Austrian Man and Me

Jeffrey ist Österreicher.

At its most basic, economic modeling is about simplification and abstraction. In order to give useful explanations of economic phenomena, the economist must isolate variables and make assumptions about the nature of man and society. But as the economist maps the world as he sees it, he unavoidably boils man down to an essence. Many economic models exist, each with its own representation of man, but only one perfectly captures my essence: The Austrian model.

Before the Austrian School made its mark on economic thought, neoclassical economists conceived of a static world where knowledge, resources, and human goals remained constant. The idyllic society could achieve equilibrium, a position of perfect efficiency where nobody in the market could be made better or worse off. This conception, teleological in nature, represented man as a purposeful and determined automaton who would stop at nothing to maximize wealth and happiness.

The Austrians saw things differently. To them, the world was constantly evolving, a mass of changing and unpredictable variables. They believed that equilibrium was in constant motion, reacting to changing environmental conditions. Austrian man was far more complex. Like neoclassical man, he was purposeful and idealistic; he set goals for himself and painstakingly worked to achieve them. But Austrian man was also susceptible to the forces of his environment. He shifted his focus at the acquisition of new knowledge and reevaluated his goals in response to changing conditions. Reciprocally, Austrian man was capable of changing his environment. With his creativity and ingenuity, he could personally shift societal equilibrium. As the interplay between man and environment developed, man became more creative and resourceful, knowledgeable and complete. But he also ascertained that his knowledge was incomplete. Vulnerable and life-like, Austrian man closely resembled man as we know it – fickle, fallible, flesh and blood.

Austrian School economics gives me perspective on the trajectory of my academic goals and interests. I always set lofty, long-term goals for myself, confident in my ability to achieve them. But the conditions of my environment often change, and forces internal and external challenge the linearity of my ambitions. I learn new things about myself, and I adapt, readjust, and reprioritize accordingly. Like Austrian man, I fail and despair, but I grow in the process.


– Winch


The libertarian paternalistic defense of the YU internet filters: A critique

Jeff means “Jeff.” Not “higher Jeff,” “”true Jeff,” or “real Jeff.”

Josh Halpern, a student at Yeshiva University, recently wrote a piece defending YU’s controversial decision to implement an Internet filter on campus. The filter in question, implemented proximately as a block on pornographic content, ultimately serves as a means to ensure the spiritual well-being of the Orthodox Jewish students at Yeshiva University. The article is very well written and presents a clear and well-structured philosophical argument in defense of the Yeshiva administration’s decision. I would like, however, to offer a critique of Halpern’s reasoning by identifying a glaring equivocation with respect to a key concept in his chain of reasoning.

The weight of Halpern’s argument rests on the principles underlying what is known as “Libertarian Paternalism,” a political philosophy that grants responsibility to decision makers in government to shape social norms and, consequently, human action in ways that will favor human well-being and autonomy. Libertarian Paternalism has been buoyed by the nascent fields of neuroeconomics and behavioral economics, which have made great strides in pinpointing the social, psychological, and neurological causes of irrational and self-destructive decision-making. According to this new philosophy, if government has the knowledge and capability to incentivize “good” or “rational” activity by limiting the deleterious effects of these social, psychological, and neurological impediments, then it has the moral obligation to do so.

“Nudge” by Richard Thaler and Cass Sunstein lays out the fundamentals of “libertarian paternalism.” It is a worthy read.

In the case of the Internet filter, Halpern likens the YU administration (deans, rabbinic authorities, etc…) to governmental decision-makers. These decision-makers, cognizant of the Internet activity of students on campus, understand that students face serious, possibly insurmountable, psychological challenges that threaten to impede their spiritual growth. In other words, real psychological barriers exist (in the forms of pornography addiction, powerful libidos, etc…) to being a fully “rational” or “good” Jew. In addition, these decision-makers have the tools necessary to remove some of those barriers, and, therefore, have the moral obligation to do so.

