. Highly recommended if you're open-minded and want to learn.

***

At the end of the day, what gets me excited is my Antilibrary, all the books I have on my shelf or on my Amazon wish list that I haven't read yet. The prospect of reading another great book that changes my life like these books did is an exciting quest.

Garrett Hardin on the Three Filters Needed to Think About Problems

One of the best parts of Garrett Hardin‘s wonderful Filters Against Folly is when he explores the three filters that help us interpret reality. No matter how much we'd like it to, the world does not only operate in our circle of competence. Thus we must learn ways to distinguish reality in areas where we lack even so much as a map.

Hardin's genius reminds us of this quote by Sports Illustrated's Andy Benoit.

Andy Benoit

Mental Tools

We need not be a genius in every area but we should understand the big ideas of most disciplines and try to avoid fooling ourselves. That's the core to the mental models approach. When you're not an expert in a field, often the best approach is one that avoids stupidity. There are few better ways of avoiding stupidity than understanding how the world works.

Hardin begins by outlining his goal: to understand reality and understand human nature as it really is, removing premature judgment from the analysis.

He appropriately quotes Spinoza, who laid out his principles for political science thusly:

That I might investigate the subject matter of this science with the same freedom of spirit we generally use in mathematics, I have labored carefully not to mock, lament, or execrate human actions, but to understand them; and to this end I have looked upon passions such as love, hatred, anger, envy, ambition, pity, and other perturbations of the mind, not in the light of vices of human nature, but as properties just as pertinent to it as are heat, cold, storm, thunder, and the like to the nature of the atmosphere.

The goal of these mental filters, then, is to understand reality by improving our ability to judge the statements of experts, promoters, and persuaders of all kinds. As the saying goes, we are all laymen in some field.

Hardin writes:

What follows is one man's attempt to show that there is more wisdom among the laity than is generally concluded, and that there are some rather simple methods of checking on the validity of the statements of experts.

Three Filters Needed to Think About Problems

Literate Filter

The first filter through which we must interpret reality, says Hardin, is the literate filter: What do the words really mean? The key to remember is that Language is action. Language is not just a way to communicate or interpret; language acts as a call to, or just as importantly, an inhibitor to action.

The first step is to try to understand what is really being said. What do the words and the labels actually mean? If a politician proposes a “Poverty Assistance Plan,” that sounds almost inarguably good, no? Many a pork-barrel program has passed based on such labels alone.

But when you examine the rhetoric, you must ask what those words are trying to do: Promote understanding, or inhibit it? If the program had a rational method of assistance to the deserving poor, the label might be appropriate. If it was simply a way to reward undeserving people in his or her district for their vote, the label might be simply a way to fool. The literate filter asks if we understand the true intent behind the words.

In a chapter called “The Sins of the Literate,” Hardin discusses the misuse of language by examining literate, but innumerate, concepts like “indefinite” or “infinite”:

He who introduces the words “infinity” or any of its derivatives (“forever” or “never” for instance) is also trying to escape discussion. Unfortunately he does not honestly admit the operational meaning of the high-flown language used to close off discussion. “Non-negotiable” is a dated term, no longer in common use, but “infinity” endures forever.

Like old man Proteus of Greek mythology, the wish to escape debate disguises itself under a multitude of verbal forms: infinity, non-negotiable, never, forever, irresistible, immovable, indubitable, and the recent variant “not meaningfully finite.” All these words have the effect of moving discussion out of the numerate realm, where it belongs, and into a wasteland of pure literacy, where counting and measuring are repudiated.

Later, in the final chapter, Hardin repeats:

The talent for handling words is called “eloquence.” Talent is always desirable, but the talent may have an unfair, even dangerous, advantage over those with less talent. More than a century ago Ralph Waldo Emerson said, “The curse of this country is eloquent men.” The curse can be minimized by using words themselves to point out the danger of words. One of their functions is to act as inhibitors of thought. People need to be made allergic to such thought-stoppers as infinity, sacred, and absolute. The real world is a world of quantified entities: “infinity” and its like are no words for quantities but utterances used to divert attention from quantities and limits.

It is not just innumerate exaggeration we are guarding against, but the literate tendency to replace actors with abstractions, as Hardin calls it. He uses the example of donating money to a poor country (Country X), which on its face sounds noble:

Country X, which is an abstraction, cannot act. Those who act in its name are rich and powerful people. Human nature being what it is, we can be sure that these people will not voluntarily do anything to diminish either their power or their riches…

Not uncommonly, the major part of large quantities of food sent in haste to a poor country in the tropics rot on the docks or is eaten up by rats before it can be moved to the people who need it. The wastage is seldom adequately reported back to the sending country…(remember), those who gain personally from the shipping of food to poor nations gain whether fungi, rats, or people eat the food.

