Monday, May 18, 2015

Politics and economics: Rational or not?

Dissident Politics relies on current understanding of human cognition to argue that the two-party system (TPS) subtly but effectively manipulates both perceptions of reality and logic. That is done for self-interested reasons and a key reason is defending a failed status quo. The TPS bases its manipulation on centuries of human experience with how reality and logic can be distorted to the advantage of the manipulator. Machiavelli’s book about political leadership, The Prince, published in 1532, is an example of explicit advice to leaders to lie and commit immoral acts and crimes. The point is to advise leaders on how to gain and keep political power. Deceit of both the public and political opponents is a major component.  

Machiavelli’s 16th century tactics are mirrored in politics today, but softened somewhat by limits the rule of law imposes on the rough edges. Despite the softening, politics remains a dirty, bare knuckles fight. Being faithful to unspun fact and unbiased logic has little or nothing to do with modern political rhetoric and debate. That isn’t the point. Spin in politics is constitutionally protected free speech.[1] The point of spin in most campaigns is to deceive the public while serving special interests, including the candidates themselves and their major campaign contributors, before serving the public interest.[2] Evidence of fact and logic distortion, including withholding information from the public, is overwhelming. It happens in public debates, routine discourse and governing.

Don’t trust the experts, or the politicians
A major political concern is with budgets, economic forecasting and fostering economic growth. Most economic theory that politicians rely on is based on an assumption that humans are rational in their decision making. This is referred to as the “rational man” theory. In the last few decades, social science has shown the rational man theory to be basically wrong. Unfortunately, economists and their advice to politicians are based on the flawed rational man theory. Their advice is very influential in informing or guiding political policy choices. According to Richard Thaler, a psychologist, who helped debunk the rational man theory, economic policy advice, “the very premises of which are deeply flawed” is why “economic models make a lot of bad predictions: some small and trivial, some monumental and devastating.”

That observation is in accord with research showing that human experts generally do a poor job at forecasting the future. Experts typically get predictions right about 10% of the time, 20% at best by the rare exceptional expert. By contrast, one statistical model that was tested for comparison purposes gets predictions right about 50% of the time. Experts are often not much better at predicting the future than simply guessing. The reality is that experts are intuitive creatures like everyone else and, also like everyone else, they typically use logic to justify and/or deny their own errors or biases.[3] The subtle power of intuitive belief or ideology to distort fact and logic cannot be understated. People who become self-aware enough to see the subconscious power of normal intuitive, not rational, human cognition are few and far between. That ignorance applies in spades to most politicians and even more so to true ideologues.[4]

Machiavelli + free speech + unenlightened humans with big egos = flawed 
second rate government
What is one to make of all of that? Those observations are disparate and have little to do with each other, right? Wrong. They have everything to do with each other. That assumes that one accepts that (i) Machiavelli was basically correct about the nature of political leadership being basically self-interested (not public interest-focused), (ii) spin dominates political discourse and (iii) most politicians, like everyone else, are intuitive creatures and find it hard or impossible to apply reason to alter flawed intuition or faith. If those assumptions are correct, what are logical, defensible conclusions?

Conclusions that jump out are not subtle. TPS politics is based as much or more on false beliefs and flawed logic than it is based on unspun fact and unbiased logic. That flawed basis for governance is self-serving or special interest-focused, typically at the expense of serving the public interest. And, finally, if people and politicians can be taught to see their own intuitive nature and more often apply reason to guide it, politics and governance can be made to be first rate.

1. Spin is speech that consciously or not, is based on one or more of lies, deception, misinformation, withholding, distorting or denying inconvenient facts or arguments, unwarranted character or motive assassination, and, use of fact or logic that is distorted by ideology and/or self-interest.
2. Serving the public interest as DP defines it: Governing by finding a rational optimum balance between serving public and private or commercial interests based on a pragmatic, non-ideological assessment of competing policy choices, while (1) being reasonably transparent and responsive to public opinion, (2) protecting and growing the American economy and its standard of living, (3) defending personal freedoms, (4) protecting national security and the environment, (5) increasing transparency, competition and efficiency in commerce when possible, and (6) fostering global peace, stability and prosperity whenever reasonably possible, all of which is conducted (i) in an fiscally sustainable manner, (ii) in accord with the U.S. constitution and the rule of law and (iii) by way of government that is as transparent as applicable realities permit.
3. A new field of academic research called behavioral economics generated this new understanding of human cognition. The data show that humans are “rational” but with rationality based mostly on the intuitive or emotional basis of human cognition. On rare occasions when people do consciously use logic or reason, it is usually to justify intuition or belief, even when the intuition is wrong. Intuition can often objectively be shown to be mostly right or wrong. When it is wrong, changing a false intuition or faith can be hard or impossible. Logic or reason is rarely used to critically analyze a personal intuition (belief) and it is very unusual for logic to change an intuitive belief based on fact or logic that undermines the belief. Fortunately, people can be taught to see this aspect of their own nature and, with moral courage, to give more respect to their own power of reason to correct flawed beliefs. It won’t make politics perfect, but it will make it better.
4. Even economists resisted evidence that their theory about the rational man was wrong. Dr. Thaler observed that: When  traditional economic theory predicted something, but the evidence did not confirm or contradicted it, the “establishment explained away the evidence as an anomaly or miscalculation.” Up to a point, skepticism of evidence that contradicts an established theory makes sense and is good. However, there comes a time when an old, flawed theory has to be acknowledged for what it is. Human cognition and biases delay the day of reasonable reckoning, sometimes by decades. That is just a manifestation how inefficient (imperfect) human cognition or reason can be.

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