How Ukip take advantage of you having your heart in the right place

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Photo credit http://www.reddit.com/user/cbwm on reddit. To calm you down all posts about Ukip should by law carry a cat photo.

“Do I contradict myself? Very well, then I contradict myself, I am large, I contain multitudes.” – Walt Whitman

Voting is a duty. A lot of people think it’s a right, but that only covers part of it. You don’t just have a right to vote for who governs you, but a duty to choose the right person to govern everyone. A lot of people get this and you can people voting against their own interests all the time. It’s a noble thing.

But when this sense of duty collides with the ignorance of the British public something horrible happens. Were people to vote in their own interest, we’d have a much nicer world for immigrants. When asked about issues affecting the country, immigration comes out tops, when asked about issues affecting them personally immigration vanishes.

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Tuesday’s post listed just some of the ways the public are wrong about the world. If 15% of girls under 16 were pregnant each year that would be worth concern. It would imply that all girls aged over 14 were constantly pregnant. That demands action. I’m not too liberal to admit that. If we did spend more on JSA than pensions that would be worth concern.

Given current state pension spending of £74.22 billion and the over-25 rate of JSA of £72.40, we’d be paying JSA to twenty million people. That’s the population of Angola. If that was true, then I can see how people would think overseas aid was on of the top three UK budget expenditures.

People want to help their fellow citizens and immigration has become a flashpoint for many concerns. Housing, the economy, poverty, fairness, inequality. All these things converge on what the public think they know about how immigration is affecting someone else. They think 31% of the population are immigrants, when the official figures are 13%.

I think this concern is genuine, but misguided. A lot of what I’ve written probably makes me sound like I dislike the public and think they are scum. But that’s not true. I think they’re very caring individuals who are deeply, deeply wrong about how to help people.

They show great concern for their fellow citizens’ wellbeing when it comes to immigration, but great vindictiveness on many other matters. They think capping benefits at £26,000 per household will save a lot of money, but it won’t. They think it will work because they have a lot view of their fellow citizens, the citizens they very much want to help, are scamming them.

There’s no such thing as public opinion. You can’t collate and rank all the opinions everyone has. They don’t and can’t stack properly. But worse than this, even individuals don’t have consistent opinions. They think it’s important to protect their fellow cheating citizens from their kind immigrant neighbours.

Fighting Ukip is hard because of this. They can promise contradictory things and get away with it because people can believe contradictory things. They believe them willingly. Ukip are an anti-immigrant party with a pro-immigration MP (pro-immigration for an MP that is), who are campaigning as the champions of the UK libertarian tendency who want to protect the NHS. In government Ukip would probable deliver contradictory things and people would probably like it. People, you can’t trust ‘em.

Square this circle: common sense, Ukip and the decline of deference

IPSOS-Mori point out ten places British public opinion disagrees with British reality.

  1. Teenage pregnancy: on average, we think teenage pregnancy is 25 times higher than official estimates:  we think that 15% of girls under 16 get pregnant each year, when official figures suggest it is around 0.6%[i].
  2. Crime: 58% do not believe that crime is falling, when the Crime Survey for England and Wales shows that incidents of crime were 19% lower in 2012 than in 2006/07 and 53% lower than in 1995[ii].  51% think violent crime is rising, when it has fallen from almost 2.5 million incidents in 2006/07 to under 2 million in 2012[iii].
  3. Job-seekers allowance: 29% of people think we spend more on JSA than pensions, when in fact we spend 15 times more on pensions (£4.9bn vs £74.2bn)[iv].
  4. Benefit fraud: people estimate that 34 times more benefit money is claimed fraudulently than official estimates: the public think that £24 out of every £100 spent on benefits is claimed fraudulently, compared with official estimates of £0.70 per £100[v].
  5. Foreign aid: 26% of people think foreign aid is one of the top 2-3 items government spends most money on, when it actually made up 1.1% of expenditure (£7.9bn) in the 2011/12 financial year.  More people select this as a top item of expenditure than pensions (which cost nearly ten times as much, £74bn) and education in the UK (£51.5bn)[vi].
  6. Religion: we greatly overestimate the proportion of the population who are Muslims: on average we say 24%, compared with 5% in England and Wales.  And we underestimate the proportion of Christians: we estimate 34% on average, compared with the actual proportion of 59% in England and Wales[vii].
  7. Immigration and ethnicity: the public think that 31% of the population are immigrants, when the official figures are 13%[viii]. Even estimates that attempt to account for illegal immigration suggest a figure closer to 15%.  There are similar misperceptions on ethnicity: the average estimate is that Black and Asian people make up 30% of the population, when it is actually 11% (or 14% if we include mixed and other non-white ethnic groups)[ix].
  8. Age: we think the population is much older than it actually is – the average estimate is that 36% of the population are 65+, when only 16% are[x].
  9. Benefit bill: people are most likely to think that capping benefits at £26,000 per household will save most money from a list provided (33% pick this option), over twice the level that select raising the pension age to 66 for both men and women or stopping child benefit when someone in the household earns £50k+.  In fact, capping household benefits is estimated to save £290m[xi], compared with £5bn[xii] for raising the pension age and £1.7bn[xiii] for stopping child benefit for wealthier households.
  10. Voting: we underestimate the proportion of people who voted in the last general election – our average guess is 43%, when 65% of the electorate actually did (51% of the whole population)[xiv].