Halpern addresses a few objections to Libertarian Paternalism that would serve to undermine his microcosmic application of the philosophy. He neatly rejects the “local knowledge argument” that students, uniquely aware of their own problems and behaviors, are better positioned to solve their own problems as well. This, as Halpern correctly notes, is a consequentialist argument contingent on the empirical reality of the statement the argument makes. If others (the administration and rabbis) are, in fact, better positioned to take measures to solve students’ problems and to ensure their spiritual well-being, then the local knowledge argument falls apart. He also dismisses the oft-cited “slippery slope argument” against administrative regulation. The slippery slope argument is ineffective when regulations are anchored by certain extrinsic requirements (i.e. policy must achieve its intended effects or respect certain inalienable rights). But it is the most powerful objection to Libertarian Paternalism that Halpern, in my mind, fails to address effectively. That objection is the Libertarian one – that allowing government to restrict certain activities and, in effect, control our behavior, is a violation of personal liberty. Rather than face the objection head-on, an achievable task, Halpern skirts around the issue by playing fast and loose with the definition of “freedom.”

Here is the crux of Halpern’s argument:

…it is impossible for a government to simply “let people be” because federal laws and the lack thereof shape the social norms that influence human behavior. These extremely powerful social norms can create complex and difficult societal problems.

If I understand this passage correctly, Halpern argues that the Libertarian conception of “freedom” entails “letting people be.” “Letting people be,” however, is a false concept because people never truly act of their own free will, but are always swayed by outside influences. These influences include social norms, which often induce bad behavior, leading to undesirable social consequences.

The upshot is:

…the libertarian conception of political freedom from coercion does not stand up to close scrutiny and must, therefore, be supplanted by an alternative definition…The sort of political liberty worth having (and capable of being had) must consider the role of social norms in our life choices.

In other words, the failure of one type of “liberty” to successfully resolve important social problems necessitates a redefinition of the concept itself. We should not worry about paternalistic social policy impinging on our freedom because we fundamentally misunderstand the “true” definition of “freedom.” In reality, regulatory policy that removes restrictive social norms makes us “more free” than we had been under the status quo.

To sum up, Halpern’s argument follows a chain of reasoning that states: (1) people are never actually “free” under a libertarian political system because they are always under the influence of powerful social norms, (2) these social norms can induce bad behavior and undesirable societal consequences, (3) “freedom” is better understood as the ability to act in line with one’s (or society’s) “true” preferences, and (4) by shaping social norms, regulatory policy can “free” us from restrictive social norms, allowing us to follow our “true” preferences.

Halpern’s redefinition of “freedom” is a problematic equivocation that severely muddles his argument. There are important distinctions between the libertarian conception of “freedom” and Halpern’s redefinition that must not be ignored. In fact, it is Halpern’s new definition, not the libertarian one, that is a “false concept.”

The first key distinction lies in the definition of “coercion” presumed under each definition of “freedom.” In the libertarian formulation, “coercion” specifically requires human agency. “Freedom” may thus be defined as the absence of human force as a prospective instrument of decision-making. Halpern’s formulation, however, subsumes libertarian “coercion” under a far broader definition of the term. Coercion no longer implies human agency specifically, but any extrinsic force playing an instrumental role in influencing human decision-making. This broad definition allows Halpern to make claims like:

Perhaps, the only way to conquer this crippling impediment (i.e., the male libido) is to enact coercive university “legislation.” By filtering the internet, YU promotes freedom: its students, uninhibited by internal, insurmountable constraints, are free to act in accordance with their true spiritual motives.

How can “coercive university legislation” possibly promote freedom? Isn’t this a blatant contradiction in terms? Well, if human coercion and libidinal coercion are commensurable, then Halpern can argue that the gains in freedom to be had by removing libidinal coercion exceed the losses of freedom resulting from coercive university legislation. This utilitarian calculus assumes that all coercion can be measured along the same axis. The issue, however, is that human agency adds a certain moral weight to coercion, differentiating itself from other coercive instruments, so much so that human coercion and libidinal coercion must be seen as different phenomena altogether. We must treat interpersonal coercive activity with unique severity, distinguishing it not only in scale, but in kind, from non-conscious forms of coercion.

That human agency distinguishes itself from unthinking deterministic processes should seem obvious. But let me briefly explain why [from Wikipedia, “Agency (Philosophy)”]:

If a situation is the consequence of human decision-making, persons may be under a duty to apply value judgments to the consequences of their decisions, and held to be responsible for those decisions. Human agency entitles the observer to ask “should this have occurred?” in a way that would be nonsensical in circumstances lacking human decisions-makers…

In other words, with agency comes responsibility. At the crux of every moral dilemma is a moral agent saddled with a choice, and the agent bears the burden of responsibility for the outcome of that choice. A libido never faces a “choice.” It can never be “wrong” or “guilty.” It compels its owner, naturally and deterministically, to take action.

