Rational Actor?

I took about 20 hours of Economics before I switched to Geography for my undergraduate degree. Not only because reading Toynbee and Mackinder is downright riveting compared to Keynes and Hayek, but because I started to get the feeling that the whole subject of economics is a house of cards. It's a bunch of models, which are only useful if tied to reality, but the assumptions economists make to build their models are based on half-baked, or outright false, theories of human behavior.

Take the idea of the Rational Actor. Economists presume that human beings act rationally and all those thousands of small rational decisions and choices create unbeatable efficiencies in the marketplace. Now, by using the word rational, they mean simply that people weigh cost against benefit before taking an action. But they never address the fact that people often do not act rationally, even in this limited sense. People are social, emotional, hormonal, impressionable, tribal, and so much more, but rarely, oh so rarely, rational.

The American Scientist has a well-developed discussion of the problems with the rational actor theory in the context of game theory and other developments in the behavioral sciences. In the vein of E.O. Wilson's idea of consilience - where he suggests that the hard physical sciences and the life sciences need to converge their fields of study, so should Economists and other behavioral scinces, such as Psychology and Sociology, so we can gain greater insight into what is actually happening in the marketplace.

Why people believe Conspiracy Theories

One cannot go through too many days on this planet without running into a conspiracy theory or two. My first experience with a believer in one of these theories was many years ago, when I ran into a John Birch Society representative. They actually believed in quite a few conspiracies at once, but the foundation stone of their theories was that Dwight Eisenhower was the chief communist agent operating in the Western World. How else to explain his meteoric rise from Lt. Col. in the U.S. Army to (Four-Star) General in three short years? Of course, the easiest explanation would be that he was good at his job, and that the U.S. entered the Second World War during that time which saw the need for active officers increase twelve fold. Additionally, lots of people on active duty in 1941 were quickly promoted after the war began in earnest. Omar Bradley, Dwight Eisenhower, and George Patton, three of the most famous American generals of the war, all started out as (Full-bird) Colonels in 1941, before the U.S. entry on 8 Dec. 1941. All became Four-star Generals by 1945.

As I spoke with the Bircher, I suggested there were four simple, and believable, factors that influenced Eisenhower's quick promotion: there was a war; officers who fought and commanded well were needed; a lot of officers died, so those who lived were promoted quickly to fill in gaps; and finally, his reputation for exceptional personal and organizational skills - exactly what a high-placed general officer needed to put together such huge operations with multi-national forces. But this was too simple for my Bircher acquaintance: he preferred to believe a vast communist conspiracy placed Eisenhower in just the right positions, and ensured he was promoted quickly, so he would be in position to be President -as if anyone could predict all of the events that culminated in his ultimate election. I suggested that such a belief defies simple logic. But the Bircher would have none of it.

Many skeptics and debunkers, such as Michael Shermer, point out the obvious shortcomings in many of these theories. For instance, to pull off a faked moon landing would require that thousands of people were in on the hoax, and stayed quiet all this time. A similar problem plagues Kennedy assassination theorists.

As David Aaronovitch states, "After the JFK assassination, it was unbearable to many people that they could live in a country where a lone gunman could kill a president. In those circumstances, it’s not surprising that an overarching conspiracy theory emerges." In his new book, Voodoo Histories: The Role of the Conspiracy Theory in Shaping Modern History, he posits that it simply makes people feel more secure to think that organized human agency was responsible for horrific acts such as the JFK assassination than to allow the chaotic power of a crazed gunman to intrude into their comfortable worlds.

Recent examples include the various 9/11 theories, which suggest everything from blaming Israel to blaming an enormous conspiracy within the Bush administration, and the Obama birthers, lest we be accused of partisanship, who contend that President Obama was not born in the U.S. and that his parents faked their announcement in the Honolulu newspaper in order to ensure he could be President someday. Numerous flaws can easily be demonstrated in all of these theories. Obviously, these theories fill an emotional or psychic need within their advocates, and very few will allow reason to intrude as long as their need is met by their conspiratorial claims.

David Simon on the Drug War and the death of policing

In a compelling interview with Bill Moyers, the producer of The Wire, David Simon outlines how the drug war has destroyed the profession of the policeman. First, he points out how 25 years ago 30-35% of prisoners were incarcerated for violent crimes, and now violent crimes account for only about 7% of prisoners. He then explains how police get promoted by valuing "easy to go after" cases, and drug cases are easy. You find a guy who has drugs on him, and you charge him. Easy. And a cop can make an arrest every few days by just shaking up some guys in the right neighborhoods. So he can make a lot of arrests. Whereas the cop who spends his time investigating murders and rapes has to put in many, many hours to gather enough evidence to make a bust. So the guy who makes the drug collars (which is basically a non-violent crime) gets promoted.

And the guy who tries to solve crimes where citizens were actually hurt? He gets passed over and told to go make more arrests.