Things like this make me not envy politicians. How do you make policy when you have to appeal people who think 15% of girl’s under 16 are pregnant, but which has to be implemented by people who know it’s nonsense?

Ukip are the party of common sense. That means the received, sensible, and wrong wisdom encapsulated in the above mistakes. It’s common sense that people are ripping off the benefits system, but really its pensioners voting for a pensioner based festive meal.

People think 31% of the population are immigrants. It’s not even like that in London. How do you make policy to confront a problem which doesn’t exist. The solutions are already rolled out. The poor can’t marry foreigners. You can’t bring your family over if you’re poor. There is no legal way for asylum seekers to enter the country.

EU enlargement is over for a generation and EU immigration numbers are now dictated by the relative strengths of different parts of Western Europe. The better the UK does relative to Southern Europe the more migration we’ll see.

Sadly, I don’t have a solution to Ukip. The deference and respect people had has evaporated. People don’t believe they live in the same world as politicians. A lot of the time they’re right. For housing, employment, cost of living, economic security things are much worse than the political establishment think. But on so many other matters it is voters who have become unmoored from reality. And in these area, these vitriolic, common sense causes, that battle lines are being drawn.

I don’t have any answers, and if anyone thinks they do, then I’ll be right behind them…about a mile or two behind them.

Life coasing

+ EXCLUSIVE + Extracts From Steven Levitt and Stephen Dubner’s new book “Life Coasing” + EXCLUSIVE +

Subtitled “How The Economic Way Of Thinking Can Justify Your Horrible Personality”, Life Coasing is a terrific return to form for Levitt and Dubner. These two authors have done more than anyone else to bring the economic way of thinking to the attention of popular culture. Freakonomics and Superfreakonomics were cultural phenomenons which hugely influenced a generation of horrible people. I am pleased to exclusively offer extracts from their latest book.

Inspired by the saga of the knee protector, this kindle single (pictured above) introduces the ideas of Ronald Coase, and how his idea of making small side payments can totally justify your horrible treatment of everyone around you. Going beyond Coase, who focused on policy, Levitt and Dubner show that through the total disregard for other’s feelings only arseholes have, they can enable more transactions by ignoring the feelings of others. It’s going to be huge in Silicon Valley, I assure you.

Without further ado, I have a few teasers to share with you:

“Chapter 1: How is reclining your seat like buying a newspaper?”

We were shocked to hear people were using knee protectors to prevent people reclining other people’s airplane seats. I’m sure you were outraged too. But how do you solve a problem like a reasonable person trying to remain comfortable in a hostile environment? Contrary to what your mother told you, the answer is to make the environment more hostile. Every person has a price, and although some people might pretend to be moral, what they actually mean is they are expensive.

Newspapers, remember them folks? They’re expensive, not only because you have to distribute a paper parcel (not even by drone), but you have to bundle up a variety of different news items together to someone who only wants part of it. Hence you pay for a lot of information you don’t want. Conversation around reclining seats if often a lot like this. People take forever to get to what you want: the price of their comfort.

