Saturday, September 17, 2011

Darwin the economist

The newest episode of EconTalk should not be missed. Guest Robert Frank served as a great balance to Russ Roberts, so listeners got a good mix of "left" economics and "right" economics.

Frank scored so major honesty points when he said that before the government intervenes in the economy, it should make sure its plan won't make things worse. Yes, sometimes the market returns results that are not socially optimal, but there's no point in applying government pressure if you have no reason to believe the results will be better.

He also made a tremendously concise comparison of the wastefulness of both evolution and free markets. For example, male elephant seals fight each other for harems of females, so genes that make them better combatants get passed on. As a result, a male elephant seal weighs about 6,000 pounds. That's wasteful. They'd all be better off if they all fell a third in size.

Compare that to hockey players, who can see more without a helmet. If given a choice, most players will opt not to wear one. That means no one gets an advantage, and everyone is at risk of an injury. Because of this, players will vote to enforce helmet rules on everyone.

Message to Michael Hawkins: this one is perfect for you.

Also, in the final minutes, Frank went into the advantages of replacing the income tax with a consumption tax, and I was impressed at how simple the mechanism is. I know Dan over at Crumb City is a fan of this policy, even if most of his work is about slaying trolls and stealing tomes.


  1. Yes, Michael Hawkins, had you only worn a helmet, you could have avoided all of that horrible brain damage.

    And the impotence, but those two things might not be related...

  2. Maine Republicans told me that switching to consumption from income equates to a tax hike for the people poor enough to not owe for income.

  3. A couple of things. First, even though you linked to me, WordPress is finicky about showing me when people mention my site (unless someone actually clicks the link). Second, I'm skeptical about how concise a comparison these two things are. How does one define a non-wasteful elephant seal? One which is thin?

  4. I've seen this argument in other evolutionary arguments, that the life form is putting resources into competing with its own species. In this case, the male seals have to eat more and get bigger for something that doesn't protect them from anything outside the species.

    Another example is trees that are taller have more access to light, and are more likely to pass on those genes than shorter trees. But it doesn't matter how tall trees are alone, it's about relative height to their neighbors.

  5. What Frank did in his comparison was assume one and/or two things: First, he assumed the perspective of a designer. He was wrong to do this for two reasons. One, obviously if there was someone there with foresight, then yes, many things in organisms could be made fantastically more efficient. But that isn't how natural selection works. Two, he is failing to recognize that natural selection is fantastically efficient. It isn't as efficient as an engineer would be, but it does not take roundabout routes, per successive step, to get to wherever it may go. Like water, it always takes the path of least resistance, occasionally running into a fortunate pebble or two that changes its direction (and more often running into an unfortunate rock wall that stops everything).

    Second, Frank was probably also assuming an organism-centered view. I'm not so sure on this one because his designer-perspective is enough to explain the flaw in his analogy, but it wouldn't surprise me. If he had have taken a gene-centered view, he wouldn't look at the elephant seal as wasteful, but rather the elephant seal's genes as doing exactly what is necessary for them to survive. Specifically, as you alluded, doing what they have to do to survive relative to the other genes in the gene pool.

  6. Robert Frank has a summary in the New York Times that does address the gene-centered view. He switched his metaphor from seals to the large antlers on elk.

    "Many 19th-century social Darwinists mistook Darwin’s message to be that whatever emerges from the struggle to survive is morally praiseworthy. But Darwin believed no such thing. He understood that competition often favored traits that brought misery to all, and he knew animals like elk could do nothing about it."

    So the market metaphor would be that product features are passed on, even if they don't benefit society as a whole, as long as they make the product more successful. I imagine a liberal example would be a company that pollutes to save money and this pushes the company over the tipping point from unprofitable to profitable.

    The whole point of markets is you do NOT need a designer. Market interventionists are like dog breeders. They attempt to guide the evolution of the animals, but they did not create the animals with magic. I support market interventions in limited scenarios, and we don't have the same power over biological forces as we do over economic ones. Both are types of spontaneous order, and centrally planning is the equivalent of creationism.

    I realize creationism doesn't actually exist, and we have seen attempts at central planning. I simply mean they are top down approaches instead of bottom-up.

  7. His switch from an organism to a particular phenotypic effect works better because it narrows the analogy, making it more a matter of perspective than anything. That is, depending on how one wishes to look at things, we could talk about the antlers or simply the genes for the antlers. The point is effectively the same in this sort of limited scenario.