Problems With Rawls

Jessica recapitulates the part of John Rawls’ theory that economists care about (concerning any other parts, I generally must plead ignorance). She recently read Will Wilkinson’s thoughts on it (linking to this particular post), and though I don’t believe that Rawlsekianism has much in the way of legs, pushing the left towards freer markets isn’t such a bad thing. At any rate, I promised that I would critique Rawls, and that is what this is all about. In a few short pages, James Buchanan laid down a short but very strong critique of Rawls. Although I no longer have access to that paper*, I am going to use some of that argument (to the best of my recollection).

Rawls, Buchanan, and FA Hayek each came up with their own version of constitutionalism at roughly the same time, each fleshing out basic ideas in the 1950s but really putting things together during the 1970s, so it is interesting to see how three thinkers can go down the same theoretical road but end up using entirely separate methods and at different results. Draw your own comparisons to the first batch of social contract philosophers, noting that Buchanan relied heavily upon Hobbes in his theory.

Each of the three sees a subset of the entire set of possible sets of constitutional rules as normatively reasonable and others normatively unreasonable. None of the three, for example, wishes a Leviathan-style government in which one individual controls everything without any checks. The question, however, is how to describe the subset of normatively reasonable solutions and from there, how do we get to one of those? I think Jim Buchanan’s depiction of the set is the clearest and best, at least in certain spheres of rules: look at things as m n-person cooperation games or prisoner’s dilemmas, where m is the number of areas in which a rule can exist. Within each of the m areas, if the area manifests itself historically as a cooperation game, either no rule is required or a rule is required to have citizens choose the best cooperative option**. On the other hand, the games which look like prisoner’s dilemmas will always require rules, and the best rule is to eliminate the off-diagonals, leaving only options in which all individuals perform the same action and the temptation from defecting when others cooperate is gone. After doing that, individuals will all cooperate.

Rawlsian Utility functions

Rawlsian Utility functions

Given a set of game theoretic mechanics, how do we convince individuals to submit to rules? After all, individuals already exist and there is a status quo in place which we have to upset in order to introduce our set of normatively reasonable rules. These rules will likely have a negative effect on some individuals and a positive effect on others, so how will we convince those who may lose to play along? For Rawls, he first assumes risk-averse individuals and then strips them entirely of their history and knowledge of particular features, placing a veil of ignorance around them. Without any knowledge of who you are and what you could be, you enter into debate with all of the other ethereal spirits who will exist in your world. Because of your risk-aversion, you would like conditions to be as good as possible for the worst among you***, which is his difference principle. To see it in graphical form, look to your left. This is a simple version of a graph with two individuals, where the utility is equal to the minimum utility of the individuals in the society. In other words, we have indifference curves following a Leontief function occurring about a 45-degree line from the origin. A sufficiently risk-averse individual, with no clue whether he be person X or person Y, will submit to a set of rules which maximizes the function min(U(X), U(Y)). U(X) and U(Y) will not necessarily be equal, so there can still be relative winners and losers, but there is no set of rules which will assist the worst-off (individual Y, for example) without making some better-off individual (X) worse than the previous worst-off individual (so U(X, new) < U(Y, old) < U(Y, new)). This outcome is called the difference principle.

Now that we have a quick overview of the major points—the veil of ignorance and the difference principle—I can go into a critique, working in ascending order of seriousness. The first critique is that Rawls assumes that all individuals are risk-averse. This is a fairly common assumption in neoclassical economics, so I can’t fault him for it, but to get his outcome, you have to consider individuals to be seriously risk-averse, not just mildly. Suppose you have a thousand individuals in a society and two potential sets of rules. With rule set 1, all 1000 individuals will end up with a utility of 2. With rule set 2, 999 individuals will have a utility of 23 million, whereas one unlucky soul has a utility of 1 (where 1 is slightly above the bare minimum required to live, so that person will still be able to survive). If you take Rawls seriously here, everybody would be so supremely risk-averse that they would turn down an almost-guaranteed life of luxury for guaranteed decrepitude simply because otherwise, one person’s living in a van down by the river. This result just does not make sense, and though a Rawlsian would likely counter by arguing that this is an edge case and that the people with a utility of 23 million apiece could surely come together and give a few bucks to Matt Foley, a reasonable theory would have to deal with cases similar (but less extreme) than these.