[...]

So as you have seen already, the economic way of thinking is already proving incredibly useful in justifying your horrible personality. We’ve got you a more comfortable seat and you’ve learned something along the way, but we’ve passed over something which needs explaining.

“Chapter 2: What are transaction costs anyway?”

What is a transaction cost anyway? You’re probably unfamiliar with some transaction costs because arseholes have low transaction costs. A transaction cost is a way of describing the frictions people face in life contracting. You might be familiar with lawyers fees from copyright disputes over poorly conceptualized satires. That’s an enforcement cost. I wouldn’t bother about these. Nope.

There are other costs too, searching for something you want and getting the information you need to make an informed decision are important. Most important for this book are bargaining costs. These are the costs required to come to an acceptable agreement with the other party to the transaction, drawing up an appropriate contract and so on.

In Coase’s The Problem of Social Cost he explains how property rights can enable those who suffer the pollution of a nearby factory to negotiate with the owners. If people own the right to clean air then they can sell that right for the right price. Pretty neat huh? You don’t necessarily own a polluting factory (although I’m sure some of our entrepreneurial readers actually do.), but in a way your personalities are pollutants. But just like the answer to global warming is to pollute the air in a slightly different way, your terrible personality pollution is also the answer to your problems.

[...]

Because you have low bargaining costs, because you quite literally don’t care if people hate you, you can negotiate your way out of being an arsehole. One of the largest barriers to these transactions is hurting other people’s feelings. Luckily, if you’re reading this book you probably don’t care about people’s feelings. You can facilitate many more transactions. Your horrible personality really can make the world a better place. And isn’t that the wonder of the economic way of thinking.

“Chapter 3: Out of the mouth of babes”

[...]

The ultimate coasean bargain is the extraction of lunch money by school “bullies.” (H/T) Everyday, up and down the country, 11 year olds are rediscovering Coase’s seminal work. But instead of praising them we punish them. If children did not value the services of the bully (and what else is a bully but a proto-state, a stationary using bandit), they would not hand over their lunch money. The money involved is often low denomination and usually very small fees actually exchange hands.

We could work out the cost of bullying directly if we knew the wages of children, but sadly we do not. However, thanks to these coasean pioneers we can extrapolate from these bullying fees figures to come up with the reservation wages of children. From these we can imagine what transaction fees must be like for children and develop a rough cost of bullying (Perhaps Mr Piketty thinks the only way of collecting this data is to tax children!).

[...]

If bullying mattered, don’t you think the children would have sorted something out by now themselves? Because the reservation wage of children is so very low it can’t be transaction costs which prevent them successfully preventing bullying themselves, it really is just uneconomical to do so. The bully rent is too damn low. Remember to bring this up in the next PTA meeting when someone suggests another anti-bullying campaign. Your terrible personality (and that of your demonic spawn) really will save everyone time and money. Don’t wait for any other business just shout out at the beginning of the meeting. Remember, you’re keeping bargaining costs low.

“Conclusion”

[...]

Alongside internet atheism and men’s rights activism, the economic way of thinking is among the best ways of justifying your horrible personality. But until now these advantages have not been codified. I hope in this book, “Life Coasing: How The Economic Way Of Thinking Can Justify Your Horrible Personality”, we have explained how coasean bargains and the economic way of thinking can provide cover for your horrible personality.

Uber is hyper-capitalist? Welcome to capitalism, where have you been?

According to Salon, Uber is hyper-capitalist and must be stopped. Frankly I’m a bit annoyed with anything aggressive being labeled hyper-capitalist. Garment factory collapses in Bangladesh, that’s capitalist. The Triangle Shirtwaist Factory fire, that’s capitalist. Blowing up your fertiliser plant, that’s capitalist. Someone headhunting your employees? That’s hyper all of a sudden.

So SLOG, Uber’s recruitment drive, employs private contractors, disposable burner mobiles and fake identities to pick up lifts from Lyft, chat up their drivers. This results in some cancelled rides, but the purpose of the service is to pick up rides rapidly. A quick cancel ends in a quick new fare, the direct costs to Lyft are probably lower than other more common recruitment methods.

