Friday, November 25, 2005

Invisible hands - the point

The net result of individuals selfishly pursuing self interest can make society "better". That is Adam Smith's economic tenet. In theory, greed should instead cause a lot of exploitative and abuse of power kind of behaviour. Economic structures such as competition policy, free trade, property law tend to lessen exploitative behaviour because it becomes less profitable. Dr Clam is theorising that because "voters" pursue selfish interests, the greater good can't be served. He also says that because we don't vote daily, the competitive pursuit of votes doesn't have a day to day influence on government policy. On both counts, my point is that economic and democratic process policies, have indirect effects far greater than the direct effects of any one mandate or another. These are somewhat measurable by experts, and many of the indirect effects are counter-intuitive.


Dr. Clam said...

I am not theorising that because voters pursue selfish interests, the greater good can't be served: I'm saying that the rate of flow of information in so-called 'democratic' processes is so much slower from the constant flow of information in the marketplace that I can't see an invisible hand being at all effective. There also seems to me abundant evidence that the market converges on good solutions, and I offered some historical evidence that democracy tends to converge on bad solutions. This is not saying that because voters pursue selfish interests, the greater good can't be served: it is just saying that I see no evidence that the greater good is being served, whether the voters are being selfish or not. You need to have an effect to explain, before you go looking for a model to explain it!

Marco said...

There are several effects that I have in mind. To start with the observation that famines don't happen in democracies. A second one is that terrorists target democracies rather than dictatorships. These are general observations and will certainly have exceptions. However, these effects are much more neatly explained as a net result of people voting selfishly, rather than as something or other the elected leaders may do in any specific case. Note that these effects aren't necessarily the "greater good", but just a skeleton of a model to study general observations such as these, and to find electoral structures that may influence them one way or another by comparing various countries in similar situations. The resulting "expert" information on these connections is invaluable in nation-building.

Dr. Clam said...

It is a stretch of the imagination to say that the lack of famines in democracies is an 'invisible hand': it is a perfectly visible hand- one of these, over here! :D
I think we've talked about this before, and the lack of famines in democracies arise from interference in the natural workings of the market by politicians on all levels of government who are aware of the very visible syllogism: X lets constituents starve to death = X is hounded out of office.

As for terrorists targetting democracies, I would say that is not something that is supported by the empirical evidence at all. If you define terrorism as 'targetting civilians with lethal violence for political ends', like I do, then the majority of victims of non-state terror have been victims of 'state-wannabe terror': authoritarian organisations fighting more powerful authoritarian organisations via campaigns of ethnic or social cleansing, as in Algeria or Turkish Kurdistan.

Marco said...

As for your visible syllogism, I challenge you to find a single example where a government has been voted out of office by people facing starvation. In practice, the pre-cursors to famine, which incidentally have nothing to do with a lack of food see destitution, not dearth, are what seems to be prevented indirectly by democratic action. There is also a correlation between interference in the natural market for food by a country and famine in its own or neighbouring country. In other words, it's the lack of interference in the market for food (outside of emergency measures) which helps prevent famines!

As for the Terrorism point, I will re-word the effect I'm talking about - because there is a counter-intuitive effect that I am stressing. Citizens of functioning democratic countries are considerably more likely to be targets of terrorism than are citizens of (otherwise similar)functioning non-democratic countries.