A stronger critique, which Buchanan uses, is to note that we are never in an ex nihilo situation but instead deal in a world which already exists, rules which already exist, and outcomes which have already come about. Even if you have a veil of ignorance around the present and future, it is impossible to have it around the past. I know what kind of utility I had with the previous set of rules and I am going to want that at least that utility with a new set, especially if I am as risk-averse as Rawls makes me out to be.

Finally, the strongest critique—another which Buchanan brings up—is that our veil of ignorance is necessarily incomplete. You do have at least some knowledge about your characteristics, contra the Rawlsian assumption. I may not know what my exact characteristic makeup will be twenty or thirty years from now, what my precise beliefs and standing will be, etc., but I have a reasonable idea and a better idea of what my position will be two years from now. Because of that, when it comes time to come up with a constitution, I do have an idea of where my interests lie and as a self-interested individual, I am obviously going to use that knowledge to further them. Having me pretend that I don’t know my probabilistic makeup (e.g., I believe there is a 30% chance that I will end up in situation X, a 90% chance that I will adhere to belief z, or a 0.015% chance that I will be hit by a bus and become mentally incapable) simply does not work because you have a prisoner’s dilemma situation for Rawlsians. If everybody else (“all y’all,” in South Carolinian) were to adhere to the veil of ignorance and forget about their situations, I get an advantage by remembering my situation and jiggering the constitution to favor me. If everybody else were to remove the veil of ignorance, I would be at a deficit if I kept mine. Thus, defection and removing the veil of ignorance is the winning strategy.

Given this, how do we respond? Again, I can take Buchanan as the model here (even though I tend closer to the Hayekian model of constitutionalism). In Buchanan’s book, The Limits of Liberty, he draws up how a group of individuals could, starting with knowledge of their own situations and in a Hobbesian state of nature, create a value-increasing constitution. For Buchanan, extreme risk-aversion is not a necessary aspect and his form of constitutional economics will work even with risk-neutral individuals. In addition, Buchanan has a “veil of uncertainty,” which is like a drastically weakened veil of ignorance. With the veil of uncertainty, we all know our present and past characteristics and circumstances. Furthermore, we understand the history of our society (and possibly other societies as well) and even have an idea of what our future will hold given sets of rules. We will not necessarily be right—Knightian uncertainty can play a role here, as well as our future characteristics following probabilistic models—but we are not entirely in the dark. As a result, Buchanan’s constitutional prescriptions are much more circumscribed and modest than those of Rawls. Buchanan argues that we should limit constitutional rules—as much as possible—to abstract and long-term situations, increasing the percentage of rules which fall in a hazy area of the veil of uncertainty and thus increase the degrees of freedom available for negotiation. In fact, it is even possible to get oligarchs on board with a constitution which eventually leads to their own destruction, by timing rules so that the current generation will not be affected by certain rules or they receive up-front a one-time cash payout (or a pension) equivalent to their losses from the normatively superior set of constitutional rules.

This sums up my critique of Rawls and scratches the surface of why I would consider Buchanan a much better starting point for constitutional economics. You don’t need as restrictive of assumptions (really, all you need is the “hard core” of methodological and normative individualism and self-interest, as well as unanimity and the capability for wheeling and dealing) and Buchanan-style constitutionalism is actually possible in the realm of man.

* – Rawls on Justice as Fairness,” Public Choice 13 (fall 1972): 123–28. In Social Justice and Classical Liberal Goals, vol. 3, Social Choice Theory, ed. Charles K. Rowley (London: Edward Elgar, 1993), 75–80.