The Numerate Filter

Hardin is clear on his approach to numerical fluency: The ability to count, weigh, and compare values in a general or specific way is essential to understanding the claims of experts or assessing any problem rationally:

The numerate temperament is one that habitually looks for approximate dimensions, ratios, proportions, and rates of change in trying to grasp what is going on in the wold. Given effective education–a rare commodity, of course–a numerate orientation is probably within the reach of most people.

Just as “literacy” is used here to mean more than merely reading and writing, so also will “numeracy” be used to mean more than measuring and counting. Examination of the origins of the sciences shows that many major discoveries were made with very little measuring and counting. The attitude science requires of its practitioners is respect, bordering on reverence, for ration, proportions, and rates of change.

Rough and ready back-of-the-envelope calculations are often sufficient to reveal the outline of a new and important scientific discovery….In truth, the essence of many of the major insights of science can be grasped with no more than child's ability to measure, count, and calculate.

***

To explain the use of the literate and numerate filters together, Hardin uses the example of the Delaney Amendment, passed in 1958 to restrict food additives. This example should be familiar to us today:

Concerned with the growing evidence that many otherwise useful substances can cause cancer, Congress degreed that henceforth, whenever a chemical at any concentration was found to cause cancer–in any fraction of any species of animal–that substance must be totally banned as an additive to human food.

From a literate standpoint, this sounds logical. The Amendment sought to eradicate harmful food additives that the free market had allowed to surface. However, says Hardin:

The Delaney Amendment is a monument to innumerate thought. “Safe” and “unsafe” are literate distinctions; nature is numerate. Everything is dangerous at some level. Even molecular oxygen, essential to human life, becomes lethal as the concentration approaches 100 percent.

Sensitivity is ordinarily expressed as “1 part per X,” where X is a large number. If a substance probably increases the incidence of cancer at a concentration of 1 part per 10,000, one should probably ban it at that concentration in food, and perhaps at 1 in 100,000. But what about 1 part per million?…In theory there is no final limit to sensitivity. What about 1 milligram per tank car? Or 1 milligram per terrestrial globe?

Obviously, some numerical limits must be applied. This is the usefulness of the numerate filter. As Charlie Munger says, “Quantify, always quantify.”

Ecolacy

Hardin introduces his final filter by requiring that we ask the question “And then what?”  There is perhaps no better question to prompt second-order thinking.

Even if we understand what is truly being said and have quantified the effects of a proposed policy or solution, it is imperative that we consider the second layer of effects or beyond. Hardin recognizes that this opens the door for potentially unlimited paralysis (the poorly understood and innumerate “Butterfly Effect”), which he boxes in by introducing his own version of the First Law of Ecology:

We can never merely do one thing.

This is to say, all proposed solutions and interventions will have a multitude of effects, and we must try our best to consider them in their totality.

In proposing this filter, Hardin is very careful to guard against the Slippery Slope argument, or the idea that one step in the wrong direction will lead us directly to Hell. This, he says, is a purely literate but wholly innumerate approach to thinking.

Those who take the wedge (Slippery Slope) argument with the utmost seriousness act as though they think human beings are completely devoid of practical judgment. Countless examples from everyday life show the pessimists are wrong…If we took the wedge argument seriously, we would pass a law forbidding all vehicles to travel at any speed greater than zero. That would be an easy way out of the moral problem. But we pass no such law.

In reality, the ecolate filter helps us understand the layers of unintended consequences. Take inflation:

The consequences of hyperinflation beautifully illustrate the meaning of the First Law of Ecology. A government that is unwilling or unable to stop the escalation of inflation does more than merely change the price of things; it turns loose a cascade of consequences the effects of which reach far into the future.

Prudent citizens who have saved their money in bank accounts and government bonds are ruined. In times of inflation people spend wildly with little care for value, because the choice and price of an object are less important than that one put his money into material things. Fatalism takes over as society sinks down into a culture of poverty….

To Conclude

In the end, the filters must be used wisely together. They are ways to understand reality, and cannot be divorced from one another. Hardin's general approach to thinking sums up much like his multi-disciplinary friend Munger's:

No single filter is sufficient for reaching a reliable decision, so invidious comparisons between the three is not called for. The well-educated person uses all of them.

Check out our prior posts about Filters Against Folly:

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