This isn’t hyper-capitalist, this is headhunting. If this was happening on LinkedIn to consultants nobody would bat an eyelid. The time taken out to interview and flirt with new potential employers isn’t seen as hyper-capitalist, just normal capitalist. I think there’s classism here too, that taxi drivers would be tricked into moving to Uber, but that consultants headhunted know what’s what.

Uber is also seen as hyper-capitalist because it’s subverting regulations. In Germany it’s just ignoring court rulings and running on venture capital. You mean….a capitalist firm…is ignoring regulations?! Colour me shocked. There are serious concerns about driver licensing and public safety, but none of this makes it hyper-capitalist. Just…normal.

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I see dead people (but not racists)

Many voters are reality invariant, they say things about who they are rather than the world they live in.

In the US, more whites believe they have touched a ghost than believe blacks are discriminated against a lot. I would consider this a good example of people being reality invariant. Needless to say there’s ample evidence of racism, and little of ghosts, but note that these beliefs are treated differently.

Reality invariant voters are sometimes paid attention to, and sometimes not. It’s not enough to blame policy errors on politicians pandering to the reality invariant. When and where they’re tolerated or ignored tells us a lot too.

One reason there are racist policing policies is that white voters in America don’t realise they exist or pretend they don’t. But there are no ghost friendly policies to the same degree despite comparable levels of reality invariance.

Some of this is because the fish is the last to know the water. Many Americans have swam in racism so long they don’t see it. Another is that there is no institutional outlet for supporting ghost based policies unlike those for racism.

I think the idea of a reality invariant electorate is important, but it’s not nearly a complete theory, as the above example shows. History, path dependence and institutional capability and development all play a role in whether these reality invariant voters are catered to or not.

 

 

 

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Poor people are not reality invariant, give them your money

On Monday I wrote about the reality invariant. Often these people are reality invariant because they can afford to be wrong. Nothing too bad will happen. They won’t be brutalised by the police if they crack down on non-existent crime. They won’t be detained at the border. They won’t discover themselves poor.

Some people can’t afford that level of detachment, people who are poor. In fact often they have few views on policy, they’re too busy. That’s poor people and they’re very practical. That is why I support Give Directly, a charity that gives money directly to poor people, no strings attached.

I’ve written about them on a number of occasions. Just search this blog for more. They find poor households in Kenya and Uganda in areas which have a mobile payments network and give them money. This seems personally the least patronising way of helping people and ideologically the most appealing to me.

But am I being reality invariant? Am I giving poor people money because I want to feel empowering and it reflects my anti-bureaucracy instincts? Well, as it turns out no. I was right all along. Which is a relief. As well as doing regular audits of measured outcomes the Give Directly people also speak to recipients and ask what they want.

It turns out they do want cash. If an NGO offers you a free cow shed you’ll say yes, but if you have the money yourself you might find it makes more sense to buy a water purifier. But if the purifier people are in the village next door and the cow shed people are in town, fuck it, have a cow shed. Why not?

That’s the story Give Directly tell (without the swearing, I added that, for colour) about why they’re efficient. And Give Directly are efficient, but efficiency isn’t all there is to life. Turns out its not just efficiency that the poor need. Giving them money may sound infantalising or like it would breed dependency but that is not the case. Recipients tell a totally different story.

Being given money means that goods which are bought are more valued. If you end up with a cow shed or a water purifier it is because you really wanted one. Rather than infantalising you, being given money is empowering. These aren’t lazy people, they’re often working constantly so the money gives them the power to respond to shocks and gives them the dignity to set their own standards. Rather than buying one big off the shelf NGO supplied thing recipients can shop around for the items they really want.

These people are empowered by money. Commerce and money are great liberators. Luckily a lot of evidence is building up that proves this and that also proves it is an easy gift for you, dear reader, to give. So if you are thinking about supporting a charity, and I believe lots of people are at the moment, then consider donating to Give Directly.

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Photo above taken from Give Directly’s 2013 report.

Making policy for the reality invariant

I like to call a lot of voters reality invariant. I’m definitely not saying they’re stupid, just that their opinions are reflections of their internal world, and are invariant to reality. Policy makers are treating these signals as true statements of their view of the world and want to change the world to satisfy them. Because some people are reality invariant this is doomed to fail. This is my suggestion for the converse of the Lucas critique.

The Lucas critique says that policy made using past observations won’t be effective. If you change policy from that which produced the predictions you’re using to change policy, the policy change won’t work as expected. Imagine FIFA is corrupt (!) and a team bribed it to make headers worth double, because in past competitions it would have advantaged them. Because rules change in a predictable way any previous advantage might vanish as other teams adjust their playing style.

In contrast, voters being reality invariant mean policy changes won’t work because people don’t care about policy. If you make policy to change a real outcome people say they care about but don’t, then a effective policy won’t be successful. You’ll change the targeted outcome, but not please voters. This can be misinterpreted as failing and so policy must double down on reality, even as the reality invariant remain oblivious.

One of the most obvious is immigration. For many people around the  world national immigration controls are not an issue. Around 10% of people think it is an issue at any one time. In the UK, that figure is around 45%.

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This is despite British people agreeing with the rest of the world about their local area. Britons think that immigration is a huge problem nationally, but if everyone went and visited each other they would find out it isn’t.

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For over a decade tighter and tighter immigration acts have been passed to the point where the immigration question has been solved. Short of Ukraine or Turkey joining the EU, or the UK leaving, immigration controls cannot get any tighter. And yet the British public are still not satisfied. [1]

It’s that second graph you should worry about if you’re a policy maker. The British don’t care about immigration. They care about the perception of immigration. British politicians have been very effective at reducing immigration. Only 1% of those who want to enter do so. The public don’t care.

They’re reality invariant. You can change reality but it will have no effect on their voting habits or opinions. You can lament the rise of spin, and I do!, but there’s a reason it’s so important. We’ve reached the effective limit of immigration restrictions and the public are still not satisfied.

Inequality is another area where people are reality invariant. Various policy changes have turned the US into a more unequal country, even as European states have held of the worst excesses of liberalisation. The FT have results of a survey that shows nobody understands how unequal their country is. Americans believe their country is more equal than it really is, and Europeans think their countries are more unequal than they really are.

“The results of the study suggest that, in the political debate on income distribution, it is often not the facts that count but [perceptions],” says Professor Michael Hüther, director of the Cologne-based IW economic institute, which carried out the research.

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In Hungary belief in widespread poverty is supporting the growth of Jobbik and Hungary’s slide into fascist politics. In America belief in egalitarianism prevents help going to the poor. The voters are reality invariant, they are discussing how they feel about reality, not reality.

Crime is the most famous example. Fear Of Crime™ is a major issue. Crime just isn’t.

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The reality invariant voter looks at this and sees fiddled numbers. By 2007 crime was the number one concern for British voters, briefly displacing “immigration” before being engulfed by “the economy.” Despite violent crime falling in half, fear of crime continued to increase.

War is the last area I want to briefly touch on. War, what is it good for? Absolutely nothing, until it’s useful for absolutely anything. Intervening somewhere is a very bad idea, until it isn’t:

It doesn’t matter, how many times your Yazidis get off the mountain without significant UK aid or an entirely theoretical artillery seige of Bengazhi with rapacious house-to-house murders turns into an actual, person-killing, NATO-supported, civilians-running-everywhere seige of Sirte.  There’s always some compelling reason why this war, this intervention, this bombardment, is radically different to all the other invasions and occupations and airstrike campaigns, and why the horrible news always means that there’s no time for rational thought this time before we start blowing that shit up.

I’ve come to you with a problem, and a snappy term to describe it. Traditionally this is where a writer would offer a solution. But not me. Lucas didn’t have a solution, he had a critique. I am also merely pointing out that policy is today being made foolishly. The assumption of policy makers that changing reality will have the desired effect is based on a faulty model. It is a very rational model, but the model is wrong nonetheless. Lots of the public are reality invariant, and you can’t make policy presuming they’re not.

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[1] As Chris points out, the reality is that these policies kill and kill intentionally and purposefully. But this is also a reality most people ignore.