** – Viktor Vanberg, in Rules and Choice in Economics, chapter 5, argues that Hayek saw such cooperative games as evolving to a set of best practices, but it is possible to get stuck in a sub-optimal equilibrium if enough people start out in one. If driving on the left side of the road when everybody else drives on the left nets you a utility of 1 but driving on the right side when everybody else drives on the right nets you a utility of 2 (because you can travel to other countries more easily, for example), you would think that everybody would drive on the right side. But if all individuals start out driving on the left side of the road, they will stay on that side even if every individual sees the utility gain from _all_ individuals switching. When one individual switches, though, you have a utility loss: some moron driving on the wrong side of the road. What you can do about this situation, Vanberg argues, is to have a rule-making authority decree that from a particular day on, everybody shall drive on the right side of the road. He uses the example of Sweden quite often, as they did exactly this. On the other hand, somebody once wrote a paper arguing that with two societies with open immigration and a stochastic function representing which action an individual would take (drive right, drive left, move to the other island and drive right, move to the other island and drive left), eventually the higher-utility option would win out. I can’t find this paper anymore to credit the person, but I thought it was in the Review of Austrian Economics.

*** – Throw in your own Christian reference yourself; I don’t do that stuff for you.

Vacation Time…

My vacation officially began yesterday, and I am looking forward to the week off.  Granted, I am still going to do some work during my vacation, as I have to finish up an XML schema to give third parties an opportunity to develop interfaces for an application at work, but other than that, I am quite free.

Although I had to work on Friday, the vacation kind of started on Thursday, upon going to Cedar Point.  While there, I ended up going on several of the rides.  First, I went up on the Dragster with a co-worker.  Even though he had been on that ride several times before, he was still freaking out.  In the meantime, I was entirely stoic, save for the point at about 250 feet in the air where the car starts rotating and you feel like you’re going to fall out.  Going down was also a bit of a rush, but by that point, I had regained my poise and was ready to go on to the next ride.  We then hit the Power Tower and went on the go-up-really-fast ride, which was also a snap.  This ride, like most of the others, was practically a walk-on.  The longest we waited for a ride was about 40 minutes for the Dragster; as Tony pointed out, there were not many elderly people around, making us wait to go on the rides…

We also ended up going on the two wooden roller coasters:  the Gemini and the Mean Streak.  These were also fun, and there was one spot on the Mean Streak where you could almost swear that you’d smack your head right into a wooden plank, so most of the people ducked down instinctively.  I will admit that I flinched, but I didn’t duck…

Unfortunately for my poise, I then went on the Skyhawk, which is a giant swing.  I’m not a big fan of swings, having attempted a few too many daredevil antics from them as a kid, and this ride completely messed me up.  After sitting down for a little bit, we then decided to go on the Millennium Force.  I had no trouble with the ride itself, but immediately after I got off, I became remarkably dizzy and lost about half a pound.  Sadly, this basically ended my ride-going for the day, although I did go to the bumper cars.  While waiting in line, there was a grandfather who was riding the course and he absolutely dominated.  Nobody could touch him as he drove around the course, but as soon as he spotted somebody, it was “Bam!” right in the side.  To this white-haired maestro of the bumper cars, I salute you.  I was not nearly as successful as he, though I did have fun running into unsuspecting drivers and getting ganged up on by co-workers.

We ended up leaving at about 6:30 to get dinner and drive home.  The drive home left me queasy, partially because of the bumpy road and partially because I really don’t do well in the backseat of cars (I tend to get carsick when I’m not in the front).  Fortunately, there were no further evacuations of sustenance, so our driver need not re-upholster his vehicle…

Palin

After Obama chose Joe Biden as his candidate, i wrote up a quick summary of the situation. Now, time for Sarah Palin. To sum up McCain’s advantages and disadvantages:

Advantages

  • Not as closely tied to Republicans as a generic Republican candidate would be.
  • Strong on foreign policy, particularly with the surge.
  • Anti-pork, anti-corruption.
  • Stands a reasonable to good chance at drawing working-class, weakly-aligned voters, especially in the Appalachian region mid-west.
  • Very good off-the-cuff speaker.
  • Has reversed his opinion on off-shore drilling and addition of energy sources, moving him closer to the “all of the above” option that House Republicans support.

Disadvantages

  • The base does not find him conservative enough and are hardly enthusiastic with him.
  • Gained his reputation for “straight talk” mainly at the expense of conservatives.
  • Amnesty.
  • Not very strong on domestic issues.
  • Not good with prepared speeches.

Now, what exactly does Palin bring to the table? Her selection allows McCain to go full-bore with the “reformers with results” theme, pointing out how Palin’s worked to clean up corruption in Alaska and sunk the Bridge to Nowhere. She is a total Washington outsider with a small-town background that will more than likely appeal to rural and exurban voters on a personal level. She supports the “all of the above” energy option, including ANWR (with McCain still opposed to that, at least for now). In addition, she has the ability to make the conservative base enthusiastic with her, if not so much with him.

So, outside of the top point of McCain’s disadvantages section, Palin acts more to sharpen McCain’s advantages rather than dull his disadvantages, as Biden does for Obama. In this election, both candidates have chosen reasonable strategies: Obama is ahead so he can play defense and limit his weaknesses; McCain, meanwhile, needs to pull potential Obama supporters and people fed up with Republicans over to his side, so he needs someone exciting and reformist.

Palin does have some disadvantages, as Ramesh Ponnuru points out. Inexperience is her biggest liability. Because she isn’t very well-known and is still rather young (in political terms), a gaffe can quickly turn into a Dan Quayle situation, especially for somebody who speaks with a provincial accent. It also limits, to an extent, any ability to make such charges against Obama. On the other hand, the McCain campaign can respond by noting that one party has the experienced leader with an exciting understudy, whereas the other party has an unexperienced (but exciting) leader with a dull but experienced understudy, and when problems come up, the first setup is much better than the second.

Fortunately, Jay Cost has similar thoughts, so I can’t be _too_ far off…

PS – I should note that I have no clue how McCain and Palin should handle Ted Stevens and Don Young, in the event that Young wins his primary.  I personally would fully support their throwing Stevens and Young under the bus, saying that Republicans like these get Democrats elected and that Republicans need to send conservatives who aren’t enthralled with pork and corruption to Washington.  Unfortunately, this likely means losing a Senate and House seat and looks like political back-stabbing to some elected politicians, making it less likely that they will play well with the candidates.  But if they let that issue fester, it definitely will come up in debates and Obama and Biden have a perfect dash:  “They claim that they’re reformers, but if John McCain and Sarah Palin can’t denounce pork-hauling criminals in Palin’s own state*, what are they going to about all the other corrupt Republicans?”

* – I should note that this is rather unfair to Palin, given that she supported Young’s opponent in the primary and has (rather politely) told Stevens to shove off.

Cedar Point

Today, I’m going to visit Cedar Point for the first time (or, if I have been there before, I can’t remember it), going along with a few people from work.  The beauty of it all is that school has started, so we hopefully won’t get long lines of kids and because it’s a work day, we’re hoping not to get long lines of adults, thus leaving only college students and the elderly to knock down as we rush to various roller coasters and other sundry rides.  I shall be sure to peruse the most powerful and awe-inspiring of rides, as I certainly paid enough for the privilege…

Fantasy football (and some more thoughts on Madden)

My Yahoo fantasy team, an homage to the band Dan and I were going to have but never did, is named Holy *#*@! Robots. I wanted to go with the Moe Syzlak Experience, but Yahoo will not allow me to have that long a name. Line up is thus: QB, RB, RB, WR, WR, TE, W/T, W/R, K, DEF, DB, DB, DL, DL, D (generic defense). In any event, the team is as follows:

QB: Drew Brees, Vince Young — Brees is probably the starter, but when I drafted Vince Young, Brees may become a matchup guy, like when Vince plays Oakland.

RB: Marion Barber, Marshawn Lynch (starters), Earnest Graham — I’m not a big fan of power backs, so I was hesitant to go for Barber, but he does seem to be The Man in Dallas and I know he’ll get goal line carries. Lynch was a minor coup, and I’m hoping Graham duplicates last year’s success. I also have Deuce McAllister, but I’m trading him to get a defensive player (more on that later).

WR: Marques Colston, Roy Williams (starters), Marvin Harrison (W/T), Jerricho Cotchery (W/R) Deion Branch — I am absolutely loaded with wideouts. I’ve had Harrison in the last three drafts, although he was dispatched quickly last year; this year I got him pretty late in the draft. Branch is something of a dark horse; I don’t really anticipate starting him, but who knows?

TE: Alge Crumpler (starter), Ben Watson — For some reason, we had a really weird run on TEs early this year, so I missed out on the cream of the crop. I think Crumpler will be a nice target for Vince Young, and may assume the role he once played for Michael Vick. Watson is window dressing; I’d trade him if given a decent offer.

K: Rob Bironas — I purposely stayed out of the run on kickers this year; I think I got a pretty sweet consolation prize.

DEF: Chicago — My old stalwart.

D: Terrence McGee — All I have to say is, you’d better be right with how super awesome he is, Kevin.

DB: Leigh Bodden, Antrel Rolle — I’m assuming Bodden will be at least as good as he was in Cleveland; Rolle’s been really good for a long time.

DL: Rashad Moore, Aaron Kampman — Kampman I like, Moore I’m doubtful about.

I also have Shawn Merriman; I drafted him pretty late, thinking he wouldn’t take the surgery. This is why I’m acquiring Joey Porter for McAllister; I’ll cut Merriman after the trade goes through and get an RB.

I had the ninth pick in a 10 team league. My top five picks were Barber, Lynch, Brees, Colston, and Williams. Biggest steals: Cotchery in the 10th round, Vince Young in the 15th (!!)  Biggest reach: Merriman (14), Chicago (8).

Madden thoughts:

– The idea of My Skill is starting to grow on me. The Madden IQ Test is stupid (the one that determines the initial rankings), but it does correct itself nicely after each game.

– I’ve never had good success with pure power backs in Madden. Ever. Jamal Lewis gets 10 carries a game, forcing me to go a little more pass heavy than I’d like. The Browns seem to pathologically go after power backs, so for the fourth or fifth Madden in a row I’m going after a running back.

– It seems borderline criminal how hard the DB drill is in Train Active Team.

– I’m trying to figure out what valuable insight I’m gaining from scouting reports; so far it seems to be a waste of time. Readers? (Okay, Kevin?)

– I STILL can’t fire my coaches mid-season. Damn it EA, I want the right to make the same reckless decisions real NFL coaches make.

– Yeah, I’m 3-0 vs the Cowboys, Steelers, and Ravens, but the only team I beat decisively was the Steelers (27-0). The others were by margins of two scores or less. It’s largely because I can’t run the ball, but the defense is genuinely better (for both sides) than I’ve seen in previous Maddens. Not so much more turnovers, which on the whole seem to have dropped, but more pass deflections.

– I’m not as pleased with how quickly the CPU snaps the ball; it makes it harder to adjust the defense (and I do a lot of hot routes on defense).

– The Madden Moments are pretty cool; they give you a chance to play around with some “classic” moments from last season. They’re mostly pretty easy.

– Still waiting on progression apart from training the active team. When is it supposed to go into effect?

Pakistan At The Corner

A couple of days ago, Andy McCarthy pointed out a couple of stories about Pakistan.  First, the good news:  they’ve banned the Taliban.  This isn’t all that meaningful outside of the world of gestures, but it’s better than the alternative.  Second, the bad (but not unexpected) news:  their government has gone the way of Belgium’s.  Unfortunately, although Belgium is better off without a government (heck, it’s not like the provincial government does anything; the EU’s in charge of all of the important stuff anymore), it might be a good thing for Pakistan to have one around.