William Wallace understood freedom. Do you?

The second key distinction between the libertarian conception of “freedom” and Halpern’s redefinition is semantic in nature. While the freedom Halpern proposes shares one important property with libertarian freedom, in many ways the two types of freedoms are complete opposites. If we can only accept one of the two definitions, the libertarian comes closer to “freedom” properly understood.

When Halpern critiques libertarian liberty, he appeals to the undesirable consequences that often emerge under such a system. Halpern writes, “…extremely powerful social norms can create complex and difficult societal problems. In order to solve such problems, Sunstein believes that governments should legislate responsibly to shape social norms that favor human well-being and autonomy.” But the failure of libertarian freedom to address emergent social issues is a problem separate and distinct from the definition and merit of libertarian freedom itself. Libertarian freedom is a nondiscriminatory, universalistic system unconcerned with consequence. Halpern’s new conception is concerned with particular outcomes. In his essay “Freedom Properly Understood,” Tom Palmer dissects the linguistic gymnastics performed by those who

attempt to repot the freedom concept, plucked from its classical (liberal) roots:

To call wealth or health or intelligence or education or beauty “freedom” because it enables us to do more than those who lack it is to do violence to language; we already have quite good words to denote those concepts, namely – wealth, health intelligence, education, and beauty.

Halpern has made the same error in the YU Internet case by pilfering the freedom concept to conveniently replace the sufficient terms “self-control” and “mental health.” In its libertarian formulation, however, “freedom” stands alone as a broad concept, irreplaceable by the specific. Its exclusivity gives libertarian freedom ownership over the term “freedom” itself.

Despite the weaknesses of the paternalistic argument as formulated by Halpern in defending the actions of the YU administration, the decision to filter the Internet may still have grounding, even from a paternalistic perspective. The best case to be made for libertarian paternalism can be made on the basis of improving well-being. While libertarian freedom, as a standalone concept, bears its own merit, other considerations – happiness, health, spirituality, accordance with a religious code, etc… – may supercede freedom in certain circumstances. The paternalist may choose to restrict freedom for the sake of these other values. He must, however, make his case without claiming that they are the same thing.  Thomas Sowell perfectly encapsulates this point in his valuable work Knowledge and Decisions. It is worth quoting at length:

“One of the most important political trade-offs is between the amount of freedom and the amount of other characteristics desired in a society. The problem is made more difficult by intellectual ambiguities and philosophical disagreements that have long surrounded the very meaning of freedom: “We all declare for liberty; but in using the same word, we do not mean the same thing.” This is at least as true today as when Abraham Lincoln said it…An Orwellian Newspeak has made it fashionable to describe the tradeoff of freedom for other things as an expansion of “new freedoms” or of freedom in some “larger” sense. The incremental trade-off of freedom for other things is accepted by everyone except a pure anarchist. But the extent of this historic trade-off is too momentous an issue to be concealed or confused by pretty words.”

A reasonable libertarian might still battle Halpern on the likely efficacy of government intervention. He might argue that certain ends are better met under a free market system. He might also make a case for the triumph of liberty over other values under the circumstances at hand. But no libertarian denies the existence, and merit, of values other than liberty. Equality, spirituality, dignity, and liberty all vie for the crown of supreme value, and in the case of the Internet filter, spirituality might reign supreme. It may not do so, however, by dressing itself up as “freedom.”


– Winch

“But who will tame the savage drivers?”: A case for relaxing our traffic rules

Jeff runs reds in the middle of the desert

Last night, a police officer pulled me over for speeding through a blacked out intersection in the desolate wasteland formerly known as Teaneck, NJ. I thanked him for his civil service (and for letting me off with a “just be safe out there”), accepted my censure, swallowed my pride, and slowed down. When I approached the next intersection, I played a game of “You First – Me First” with two other cars, and we all escaped the game of chicken with our vehicles and lives intact.

Today, traffic in Northern New Jersey was particularly horrific. In addition to negotiating the labyrinth that is currently suburban New Jersey – its orange cones and fallen trees the cunning traps of a Daedalusian God – I survived signal-less four-ways and a share of wide-lefts. Using my eyes, hands, lights, and horn, I communicated with the aggravated mass of drivers, and I arrived at all my destinations a healthy and happy Minotaur.

