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.

One reason the EU doesn’t deserve the Nobel Peace Prize

Unlike some, I think the EU winning the Nobel Peace Prize is a good thing. Europe was the most warlike place on earth for millennia. I have trouble thinking of somewhere more incessantly violent than pre-1945 Europe.

The Americas, Africa and Australia were both too sparsely populated for properly sustained warfare of the European variety. They also didn’t have the technology to produce viable killing machines. South Asia and East Asia, e.g. the Muhgals, Han etc. settled into imperial systems in which a hegemon acted arbitrarily violently, but which was never as dangerous as Europe”s state of war.

Things got a bit peaceful from 1815-1914, but once Europe had run out of non-Europeans to kill they went back for a hundred-year-giant-slaughter-anniversary bash which they ran, with intermission, from for about the next 30 years.

But, suddenly, since 1945, we haven’t really killed each other that much – apart from the Russians, but we’ve always thought they were a bit odd. In my view somebody needed an award, the EU is good enough. Plus, it has at least been pretending that maintaining the peace is what it was trying to do.

However, a couple of days before EU was awarded the prize, they did something which made the world a marginally more warlike place. Europe killed the BAE/EADS merger. BAE is synonymous with the British military-industrial complex, EADS is the same for continental Europe. A merger would have created one of the largest producers of military hardware in the world.

By killing the deal Europe has managed to prevent the management of BAE and EADS from rushing headlong into a pointless merger and stopped them from destroying millions of pounds worth of weaponised wealth.

Mergers have a terrible history. Rather than enabling synergies and economies of scale or scope, mergers often leave everybody worse off than if the firms had remained separate. The juries out on why mergers so often go wrong; it could be managerial hubris; it could be the winner’s curse wherein the winner is the person who bids ever so slightly too high; it could be something more Hayekian, in that people underestimate the complexity of the larger company.

In any case, I thought it was likely a BAE/EADS merger was a value destroying proposition. Both BAE and EADS are tightly linked to their sponsor states. A merged company would have had to answer to the British, the French and the Germans. Can you imagine them getting anything done if you had those three bosses? It would be a recipe for disaster, but disaster in the “killing things” supply chain is a net plus for the world, so I thought it odd to see these two stories come out at about the same time.

Oh, and why would two medium firms merge into a large one if it is such a bad idea? Well, its a bad idea for the owners, but for the management

Gutted

I was just writing another piece on immigration – which will be published here soon – when I came across the following in Bloody Foreigners: The Story of Immigration to Britain by Robert Winder.

In late summer 1939 a pretty young Dutch-Irish girl called Edna van Heemstra was hastily evacuated from a boarding school in Kent by her mother, who feared that the Sout East would soon be struck by a thunderous aerial bombardment. She was by no means the only child to be steered away from the flightpath of the anticipated German bombing campaign. Indeed, she was one of the few able to take place by the simple expedient of going home. Home, however, was Holland – Arnhem of all places – and it would prove to be even more pregnant with peril than the place she had fled.

This is highlighted, and beside it, my 19 year old self has written “gutted to fuck.”

If you do nothing else today…

…ask your MP to sign this. Below is a statement showing solidarity with the legally elected Government of Honduras. It only takes 30 seconds and it’s available here.

Signatories already include 30 parliamentarians, Red Ken, Trade Union Secretaries and various Musicians, Playwright and Academics. Shouldn’t your MP be on it too?

ZelayaWe totally condemn the military coup and kidnapping of the democratically elected President of Honduras, Manuel Zelaya.

On Sunday 28 June, President Manuel Zelaya Rosales was kidnapped, removed from his home by force, rendered incommunicado for several hours and expelled from his country.

Soldiers also seized Honduran Foreign Minister Patricia Rodas and the Ambassadors of Cuba, Nicaragua and Venezuela.

The military and coup conspirators are trying to suppress popular demonstrations and news by blanket military presence, curfews and intimidation of reporters. President Zelaya was working to free his country from decades hunger and poverty.

This military coup is an illegal attempt to use armed force to overturn the course of democracy and social progress chosen by the Honduran people at the polls.

We call upon every government in the world to demand the restoration of the democratically elected President of Honduras and to pledge not to recognise the illegal government put in power by a military coup.

The Logic and Lunacy of Kim Jong-il

kjiAfter weeks of duck houses, moats, fork handles and so on some people are actually rather excited that something has happened. However, while some posts have been rather interesting, I was rather taken aback on seeing this post on Socialist Unity which suggests Western Leaders should keep their noses out of the North Korean Government’s business.

I feel it is rather disingenuous to compare the statements of Gordon Brown and the actions of Kim Jong-il. Gordon Brown has done some terrible things, not the least of them renewing Trident and helping launch a dreadful war in Iraq. However, he is still more than adequately morally endowed to tell a monster running a giant prison to stop developing Nuclear Bombs.

Some blogs have concentrated on the fact that this is actually a big deal and not a debate on PR vs. STV; others have focused on the militarisation of the Korean Peninsula; others have seen fit to question the moral authority of Gordon Brown to criticise Kim Jong-il; I have decided to focus on just why such an impoverished nation is so interested in the Bomb, what it means for regional security and what is to be done.

The Logic of Nuclear Weapons

Kim Jong-Il is a well known lunatic[1] who now has the bomb, so everyone is fairly confident that the world is now a more dangerous place. However, before we jump to that conclusion we have to ask ourselves if Nuclear Weapons are guaranteed to provoke more aggression than they will deter.

Korean_peninsula_at_nightNorth Korea spends fully $5,500,000,000 of its $40,000,000,000 GDP on its Military. Around 10%, possibly closer to 15% of total spending, the figures are always imprecise. This is from a country which is regularly struck by famines and looks like this at night. North Korea has such a large military despite its impoverishment for three reasons.

Firstly, there is a healthy paranoia about the rest of the world. I say healthy because North Korea had good reason to fear the West. After the Korean War Northern Korea had been left a sort of barren moonscape, scarred by Napalm and a genuinely popular Socialist Government was forced to retreat into the North. So in a historical context a larger Military begins to look less of an abomination.

However, the army is still an abomination, and a plague on the Korean people. The second reason for the army’s prominence is to threaten neighbouring states and from this the Korean People gain nothing. The North Korean State has regularly blackmailed neighbouring states with the threat of belligerence into helping it. Its vile threats against South Korea are made credible by its large military, thus bringing more weight to the diplomatic table in the interest of the elite which run North Korea.

The third use of the army is the subjugation of its own citizenry. The citizens of North Korea are forced to work and are stopped from escaping. The repression of the Korean people allows for a larger surplus to be extracted to enrich the elite running Korea and their hostage status allows the same elite to extract the maximum aid from the rest of the world.

A Nuclear Peace?

As I have argued elsewhere, although Nuclear Weapons are expensive they are not extraordinarily expensive when compared to maintaining one of the largest armies in the world. Moreover, a Nuclear Weapon is better than an army because it offers a more total, threatening and terrifying deterrent than any conventional military.

By gaining Nuclear Weapons a state like North Korea can reduce the army required for the first and second purpose mentioned, threatening outsiders and paranoia, while both increasing its ability to fulfil these two purposes and increasing the ability of the Military to suppress the domestic population.

Gaining Nuclear Weapons is without doubt a terrible thing for the people of Korea. However, there may be a positive side to this: a Nuclear Peace. This refers to a situation formulated by Kenneth Waltz whereby the existence of Nuclear Weapons and the possibility of the damage they will do deter all actors from engaging in behaviour which could lead to war, similar to the Cold War though on a smaller scale. North Korea gaining a Nuclear Weapon may make North-East Asia more peaceful.

This may be what Kim Jong-il is hoping for. His aim may be to scare everyone enough to leave him alone to torture his own people. This may be the logic that is drawing Kim Jong-il down such an apparently dangerous path.

What if?

However, more worryingly, it may be more accurate to describe the situation on the Korean Peninsula as a Security Dilemma. In this situation Kim Jong-il’s lunacy may play the defining role. In a Security Dilemma two or more actors unintentionally provoke one another into a conflict by misinterpreting one another’s defensive security measures.

Each action designed to make the state more secure appears as an act preparing for an aggressive act. Any attempt by a state to increase its own security will cause the other to act in kind. Thus both are drawn towards war, despite neither really wanting it.

This can be avoided if one of the actors realises they are in a Security Dilemma and acts in a way which reduces the threat they pose to the other. If this were a Security Dilemma this action would then be reciprocated by the other actor, as they would no longer need as large a defensive capability. [2]

In the Korean Peninsula the North Korean state clearly views every American move as a possible precursor to an attack. The same is true of the South Korean, Japanese and Taiwanese Governments and their ally, the US. Given the history of the Korean War this is hardly surprising; a popular Socialist interim-Government was attacked by an American backed anti-Soviet force and much of the Peninsula was laid waste. After this a psychotic North Korean regime has intimidated and bullied its neighbours.

However, it is entirely possible that North Korea could be coaxed back from Nuclear Statehood if the US reduced its military presence and Nuclear stockpile. I am not calling for the demilitarisation of the area, I do not trust the North Korean Government. However, the US could maintain a deterrent to attack on its allies while reducing its forces and offering a way out to the North Koreans.

Capitulation or Civil War

I have not considered the option that the North Korean state genuinely expects to wage a suicidal war against any of its neighbours. It may be possible that Kim Jong-il is that insane, however, it is unlikely that all those around him wish to end in the same atomic dust cloud as him.

Ultimately, whether North Korea collapses in capitulation or Civil War I am certain that the Korean Peninsula will not continue in its present state indefinitely. However, neither will the collapse of the North Korean state be a blessing for those involved. The two states splitting the Korean nation have been isolated from one another for nearly 6 decades and it has been reported that the Korean Language spoken in each part are beginning to become less and less mutually intelligible.

The obvious example for comparison is East and West Germeny. However, on top of this linguistic difference Korean incomes are far more unequal than Germany’s ever were. Moreover the North Korean state’s population is far larger in proportion than East Germany was to West.

Despite the little optimism shown above I would like to echo Neil Robertson at the Bleeding Heart Show and conclude that things are going to get worse before they get better.

[1] I know Britain has dreadful libel laws, but I think I will get away with that one

[2] Of course, if this is not Security Dilemma, and one state is clearly wants to be the aggressor, they can strike while their opponent’s defences are weak. That’s why it’s a dilemma folks.