“The cunning traps of a Daedalusian God”

The libertarian in me couldn’t help but spin this experience as an exercise in libertarian thought. Stereotypically, the anti-libertarian begins his tirade against libertarianism with the smug provocation,  “But without government, who will build the roads?” Of course, no self-respecting anarchist will let this hanging curveball brush him off the plate. But your run-of-the-mill libertarian will probably agree that infrastructure construction and maintenance is a necessary or at least excusable function of government.

What about traffic signs and signals? The libertarian in the crowd would probably concede this point as well. After all, letting human beings operate motor vehicles without control or constraint is irresponsible and dangerous. The institution of traffic signs, signals, and rules mitigates the “negative externalities” of unbridled vehicle operation, those inevitable consequences (crashes and congestion) of the spontaneous interaction of drivers on the street.

My experience today, however, seemed to challenge this orthodoxy about traffic rules and regulations. Without the numbing aid of red, yellow, and green visual indicators, people became more conscientious drivers, actively paying attention to the cars and barriers around them. Rather than placing their trust in the functionality of an external traffic system, drivers sought their own self-preservation by maneuvering the streets cautiously and responsibly. Out of all this emerged a system of mutual cooperation, where people helped themselves out by helping out each other.

Adam Smith, anyone?[1]

The notion that traffic signals actually impair the road transportation system is not without precedent. In his groundbreaking book Traffic, Tom Vanderbilt dedicates a whole chapter, titled “The Trouble with Traffic Signs,” to the unforeseen consequences of excessive signage. I couldn’t conjure an exact quote from the book (it’s nowhere to be found legally online and my car is out of gas, so no library), but much of the chapter focuses on the idea that our attention is a scarce resource and that traffic signs command too much of it to create an optimally safe driving environment. In the Summer 2008 edition of Wilson Quarterly[2], Vanderbilt details the experiment of Hans Monderman, a revolutionary Dutch traffic engineer who removed all traffic controls from the Dutch town of Drachten. Shockingly, a year after the change, traffic accidents had decreased by 50% despite a 33% increase in car traffic. The reason for such an effect, writes Vanderbilt, was the replacement of the “traffic world” with a “social world,” one where people interacted with other people and not with signs and lights. In a July 2008 Atlantic article[3], John Staddon corroborates Vanderbilt’s hypothesis. He writes, “Attending to a sign competes with attending to the road. The more you look for signs, for police, and at your speedometer, the less attentive you will be to traffic conditions.”

Traffic by Tom Vanderbilt was a groundbreaking work and a national bestseller

One of the underlying phenomena at play here is what economists call “moral hazard.” Moral hazard takes effect when people engage in riskier behavior in response to a perceived sense of security. “If I simply follow the instructions written on the signs,” says the victim of moral hazard, “nothing can harm me!” But of course this is not true. Signage can divert our attention from the important things on the road – other cars, pedestrians, bikers, and barriers – and give drivers a false sense of security.

But doesn’t the case of my speeding through an intersection on that dark Tuesday evening in Teaneck prove that we can’t simply trust drivers to engage responsibly with their surroundings? Well, I immediately learned from my mistake and permanently changed my behavior. If neighborhoods in America were ever to experiment with their roads like Hans Monderman did, there would obviously be a period of adjustment as people learned to properly engage with their surroundings. The “rules of the road”, however, would eventually evolve. Additionally, the infrastructure on which vehicles operate would inevitably evolve as well. We wouldn’t simply remove all signs and signals from major intersections and bid drivers good luck. Traffic circles would become more commonplace. Walkways would become more visible. And roadsides would adapt in ways we haven’t yet considered.

The deeper lesson here is twofold. First, people aren’t stupid. Yes, drunk drivers and visually impaired drivers and reckless drivers are stupid. But these morons will exist whether or not we have traffic signs dictating our driving behavior. When we have a group of individual drivers, each looking out to preserve his own safety, behaviors will emerge that create a safe driving environment for the entire community. Second, people respond to incentives and stimuli. When we create a traffic system that a) diverts our attention from the important tasks at hand and b) creates a false sense of security by transferring the onus of driving responsibility from the driver to the stop sign, people will respond in kind.

If today was any indication, it might not be such a bad idea to simplify our traffic control system. The roadways wouldn’t turn anarchic. Everything would probably be just fine.


– Winch

[1] From An Enquiry into the Nature and Causes of the Wealth of Nations, Vol. 1: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”

Or, if you prefer, “He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention””