Episode 123: Economics with Hayek and Sen (Intro by Seth Benzell)

0:07 Mark: Why? You're listening to the Partially Examined Life, a philosophy podcast by some guys who at one point set on doing philosophy for a living, but then thought better of it. Our question for episode 1, 2, 3 is something like, how can economics help us to understand and enact our social obligations? And we read the Use of Knowledge in Society by F.A. hayek from 1945 and on ethics and economics by Amartya Sen from 1987. You can join the discussion, get the texts and lots More information@PartiallyExaminedLife.com this is Mark Linsenmayer Pareto Optimal in Madison, Wisconsin.

0:44 Seth Paskin: This is Seth Paskin maximizing my self interest in Austin, Texas.

0:47 Wes: This is Wes Alwan in Boston, Massachusetts.

0:50 Seth Benzel: This is Seth Benzel with Complete and Transitive Preferences in Boston, Massachusetts.

0:55 Seth Paskin: Welcome.

0:56 Mark: So Seth is obviously just a cheap amalgam of Seth Paskin and then Wes, location, Boston. That's what I get out of that so far, yes. So you are an econ guy. Tell us about your background.

1:08 Seth Benzel: I was always interested in kind of social questions. There was a big debate in my high school about whether or not to enact some kind of school social policy, and everyone was really excited about it. Some people really knew that the laptops that they were given to the kids were a waste of money, and some people really knew that they were a great idea in the future. And I found that conversation really frustrating. So when I got into college, this was also the time of the Great Recession. And so these questions were in the air and I decided to major in economics.

1:39 Seth Paskin: Wait, you're 130 years old?

1:41 Seth Benzel: I am a young person.

1:44 Seth Paskin: Oh, you said the Great Recession, not the Great Depression. I'm sorry.

1:47 Seth Benzel: Oh, yeah, no, Great Recession. Yeah, nomenclature. Yeah, for a while I thought I wanted to do physics, but then I realized people bouncing off of each other are way more interesting than particles bouncing off of each other. So no offense, Dylan, and just went straight into graduate school since then. So now I study technological change and economies, some fiscal policy stuff, and also do some historical economics.

2:11 Seth Paskin: And as I discovered today, you were co author of a paper with Jeffrey Sachs.

2:16 Seth Benzel: Yes, that's right. Robot's curse or blessing. Mark, believe it or not, I actually kind of have you to thank for getting set on this track. We had a forum exchange where you were talking about how as technology develops, why do I have the intuition that there will always be jobs for people to do? And you have the opposite intuition. And so this paper is exactly speaking to that question and trying to think about how will the rise of the robots affect Wages and income distributions and what are some potential negative knock on effects? I actually got called a Marxist for this paper in a recent lit review about robots.

2:58 Mark: Yes. So Seth B. Here became apparent to me in the wake of the new work episode a couple years ago now when I was looking for somebody who knew something about economics to tell me why some of the things that seemed like intuitive that you could do to make the world better, why according to economics, they wouldn't work. And which led in some ways to a discussion about is economics something that philosophers should pay attention to, or is it like many of the social sciences, not something to be ignored, but something that is imbued with a lot of unexamined assumptions and itself needs a good spanking to gain its philosophical footing?

3:38 Seth Benzel: I don't see why those two have to be mutually exclusive.

3:41 Mark: So yes. So you suggested these readings or suggested a longer list of readings to other Seth, who has long been advocating an econ episode for us to do. I assumed that we would just do some more Adam Smith, that we would do wealth of nations, and I'm sure we'll get around to that eventually. But I think you were one of the folks that said no, come on, modern economists, that's a historical interest. There are other things that are much more on point.

4:06 Seth Benzel: Yeah, we like to think of ourselves as learning over time. And so it's a modern theory that's developing and we should talk about what people think today.

4:16 Mark: So in service of that, we're reading an essay from 1945.

4:22 Seth Benzel: This is actually the exception to the rule. I was told by a professor once, you never have to read anything that's more than 30 years old except for this essay. It's really, really, really good. And just as an aside, the American Economic Review, which this was published in already when this was published in there, this was a highly atypical thing to be published in that journal, which is a top economics journal. There's no math in it, which is would blow people's mind. If you opened up the AER today and saw a article with no math.

4:50 Mark: Maybe we should just sum up the two essays and then we can move on and just talk about Hayek for the next while.

4:57 Seth Benzel: Sure, Seth B.

4:58 Mark: Was good enough to record a Precog for us. We haven't had one of those in a while, so folks can go and just listen to him talking uninterrupted for 10 minutes about these very things to get a more detailed and sensible overview than we're probably going to stumble through right now. The main point of the use of knowledge in society. There were two main points. And the first one, the one that sounds like, yes, common sense, at least to me reading it, was a methodological one, which is, how would you plan an economy? Planning an economy would require that you know everything, you know what everybody's needs are, you know what the level of supply of everything is.

And then you could plan the economy. Since we don't have that, it makes more sense to leave it, the planning to the individuals at the tail end of things who know that this particular population is short on something, that there are weather problems in this part of the world which is making this kind of crop more rare.

5:51 Seth Benzel: But it's like even more local than that, right? It's not just that there's a shortage in my area, it's that there's a price increase in my area and how should I react to that myself? I don't even need to know what's happening.

6:03 Wes: Instead, a price increase propagated across the whole system, that my expenses went up or demand went up, and I increased prices for customers.

6:11 Mark: So there you go, you're giving the second point, which is the positive point here. If we say there's something missing that a central economic planner is not going to have all this information. Well, even local economic planners must have some information. They must have somehow. We must have some way of getting them information from hither and yon so that they can make intelligent decisions of what to do locally, whether to produce more, whether to buy now. And the solution is already given in, well, the natural economic order of things, according to Hayek, which is prices.

6:41 Seth Benzel: I will point out that Hayek doesn't claim that this is inevitable or that it's natural. He just claims that it's a solution that we've stumbled upon and we shouldn't be overly cautious about it just because it we stumbled upon it.

6:56 Mark: But it's awesome that if somebody had invented it, we would say this is the best goddamn thing ever invented.

7:01 Seth Benzel: Prices are magic.

7:03 Seth Paskin: So I want to just back up for just one second because I want to tie together the issue of knowledge that you first brought up, Mark. So what you said was if you were going to plan an economy or if you were going to try to manage the economic transactions of, let's say, a large state or a large geography with lots of different types of people and resources and whatever, what Hayek says is that to do that from a central location, to have a single planner or a group of planners that were doing that, they would need all of this information they would need a lot of knowledge. And it's not practically. Even if it's true that all that knowledge exists and is accessible, it's not practically possible to get that to them in a timely fashion where they can do it.

7:40 Seth Benzel: Yeah. And some of it, it's unclear how you would even get all the relevant information. Right. So one of the pieces of information you need is how many tomatoes does my corner Italian restaurant need? And how willing is he to substitute between sliced tomatoes and diced tomatoes? And how much more does my friend prefer this kind of cereal to that kind of cereal, to a third kind of cereal? If you actually wanted to try to do this, you kind of need a list of everybody's preferences over everything and a list of all of the possible substitutions that all of the factories and all of the shops in your society could make, you know, a little bit more labor and a little bit less tin, et cetera, et cetera.

8:21 Seth Paskin: Well, that's if you want to give people choice. I mean, the way central planning and a lot of totalitarian states gets around it is they don't give you choice. Your preference for what type of cereal you want doesn't matter. This is the kind of cereal you're going to get.

8:37 Wes: Everyone gets the crusty bread if they're willing to wait three weeks in line for it.

8:41 Seth Benzel: I want to come back to that point because I think even in totalitarian states, you're going to see black markets immediately emerge to try to get people more of what they want.

8:50 Seth Paskin: Of course, I was being semi facetious. Let me carry this point. There's an important connection between pricing and knowledge. And what Hayek is saying is that on the flip side of central planning is distributed planning. So that's where individuals transact with one another, and they have a small sphere of knowledge, but it's deeper, more specific knowledge about their situation. But they don't know what's going on at the macro level with, like you said, weather patterns in another country that are affecting the supply of wheat or whatever. But the gap in their knowledge at the distributed level is made up for by pricing or prices.

So prices are a way that it's an order that emerges, so to speak, out of all of these distributed transactions, and is a way that information gets translated or moved across people who have overlapping areas of interest and contact. And so what Hayek essentially thinks is there are definitely problems with both approaches, but prices solves the problem for distributed planning, and there is no solution for the problem of centralized planning. As far as information flow goes, I

9:56 Seth Benzel: Think that nails it? Yeah.

9:57 Wes: And in a way, price has become a sort of symbolic stand in for all the things that you don't know. But in your own planning, they give you everything that you need to know. So you don't need to know that there was a bad winter and some crop is in shortage. All you need to know is that the price of tomatoes went up or something like that, and you make your decision from there.

10:17 Mark: So before we get into that more critically, so how does that connect to the second essay, which is actually a whole book? It's three lectures that were adapted for book form, given in 1986 to a mixed audience of philosophers and economists. And it also seems to be about economic methodology primarily and has to do with first and foremost about this assumption that everybody acts selfishly. I can give an introduction to this, but Seth Paskin, I think you had a. In your notes that you just sent us a way of connecting the two essays that I thought sounded nice.

10:51 Seth Paskin: Well, and I stole it from Seth Benzel's Precog. But essentially. So Hayek puts this thesis forward that there are these two ways to solve this problem, and only the distributed model makes sense. And it only makes sense because we've developed the notion of pricing. But what's not explicitly stated in his essay, but what's a requirement for that to work, is that the economic assumptions about what motivates human behavior in an economic transaction, and then also some higher order assumptions about the way an economy works have to be in place. And it's those assumptions that Amartya Sen is going to call into question in the second set of essays that we read. But we should probably spend a little time talking about that first, because it's not immediately obvious from Hayek's essay what those things are.

11:37 Seth Benzel: Do you want me to introduce the fundamental welfare theorem?

11:40 Seth Paskin: Yes.

11:41 Seth Benzel: Okay. So Hayek is writing in the 1940s, in the 1950s, you get the development of something called general equilibrium theory. So before then, people had thought about the economy as a whole, but most of the theories that had been developed were of a market. So we talked about the market for corn or wheat. Right. But if you really want to talk about all of the interdependencies of everything, on everything else, you got to talk about the general equilibrium. And so economists started by thinking about a really abstract universe in which the only way people relate to each other is by this market exchange mechanism. So there are no market interdependencies.

12:19 Mark: Explain that. Why those two things are the same. We only relate to each Other by exchange. And so what does that have to do with market interdependencies?

12:27 Seth Benzel: Let me give the classic example. So if there is a non market interdependency, that's called an externality. The classic example of an externality is pollution. So there's the guy who's got the factory, he's selling us Mardi Gras beads. We're buying the Mardi Gras beads from him. Should be win, win, win. Right? Except for the fact that the factory is emitting all of this pollution and it's making all of us sick. And the problem is we can't. Nobody owns the air, right? Nobody has an interest to protect the air. So there's kind of a Pareto improvement.

We should introduce the concept of a Pareto improvement left on the table. Because everyone would be better off if everyone who is breathing the polluted air could bribe the factory owner not to pollute the air. But if they bribed him to do it, just somebody else would come in and do it. So there needs to be some sort of government intervention or some other kind of social coming together to deal with this externality or non market interdependence.

13:25 Mark: Okay, I just, I thought you had described it as an interdependence of markets.

13:29 Seth Benzel: No, Mark. Okay, yeah, sorry if that was unclear. So market interdependence is great, right? All of the markets are interacting with all the markets. That's the general equilibrium theory. It's when stuff happens outside of markets that a theory of markets can't talk about it.

13:42 Wes: Okay, Right.

13:43 Seth Benzel: That's the first big assumption. The second big assumption is that people only care about their own consumption. The only thing that people do in this society is they trade their labor for other people's stuff. And maybe we all trade our labor together to one guy who combines it with the machine he owns and makes something else. And then I get it back. And the idea is that every single one of these exchanges is mutually beneficial at a fixed rate price. So a third thing that will prevent the fundamental welfare theorem from coming to pass is market power or monopoly.

So if you have someone who has a monopoly over something, say shoes, then what they're going to do is they're going to know that by restricting the supply of shoes, they can have a higher price for shoes and get higher profits. It might very well be that the socially optimal result is to produce many more shoes, because everybody wants shoes. But you can actually get more profits by restricting the supply of shoes. So that's another way in which the fundamental Welfare theorem may fail. But given self interested behavior, where self interested is like the really strong kind of self interest where you only care about your own consumption, given no non market interdependencies of which one is externalities like pollution, and given no monopoly, then any market equilibrium will be Pareto efficient.

And then given another kind of weaker assumption, any Pareto efficient situation can be maintained as a market equilibrium. Pareto efficiency. So economists like to talk about efficiency. We love efficiency. Why would you want to do something that's inefficient? Right. But when you think about efficiency, usually it's thought of as kind of instrumental. Right. What's the most efficient way to produce a pound of corn? Given a certain amount of inputs, you don't want to be non wasteful with inputs. Pareto efficiency takes that a step further. What Pareto efficiency says is that suppose everyone in society is able to rank their outcomes over their futures, from the outcome they're most happy with to the outcome they're least happy with.

And it doesn't necessarily have to be the case that there's a best one or worst one. There just needs to be a list and they can compare any two options. Then it seems like at the very least, the best society should be the situation in which you can't make anyone better off without making someone else worse off. Right. Because if you could make someone better off without making somebody else worse off, do that, then everybody is better off and there's no downside. So that's the concept of Pareto efficiency. And the fundamental welfare theorem says given those assumptions which are really strong and don't hold in the real world, and there's some other stuff that I even mention, you're going to get Pareto efficient outcomes given the market.

And that's some of what's going on in the background of Hayek's paper. Now there are definitely reasons that you might want to have a decentralized market. Even if the fundamental welfare theorem doesn't literally hold, none of the assumptions literally hold. Their stuff going to be pros and cons, and we can talk about interventions in different situations, but that's the theorem.

16:40 Mark: And it seems like even if you were going to argue that for some particular good like fire service or education or whatever it is, that you're going to make an exception to this and intervene, then there would still be the underlying assumption that that's sort of parasitic on everything else remaining unregulated. That is the exception. Whereas the norm is letting the market do its work.

17:00 Seth Benzel: Yes. So methodologically you might think that economists come at this as the assumption is that the market works. And then in any given market, if somebody's advocating for a government intervention, you have to point towards the market failure. Is the market failure. An externality like pollution is the market failure. A monopoly is the market failure. Something paternalistic like people can't make decisions for themselves about how many drugs to do is the market failure? And there's the list goes on and on of different situations. Maybe asymmetric information is another big one.

So if some people know more about a situation than other people, they can be exploited by the people who know more. Lots of stuff like that. And then you would say something like, okay, we've identified the market failure, let's do the minimum amount to fix that and then let the market do everything else. So we didn't get into distribution, but obviously Pareto efficiency also that's one of the downsides of Pareto efficiency is it doesn't have much to say about distribution

17:54 Mark: that is between the rich and poor.

17:56 Seth Benzel: Precisely.

17:57 Seth Paskin: I guess kind of one of the key things that I hear coming out of this, and it will tie into what we're going to talk about with Sen later, is this idea that the fundamental welfare theorem is a shorthand way of talking about how an economic system could be optimized and optimized specifically around a combination of efficiency. But there is a principle of some kind of. I don't want to say non interference, but there's a notion that there's an equilibrium that can be reached where everybody is as well off as they can be without their well being starting to impinge on somebody else.

18:36 Wes: It's a statement of Adam Smith's invisible hand thing. Right. It's the idea that despite the fact that people are self interested and the market is competitive, what will emerge out of that is an efficient allocation of resources.

18:49 Seth Paskin: But a certain kind of efficiency is all I'm saying. You might say, well it's efficient to have 10% of the population control all the resources and the other 90% do what they say. There may be an efficiency in that, but in this case the efficiency is tied to a notion of well being.

19:05 Seth Benzel: Yeah. So there's two issues. So the first is that for almost any economy you can think of, there's going to be a whole, whole whole bunch of Pareto efficient outcomes. There are going to be Pareto efficient outcomes where one guy has everything. There's going to be Pareto efficient outcomes where everybody's almost exactly equal. Right. So it's weird to Talk about it is efficient for this distribution to take place in terms of like consuming the resources of society.

19:30 Wes: I'm not sure I understood the last part of what you just said.

19:33 Mark: To make efficiency itself as if it's a definite goal.

19:37 Wes: Right.

19:38 Seth Benzel: I think there's something intuitively attractive about Pareto efficiency just by the way we put it out there. Right. If you accept that what the good society is, is it's the one that makes everyone as well off as possible, it seems like then the best possible SOC is at the very least Pareto efficient. And it might be other stuff too.

19:57 Wes: Okay, Even for pro market economists, that's not enough. Sen obviously brings up these sorts of criticisms where you could have a Pareto efficient outcome where one person has everything. How do economists typically deal with that fact?

20:11 Mark: This wasn't on Hayek's radar, right? At least not that term Pareto efficiency.

20:17 Seth Benzel: I would be hard pressed to say whether that term existed. People read that essay as prefiguring the fundamental welfare theorem. Maybe I should say a little bit about the other direction of the fundamental welfare theorem. What the other direction says is that any sort of Pareto efficient outcome, and remember we said that at the very least society should be Pareto efficient. That's kind of like a minimum criteria. Or you might think, and then Sen's got stuff to say about that. Once you buy that, then you can say, well, any equilibrium can be supported by a market. So the intuition there is if you want to help poor people, don't do it by restricting prices. Don't do it by giving handouts in kind like maybe food stamps. Just give them money and then they'll do what is optimal for them to do with it. Just redistribute resources.

21:03 Wes: So don't interfere in the efficiency or in the mechanisms of the market, whatever you do. Is that what you're saying?

21:09 Seth Benzel: Yeah. So what I'm saying is, given that you have assumed this really unrealistic, really abstract world, then it doesn't make any sense to help poor people by doing weird stuff like restricting prices or by having government interventions and paying people higher wages. The way you should help poor people is just give them resources and then they'll do optimal exchanges.

21:33 Wes: So you could move from one Pareto efficient state to another, right?

21:37 Seth Benzel: Precisely.

21:38 Wes: You go from one market equilibrium to another. Supposing that less inequality were your goal, the second one would be better.

21:44 Seth Benzel: Yeah.

21:45 Mark: And incidentally, it's named after Vilfredo Pareto 1848-1923. He did use this concept. It was not just named after him, although I would doubt that he called it Pareto efficiency.

21:57 Seth Benzel: He was humble like that.

22:00 Seth Paskin: Going back to the idea that this is a knowledge problem, it's essentially epistemological. In Hayek's world, knowledge is virtue in the sense of you have essentially perfect knowledge of your own situation.

22:12 Seth Benzel: Yeah, at least the best of anybody.

22:13 Seth Paskin: You have better information about your situation than anybody else does, and you will act in your own best interest to do what's right for you in that circumstance. And one of the things that he points out about this is that that information, that knowledge that you have about your situation is not something that can be put into a statistical or technical or mathematical form. That even though when we look at the aggregate of a bunch of individuals with all this specific knowledge that are doing things in their own best interest, you may see a statistical aggregation come out of that.

So you can look at a whole group of people that are doing certain kinds of activity and you say, aha, right. You see that there's a stability that comes out of all of this diverse activity by all these individuals that's based on their own specific knowledge, which is not something that you can codify. Does create a certain level of stability that it gets reflected in a statistical measure. To think that the fact that the activity can be expressed statistically, it confuses cause and effect. If you think that, then you can take those statistics and apply it to any given individual that the information that the individual has simply cannot be represented that way.

And this is important for two reasons. One is, it's another way that he argues against the possibility of central planning. Because what would have to happen is the individual who had knowledge of their situation would have to find a way to actually articulate that in a statistically consumable manner. That the central planner could get it in an efficient way and tie it together with other statistical information or mathematically represent information. But it also points to a kind of emergent property of order that comes out of all of this diverse, isolated, self interested activity.

And the disconnect between the individual who's acting and then the aggregate of individuals who are acting is ultimately going to be the difference between talking about how individual economic transactions are regulated between two individuals and talking about groups of people and setting policy. One of, I think Hayek's points in this paper is to say, because we see order in large groups of people and we start to mathematize that and look at it statistically, we are inclined to think of that as reflective of the cause as opposed to being an effect of that activity.

And we are inclined to use that as a reason for making policy decisions and making decisions about how to order, which is another way of getting in the central planning mode. So there's a danger in getting caught up in that emergent order and thinking that that is itself the phenomena, as opposed to reflective of something else.

24:47 Seth Benzel: So I think that's exactly right. I would add to your first point about the impracticality of getting this information to the central planner, that also individuals will face really perverse incentives to lie to the central planner too. If you actually tried to do this, central planner's going to say, I've got a thousand cars. Who needs the cars? It might be the case. Everybody says, oh, I really need a car.

25:06 Wes: That's when Oprah Winfrey is the central planner. You get a car. You get a car.

25:13 Seth Benzel: Yes. The second thing I would say is that Hayek is really talking right there to the macroeconomics of the 1940s, because Keynes is kind of famous for introducing emergent behaviors of the macroeconomy to discuss macroeconomics. Like before Keynes, there was just economics. Then Keynes said, hey, the macroeconomy is doing all this weird stuff that we don't think individuals would do, so let's abstract away from individuals and let's just have this aggregate demand curve and this aggregate supply curve. And so that was a flaw that a lot of economists saw with the macroeconomics of that time. And then later you get what's called the neoclassical revolution in macroeconomics, in which people said, we don't want to talk about aggregate demand. We want to talk about a billion people's individual demands, and then we can all add them all up, right?

26:07 Wes: So he calls this the knowledge of the circumstances of time and place. So he says, the sort of knowledge with which I have been concerned is knowledge of the kind which by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form. For instance, by lumping together as resources of one kind, items which differ as regards location, quality, and other particulars in a way which may be significant for the specific decision. So what's a good example of the macro versus the time and place thing that. To which Hayek refers?

26:41 Seth Benzel: Let's say you have a factory and you can make your output either using tin or brass, right? It doesn't matter which one you use. So you know privately in your head that I can use either two units of brass or one unit of tin. And then when prices change, if the price of brass goes up high enough, then you switch to tin, and vice versa. And we can get even more intricate, more detailed examples than that.

27:06 Wes: There's nothing I can do with that. At a macro level, planning wise, what would a central planner even want to do there?

27:12 Seth Benzel: He says, right at the beginning of his first paragraph, he has, like, the only bit of jargon in the entire essay where he says the efficient outcome is to set marginal rates of substitution equal. And so what that's saying is, so if you were a central planner and you were deciding who should get the brass and who should get the tin, it shouldn't be the case that by trading someone's brass for somebody else's tiny, you could get more output. And so one thing that comes out of that, if you assume continuous production functions, and there's some math in the background here, is that every factory, the trade off between brass and tin should be the same.

Right? So if brass is two times as effective as tin, use it. If brass is three times as effective as tin, use it. But IF brass is 1.5 times as effective as tiny, switch to tin. And so every single factory should obey that same rule. And it turns out that prices tell you what relative quantities to use. So, right, if the price of tin is two times as much as brass, then everybody's going to internalize that.

28:15 Wes: I see.

28:16 Mark: So we could look at the foolishness of the central planner that says, but everybody should have a right to steal. Should have a right to tin.

28:24 Wes: So I bet you're saying steal, as in taking things from other people. That'd be a radical economic plan.

28:33 Seth Benzel: Sorry, tin for the people.

28:36 Wes: Tin for the people.

28:38 Mark: A tin in every pot.

28:44 Seth Paskin: Let them eat tin.

28:47 Wes: Okay.

28:48 Seth Benzel: The alternative would just be that the central planner says, okay, every factory that makes kitchen fixtures gets 10 units of tin and 10 units bronze. And then you're going to have some factories that have extra tin and not enough bronze and blah, blah, blah.

29:03 Wes: I see.

29:04 Seth Paskin: Okay, we're kind of going through the litany of reasons that Hayek thinks that central planning isn't going to work from a kind of logistical and knowledge perspective, but he actually takes it to a sort of higher order, going beyond the practical notion of you can't codify this information, and if you could, you couldn't get it to the central planar in an efficient way and in time and all that. And towards the latter part of the essay, he makes a point that if you believe that things cannot evolve that do better work or that do better than we can, if we tried to consciously design something you're mistaken, in fact.

And he quotes Whitehead, which I thought was interesting. So this is section 24. Those who clamor for conscious direction and who cannot believe that anything which has evolved without design and even without our understanding of it. He's talking about prices here. Should solve problems which we should not be able to solve consciously should remember this. The problem is precisely how to extend the span of our utilization of resources beyond the span of the control of any one mind, and therefore how to dispense with the need of conscious control and how to provide inducements which will make the individuals do the desirable things without anyone having to tell them what to do.

And then he's got a Whitehead quote that follows that. Which is nice, but let me just

30:27 Wes: give you the end of that quote because it's great. Civilization advances by extending the number of important operations which we can perform without thinking about them.

30:35 Seth Paskin: He's making the point that if you have to consciously deliberate and design things versus just being able to do that. And he uses things, for example, like the notion of variables in mathematics.

30:47 Mark: Right.

30:47 Seth Paskin: Or symbolism, shorthand. We have complex concepts which ultimately become a part of the currency of discourse that allow people to accomplish more and communicate more without having to go through torturous discussions. Right?

31:01 Wes: Yeah. Prices are signifiers.

31:03 Seth Paskin: Prices are signifiers. I'm going back to what Wes said, and he's absolutely right that you don't have to understand what sets the price of this particular thing at this point. All of the myriad of factors that go into making that price can be completely hidden from you. The price itself is shorthand for weather and distribution and supply and consumption in other places and a variety of other things that you don't need to worry about. But what I think is interesting about this is that I go back to what I said earlier about him thinking that knowledge is virtue, that your own knowledge of your own situation is your virtue.

And that when we talked about Aristotelian virtue ethics, right, There's a component of internalization that we talk about that you don't follow a rule and you don't do something that's good because of the consequences of the outcomes that you're spying. You do it because it's the right thing to do. And you know it's the right thing to do because you've done it over and over again or because you have been trained or learned from somebody who's good about how to do these things. And I just want to draw the analogy here that the mechanism that he's talking about this is A higher order, as opposed to an individual structure about how to internalize proper behavior.

There's to me an echo of that notion in what he's describing here.

32:24 Wes: It sounds a lot like Wittgenstein to me. For concepts, there's no rule for a use of a concept. The application of concepts is not a central planning, top down type of thing where we can make explicit rules for it, for instance. Rather it works in the same sort of way. Meaning is use. Let's say there's a similar thing going on here. Meaning sort of is emergent upon the sum of all these particular behaviors. And I think it's the same thing here with prices. Right. The price becomes a sort of signifier or stand in for a kind of concept, but a very abstract one.

Right. Which obscures lots and lots of different kinds of content, like you said, like weather and any other factor that affects prices. So it's different in that sense. But you were relating that to Aristotle and that's very interesting because Sen, I think ties into virtue ethics as well. But what were you saying exactly? The idea of a virtue being a behavior. So for instance, you can't just take a Kantian maxim, which again might be the central planning analogy, and reason it out and say, okay, I'm never going to lie because of blah, blah, blah.

Rather it's a.

33:35 Seth Benzel: You should only lie if it's expensive.

33:39 Wes: Yeah, I mean, maybe Aristotle is far more context sensitive in a way.

33:44 Seth Paskin: What I was doing there, Wes, is I was focusing on that part in section 24 where he says how to dispense with the need of conscious control. Right. The problem is how do we allow things to function without the control of any one person? What do we need for that? And he's like, well, one of the things that we need is we need a system that induces people to do the right thing without them being told what to do. So I just read that as saying, when you're talking about making the analogy to Aristotle. So Aristotle, virtue is taught, it's learned. You study habituation.

Habituation, Yeah, I use the word learning, but you're right, it's habituation. And he's essentially saying that the market, and specifically the way prices function in the market, habituates people in such a way that then they can really effectively use resources without anybody telling them exactly what to do. No, they don't have to say, somebody says, go buy this, go build this, go do that. There's this really, really, really simple shorthand symbolic thing called a price. And the price induces people to do the things that we want them to do, namely to create and build and consume and whatever else without actually having to tell them, build, consume.

You just see prices move. And that makes you either want to buy something because it got cheaper or it makes you want to build it because it's expensive and you can make money selling it. And so it's an interesting habituation. It's the same mechanism that is a really interesting connection.

35:14 Seth Benzel: It tells you where all the mutually beneficial exchanges are. If you didn't have prices, you wouldn't be able to know what can I do that helps me and helps someone else? That's what prices do.

35:25 Mark: So if someone else is making a killing from creating a load of crap, then it encourages you to likewise create the same kind of load of crap to try to tap into that same market, which then by maybe spreading the

35:38 Wes: crap around, it's not crap if people want it. Mark.

35:42 Seth Benzel: Thank you, Wes.

35:42 Mark: Lower the price of the crap.

35:44 Seth Benzel: So I mean like, yeah, I mean if you're going to call it crap, then you have to appeal to a market failure in which either there's asymmetric information and people don't know what they're buying or there is a monopoly and the guy can sell it for way more than it's worth. Or there is. It calls for paternalism because people aren't internalizing their own good. They think it's good, but they're wrong. We know better than them.

36:08 Seth Paskin: All of which we practice on a regular basis here on the partially examined life.

36:15 Mark: So concrete examples being fast food, for instance, so.

36:19 Seth Benzel: Yeah, exactly.

36:20 Mark: Which we don't see as overpriced crap but is very plentiful crap.

36:24 Seth Benzel: Or like you look at the Bloomberg soda ban, right? So Bloomberg said, okay, this is enough. People can't handle the decision of buying big sodas. I'm going to ban the purchase of big sodas.

36:36 Wes: And then the big soda black market

36:38 Seth Benzel: got going and then you get yeah, well, so a yes, right. People find ways to game the system, but it's just inconvenient enough for some people to not game the system. And in that case the only way you can justify that, at least in the Pareto world where there's a unidimensional. In the utilitarianism world, the only way you can justify that is I know better than the consumer what's good for him.

37:00 Wes: But it's not just that. Because isn't there a pollution analogy here? Isn't the health of the populace.

37:04 Seth Benzel: Sure. So that's a very good point. Suppose we started off in exactly the idealized market and the only issue was people drink two big sodas. We would anticipate that they would internalize the future cost of their bad health on themselves. Right. When you decide whether or not to buy a soda, you should think about the health consequences in addition to the deliciousness consequences, in addition to the price consequences. Right. But once society has decided we're going to set up a system by which we're going to pay for everybody's health care, well then yeah, maybe we do have an interest in making sure you don't free ride off of that and get unhealthier than you would have otherwise had you been paying for it.

37:45 Wes: So the idea there is just that your unhealthiness actually has a ripple effect and harms others and can be regulated because of that.

37:53 Seth Paskin: Yeah.

37:53 Seth Benzel: And so of course you can appeal to irrationality here. You can say something like is it Socrates or Aristotle that talks about the objects in the mirror are farther away than they appear? Right. So it might be that people behave as though there's an optical illusion and getting diabetes 20 years from now. Like I can't internalize that information, it's too abstract to me. So that'd be a way that you can get to paternalism.

38:17 Wes: I mean obviously people are enormously self destructive and they're not always behaving in their self interest. I mean to prefigure one of Sen's criticisms, I can't believe Sen was the first person that noticed that.

38:28 Seth Benzel: No, so people understand this. And so Sen talks a little bit about the choice interpretation or the agency interpretation of action as opposed to the utility or the welfare theory of action. So you might just say, well, people don't choose what's good for them, people choose what they choose. Right. And so maybe you want to maximize utility just because you're maximizing someone's agency. And then Sen is going to talk about the divergence between the agency value and then the welfare value. But yeah, no, it's an old idea that people do self destructive stuff.

I may be overselling the case that people act in their own self interest. But then you have to take the opposite approach. Right. How do we talk about when society should tell someone that they're doing something badly? You know, if society has decide that being gay is bad for you, should society come in and impose that right? It's, that's the kind of argument.

39:18 Wes: Right.

39:20 Seth Paskin: At the very end of the essay before he summarizes, he says the following. The price system is this thing that just formed and it made society possible in some respect, or at least the civilization that we know and understand is made possible by the pricing system. And he says, look, if you're going to design an alternative, you have to take into account the notion that this civilization that emerged, that was based on prices, it's not just about the efficient allocation of resources. It's made it possible to a very large extent for individuals to choose what they want to pursue and freely use their own knowledge and skill. Now, this is a callback to his other essay called the Road to Serfdom, which he basically says.

40:04 Wes: Or his book.

40:05 Seth Paskin: Right, book, yeah, sorry. It's essentially the thesis of that is something like central planning or putting more power in the hands of government to make decisions about how to order economic life ultimately leads to the ordering of social life and political life and moral life and totalitarianism. And so there's an implicit and a much stronger claim here, which is that this economic ordering is better. It has a normative value to it because it promotes freedom. Freedom for individuals to choose how to be fulfilled and how to satisfy their own well being.

Now, I think that's debatable for several reasons, but it's important that that's a key tenet because I think that is something that we see echoed in today's modern politics, at least in the Anglo world, where you see people who claim to be conservatives or have a conservative economic or a free market position saying that the free market position is not just free for the market, but it's the only way to guarantee freedoms for individuals. And so you'll see them fall back and use that as a backstop. It's actually a conversation killer in a lot of respects, but it's here.

41:19 Seth Benzel: Yeah, What I would say to that is you can think about and send talks about this is you can talk about freedom in two ways. You can talk about instrumental free freedom. Do you give people freedom in order that they can make choices that are good for themselves? And then you can make the argument that freedom is good because it's good. Right. So that's kind of the tack that Nozick takes, that freedom is the one thing you can't violate. Everyone should get freedom. Right. And then this is kind of a utilitarian. I think Hayek sees them exactly in line and maybe Sen sees them a little bit in conflict. But you can imagine another argument for freedom which is just it lets people choose what's good for them.

41:53 Wes: Well, the other argument he makes at the end of this is that if you want to say that something is better than the market. You need to find a solution which is produced by the interactions of people, each of whom possess only partial knowledge. And then he goes on to say, there is something fundamentally wrong with an approach which habitually disregards an essential part of the phenomena with which we have to deal. The unavoidable imperfection of man's knowledge and the consequent need for process by which knowledge is constantly communicated and acquired.

It's a very Socratic kind of economic approach where you acknowledge our fallibility and our epistemological fallenness, the fact that we can't be omniscient or our ignorance, to put it in Socratic terms. And because of that, we have to rely on this system with its own sort of emergence, rather than trying to control it or trying to pretend that we have that God's eye point of view.

42:48 Seth Paskin: Yeah. And it doesn't just hold for knowledge either. It also holds for skills and abilities.

42:53 Seth Benzel: Right? Yeah.

42:54 Seth Paskin: So now we have phones that keep our calendar for us. They do a lot of our memory for us.

42:59 Seth Benzel: And so people need to say something like, how costly is it to me to keep track of my calendar myself in terms of hours, in terms of stress? Then they look at the price of the calendar phone option on the market, and then if it's below the cost, they buy it. If it's higher, then they keep doing the calendar stuff themselves.

43:19 Wes: But no one ever really does that. I want that shiny thing.

43:25 Seth Paskin: That's right.

43:26 Wes: Then you rationalize it. Oh, yeah, it's gonna be useful. It's gonna make me more productive. And as they text away to.

43:31 Seth Benzel: Yeah, does that mental pleasure of acquiring shiny thing. Right. Are we gonna count that as good? I don't see any reason that shouldn't count as good.

43:42 Seth Paskin: Yeah. This idea that what the system does is create a way for individuals to freely choose their pursuits. The counterexample is Wes is marketed to by Apple and he sees all of his peers getting iPhones and he can't stand. He just gets overwhelmed by the marketing blush and by the social peer pressure, and he can't rationally have that deliberation to pick the iPhone. He's just got to have one and it's not a rational decision anymore. And he has no freedom in that choice. And the same thing where sugar is addictive. So there's people who say, I want my 64 ounce Big Gulp. And you're like, you're addicted. That is a drug and you are addicted. That's another type of thing that our wonderful free Market system has.

44:27 Wes: Yeah, this gets it. Whether you, you know, the old platonic question of whether you're going to identify the good with pleasure. Right. And you know, as Sen points out, we don't have to think of utility simply as maximizing what people want. Right. It could be that the good is defined objectively outside of people's subjective preferences. So it is a complicated question because on the one hand, we're afraid of the nanny state dictating whether your iPhones are good for you and whether you should have them. But on the other hand, we're highly unaware of what's good for us and the many times things are both good and bad.

Yes, the iPhone is pleasurable. That's good in some sense, and yes, it's useful in some ways. But then even usefulness at a certain point can get perverted and inverted into something that's just merely addiction. Right. So it's useful for me to be able to communicate with people in this way. But then I find myself glued to my phone texting people constantly, and it becomes a time waster. Where is this point between productivity enhancer and time waster? It's often not very clear. So these issues are actually quite murky. And the idea that there are simple consumer decisions, I don't even think that's true.

45:40 Mark: The idea is that these things would be learned over time. That yes, a lot of individual consumers make foolish choices regarding cigarettes, for instance, but then over time, as the truth of the health effects of cigarettes, it

45:52 Wes: took a lot of nanny state intervention to bring down. It took a lot of educational campaigns, it took a lot of taxes on cigarettes. It took a lot of non market forces to do that.

46:02 Seth Benzel: Yeah, sure. I'll make one observation on Seth's example of the iPhones. Right. So even there, it's unclear whether there's irrationality happening there. There's definitely a market failure. Right. So Mark sees everyone getting iPhones and he says, oh man, I can't resist the urge to get an iPhone. Right. Is what's happening there that he's just not self interested. Right. He's got this keeping up with the Joneses utility function, which is, you know, not self interested. But it Sen breaks self interest into different parts. Right. It's not a utility function that only depends on your consumption, but it is self interested.

Right. And you might make the rational decision. I will have the mental unpleasure of not keeping up with the Joneses if I don't buy the iPhone, and therefore I am making this rational decision to buy one. And it would definitely be a market failure because there's a non market relationship. You're getting the externality of envy, but it might still be rational.

46:54 Wes: Oh, envy is an externality, right?

46:56 Seth Benzel: Yeah. So if you have any feelings about something else somebody's doing, that's a non market interaction.

47:01 Wes: Huh? That's hilarious. I find that amazing.

47:06 Seth Paskin: So my point, Seth B. Was just simply that if markets worked the way that this welfare model wants them to work, which is symmetric, transparent information between parties, then there would be no such thing as marketing. Companies would be, this is our product. These are the benefits of this product. This is how much the product costs. This is what our competitors do. This is why our products are better than our competitors. Right. And then you go, huh? Are those claims true? Why yes, they are. I see that it is in my rational self interest to purchase this product from you than from somebody else.

But instead what you get is a 30 second commercial showing a hand holding a device with some sort of like ding, ding, ding, ding, ding, ding music in the background. And at the end you just see a logo that looks like a black outline of an apple with a bite taken out of it and suddenly you must have one. I'm just saying that's not what I think Hayek was thinking that would be a market failure. Except that that's the way they're designed to work. That's exactly how. What is marketing? It's called marketing, right? I mean, it's part of the system, isn't it?

48:15 Seth Benzel: It's a problem with the fundamental welfare theorem. Amongst the fundamental welfare theorem's many, many problems is that it can't account for the existence of marketing.

48:24 Seth Paskin: Okay. My professional career has been outside of the realm of the fundamental welfare theorem, so that's good to know.

48:30 Seth Benzel: There you go. But I still think economics is cool, even if you don't believe the fundamental welfare theorem. So let's not give up right now.

48:35 Wes: All right?

48:37 Seth Paskin: Why don't we move on to Amartya Sen?

48:41 Seth Benzel: Sure. The most interesting part of the argument here is Amartya Sen says sometimes economics makes these normative declarations that you should organize yourself, your economy, in such and such a way. That's called welfare economics. And Amartya Sen's got some problems with the way that welfare economics was done in the mid-1980s. So Amartya Sen does this thing where he divides utilitarianism into three parts. The first part is consequentialism. So an action or a policy should be judged based on its consequences. The second is welfarism. Welfarism is the idea that the goodness of a society or the goodness of an individual is contained in their utility.

That you can just kind of, maybe it's not a number, but you can rank an individual's goodness from best to worst and then you somehow do some combination of all the individuals to talk about society. Third part of utilitarianism is some ranking, which is you decide what's the utilitarian best outcome by adding up everybody's individual utilities. Consequentialism Sen has no problem with, but the other two he casts a critical eye at.

49:53 Wes: The overall idea, right, is he's criticizing this engineering approach to economics in which you ignore the fact that people often make their decisions not simply out of self interest or to maximize their own particular utility, but that they are often doing things, for instance, for ethical reasons or normative reasons. However we want to put that and for a variety of other reasons, I mean, he's going to break these down into little categories. So he's criticizing this utilitarian assumption. So for instance, we're not necessarily self interested. We don't always behave rationally. And even if we did always behave rationally, that's not the same thing as behaving in a purely self interested manner. Do I have that right?

50:34 Seth Paskin: Yeah, yeah.

50:35 Seth Benzel: So I guess the first thing I would say is Sen talks about consistent behavior.

50:40 Wes: That's one version of rationality. Consistency, right?

50:43 Seth Benzel: Precisely. Let me take an even farther step back. So economics wants to talk about how do individuals act and how do societies come about as interactions of individuals? In order to get into that, in order to make quantitative predictions and do all the stuff that economics wants to do, you have to make some sort of assumptions about how people behave. The most common assumption is you assume some sort of, what used to be called rational behavior. People shy away today from using the term rational. You know, they say they obey according to such and such axioms.

But the baseline version of rationality is the idea that people choose the best option from their set of options and that their set of options is complete. So given any two choices, they are able to choose one of the two choices or say that they're indifferent between the two and they don't care and they have to have transitivity over their choices. So that means that if they prefer Cheerios to Apple Jacks to hamburgers, they can't prefer hamburgers to Cheerios. Because that would be really weird, Right? It's you really prefer Apple Jacks to Cheerios, if then you prefer Cheerios to Hamburgers.

Hamburgers, Apple Jacks Right. It's how would you even go about making a choice if you had intransitive preferences like that, all of which is

52:02 Seth Paskin: familiar to people who study philosophy and logic, those principles of consistency and completeness and those sorts of things. The assumption is that that is the way human beings understand and manage their choices.

52:16 Seth Benzel: Most economists aren't welfare economists. Right. That's one of the things that Sen has a problem with. Most of us just want to be positive engineering economics. And if that's all you care about, well, then you don't even need for those preferences to have anything to do with what's good for a person or what a person wants. They just need to act in such a way that it is rationalizable, as though they had this complete and transitive list of preferences. And then once you see them make some choices, you can predict how they'll make choices in the future.

52:46 Seth Paskin: Very briefly, you talked about engineering.

52:49 Seth Benzel: So today I would call that positive economics. So it's just descriptive.

52:52 Seth Paskin: Yeah, that's how Sen starts off this essay. He distinguishes between the two roots of economics, what he calls the ethical and the logistical, and he says it was born in both. But over time, the ethical part has been neglected in favor of the logistical, to the detriment of the field. So his project is to say economics could be a lot better if it would pay attention to these things that we've talked about in part one and that he's going to talk about.

53:20 Mark: Just to make that clear, he cites this ancient Kautilya's Arthashastra from the 4th century BC. This is the first economics textbook, the Science of Wealth, which he says was the first example that he can find of this engineering approach, which is really just. It sounded like Machiavelli to me. There's an interesting amorality going on there. There's a science of governing was part of this work, and the science of wealth was part of this work, this work, to just instruct a king on how to generate more wealth.

53:47 Seth Benzel: It's 100% instrumental. Like, we don't care why you're raising taxes, just this is how to raise more taxes.

53:52 Mark: Yep. Whereas Aristotle takes it. You know, I guess I didn't realize that he mentioned things that sounded like economics in his politics, but that he sees it as part of the human good. Of course, wealth is only of instrumental value, but still, the fact that something is of instrumental value means you have to consider it as well, not just the things that are good in themselves.

54:12 Seth Benzel: Yeah, Aristotle's telling you to do all this different stuff. These Are all the different virtues and kind of mixed up in that are some politics or some economics, are some ethics, and they all kind of come together into how you should act.

54:25 Seth Paskin: Yeah, those are the ancient roots. And then he points back to the Scottish Enlightenment figures, specifically to Adam Smith and makes the point that Adam Smith was a professor of moral philosophy and he wrote the Theory of Moral Sentiments before he wrote the wealth of Nations. And he's going to go further into how Smith was misinterpreted or has been misinterpreted or selectively interpreted. That's the pedigree. I mean, he's citing a pedigree approach or an authority approach to one reason why economics has lost its connection to its past. But he has a whole bunch of other arguments, better ones.

Much better ones. Yeah. So one of the first key points that he brings up and the mechanism by which he thinks that economics has forgotten this ethical side is by restricting this notion of rationality that Seth mentioned earlier. And he says modern economics has this idea that actual behavior is rational. And he says there's a couple problems with that. One is even if it's true that actual behavior is rational, that doesn't mean that all behavior is rational. There's room for other types of behaviors that may influence people's thinking. And then he says claiming that actual behavior is a very different thing than talking about what the content of rational behavior is itself.

So you can take issue with the characterization of human behavior as rational, or you can take issue with the definition or the way in which he says economics characterizes the rational.

55:50 Seth Benzel: Before we add on more stuff to what rationality is, how do you guys feel about just that really basic definition of rationality, which is that your behavior is interpretable as though you had complete and transitive preferences. Do you already see a problem there? And I think there are already problems there. But is that like how do you guys feel about that?

56:11 Seth Paskin: Yeah, I definitely see a problem there.

56:14 Wes: Well, we should also get into the Sen section where he talks about these two versions of rationality, consistency versus maximization of self interest.

56:21 Seth Benzel: But sure, right.

56:22 Seth Paskin: Yeah, yeah. What sense is there is basically that those two conditions, Wes, are what constitute this rational notion of being a rational self interested agent is the consistency of choice, which is that transitivity and what have you and transparency and then the maximization of self interest. So those two things together are how rationality gets cashed out in this modern economic view. And I wanted to ask, and I think it's already kind of been answered in some respect, whether this was A straw man. Because kind of like Mark, I'm looking at this and I'm thinking there can't be that many PhDs around the world that think that that's the case because it's just patently false that people's choices are transparent to them and also that transitivity obtains.

I mean, I've got that not thinking fast and slow. What's the Swersky? Amos Tversky, the psychologist. It's one of those popular famous books that's actually a little more academic. But anyway, the idea that you can influence people's choices simply by putting different other choices next to them. So you can have somebody choosing between A and B and you can make them choose A by putting A and B next to C, and you can make them choose B by putting A and B next to D. Framing effect. It's a framing effect. It just patently violates or points out that the transitive thing is just false.

And so. Yeah, I don't buy that.

57:44 Seth Benzel: Yeah. So to address whether this is a strawman, what I think economics would say is that any model of the world is incorrect. It's a model, it's an oversimplification. You face a trade off then between the more aggressive assumptions you're willing to make and the more detailed predictions you're going to be able to get out and testable predictions versus making less assumptions and being more realistic, but being able to predict less. And so economists are going to make lots of different assumptions about different kinds of behavior for different kinds of models and different kinds of contexts.

So I have a friend who's a decision theorist. Decision theory is exactly trying to deal with, for example, these behavioral economic problems of oh, look, I'm a behavioral economist. I can make somebody do something irrational or something that looks irrational. And then decision theorists kind of catch up and say, okay, I've now reframed the problem so it's rational, but in this other way. So you can make these different assumptions and maybe you don't want to use the word rational anymore, but you can make these different assumptions that captures that behavior.

And then maybe an applied economist can then take that different set of assumptions and maybe make a better model. But the short answer is there's always trade offs between stronger assumptions and more realistic models that predict less. And you're going to use different axioms about human behavior in different contexts.

59:09 Wes: Sen talks about consistency first, as if some theorists think that rationality is identical with consistency. Even apart from the question of self interest. It's still a matter of Maximization, but it's according to some binary relation where you're not identifying exactly what they're maximizing. You could call it utility, the utility function.

59:27 Seth Benzel: It's called preference. They just do their preference. Yeah.

59:30 Wes: And that's got to be fully transitive and representative by a numerical function, and so on and so forth, forth. And then we get to the identification of one element of that binary relation with self interest. So that's the second step. I just wanted to point that out

59:43 Seth Benzel: precisely so then you can be more aggressive. We started off and we just said we want to describe human behavior. Obviously we want to make predictions about how people will act in the future based on how they acted in the past. One way to do that is to say when people act, they tell you something about their preferences and it doesn't have to do anything necessarily with their good or whatever. It's just, okay, they acted that way in the past, let's see how they act in the future. And you make different axioms about what sort of actions in the future are entailed by actions in the past. Now, once you want to take a step further and you want to do normative or welfare economics, you need some sort of access into what's good for people. And because we come from this utilitarian Scottish Enlightenment tradition, the natural move is to say people choose what's good for

1:00:24 Mark: them among the available options.

1:00:26 Seth Benzel: Amongst their options they maximize over their budget set.

1:00:29 Wes: So Sens he objects to the identification of rationality with consistency just because people could consistently do crazy things.

1:00:36 Seth Benzel: Sure.

1:00:37 Wes: And then the identification with self interest. The idea is that you might have what he calls ethics related motivations or goals that are not self interested. Yeah.

1:00:47 Seth Benzel: So there's lots of different ways you might not be self interested. You might be crazy. You just have no control over your actions. You might choose bad things for yourself. You might get addicted to drugs.

1:00:58 Wes: So I could consistently be pursuing that goal.

1:01:00 Seth Benzel: Exactly.

1:01:01 Mark: You might be a human being whose telos is not at all obvious, as is the case with all of us.

1:01:07 Seth Benzel: Yeah, but you have better access to your telos than I do.

1:01:10 Mark: Hegel would say exactly the opposite, actually, that we have a much more objective take on each other than we do on ourselves.

1:01:15 Seth Benzel: Mark, I know you're good. Stop. Stop playing music. It's bad for you.

1:01:19 Mark: Well, maybe you might point out that actually I'm an untalented hack and I really need to hear that so I stop doing this destructive thing.

1:01:28 Seth Benzel: You know that because the prices for your music are low.

1:01:34 Wes: Brutal. Spoken like an economist.

1:01:39 Seth Paskin: Harsh words. We've done a good job of figuring out what philosophy is worth on the open market.

1:01:47 Wes: Squeezing blood out of a stone.

1:01:50 Seth Paskin: Yeah.

1:01:51 Mark: So Sen points out these problems with traditional economic theory and these oversimplifying assumptions it makes. And it seems to anticipate the end of the essay to set up a research problem for himself, to say, well, we have to get a more sophisticated take that takes these things into account. If you want to explain why economic success happened in Japan, one of the things you want to look at is their culture and their interdependence, things in their ethics. So he sets up. Aren't there a lot of interesting relations of ways that you could give these sociological explanations for why something succeeded or didn't succeed?

But the hope is still that you could still be an economist doing this, not merely just a social observer making keen observations, but you could still hammer this into some sort of theory. And this is where it seemed to fall apart for me, is he very correctly points out all these complexities, for instance, with the notion of human happiness, which we had a really nice episode a long time ago with Owen Flanagan, where we talked about all the different conceptions of happiness and what could go into this, but yet still thinks that you could still make economics not just predicting local things.

I mean, I'll buy that. Of course, the microeconomics, I want to determine if we raise interest rates now what will happen, or if I raise the price of this particular good that I have. I don't think we just have to take a guess into nothing. And the choice is certainly not just between dismissing economics as voodoo altogether, that we're never going to make predictions about anything versus a completely positivistic view of it. But still he ends up very optimistic about his research project in a way that I knowing much less about it, you know, feeling like I'm overhearing some dialogues between people that I'm basically unfamiliar with.

1:03:30 Wes: What don't you show you don't.

1:03:31 Mark: Do not share his optimism about the

1:03:33 Wes: idea that you can, for an economic

1:03:36 Mark: theory, you can solve these problems that he's pointing out. Yes.

1:03:40 Wes: That you can solve which problems? The theoretical problem of figuring out how people actually behave or the larger welfare goal of producing an optimal. Because those are two different things.

1:03:50 Seth Benzel: Yeah, there's the micro and the macro.

1:03:52 Mark: I guess it was a little unclear to me, which he's trying to address.

1:03:55 Seth Benzel: He's kind of doing both at the same time. I agree it's kind of mixed up,

1:03:58 Wes: but yeah, he does. I thought he makes it up as

1:04:00 Mark: Well, I mean he makes some very good points about, you know, I know he's concerned with making poverty less acute, making inegalitarianism less acute. And I know somewhere in here I recall him saying something like we don't have to have a model of the perfect system society in order to, you know, actually this might not have been something that came out of him. This was something that came out of the elucidations interview with him. So I'll point people, I'm breaking the rule.

1:04:22 Seth Benzel: Oh shit.

1:04:22 Mark: It may or may not have been reflected in this book also his very hands on approach towards economics and I think part of what he's trying to do is to get rid of some of these positivistic. It seems like somebody like Hayek is going to say just theoretically you don't want to mess with the market. If you mess with the market, horrible things are going to happen. You're going to screw everything up. So we have to let whatever kind of awful inequalities, therefore this is the way at least it plays out in present political discourse persist. And Sen definitely doesn't buy that and thinks that we can make a lot of headway in heading those things off without solving Hayek.

1:04:57 Wes: Like Smith, Hayek wasn't opposed to government intervention and poverty and things like that.

1:05:01 Seth Benzel: He was to the right of Keynes, but a lot of people are to the right of Keynes.

1:05:05 Wes: He said things even in the Road to Serfdom, the background research I did this where he said it's perfectly fine to have a safety net and all those than we ought to and all that stuff.

1:05:15 Mark: Okay. So I was reading too much into his glorification of the price system.

1:05:19 Seth Benzel: I don't want to get into some already but you have to. What would be the alternative to a price system? I guess I would say two things to what you said. The first interesting thing is that. So you said you were maybe more optimistic about economics's ability to talk about relationships between different macroeconomic variables, like a relationship between the interest rate and the unemployment rate, let's say. So that's something you would be more optimistic about.

1:05:44 Mark: I don't have any opinion on that. I was being less optimistic than Sen about the ability to take all these complicated variables into account, particularly the complexities that come up with. Seems like he's criticizing general welfare economics for having a very specific view of what the ideal society should look like. Right. It's Pareto optimal.

1:06:06 Seth Benzel: Yep.

1:06:06 Mark: He's raising all these things that would make it sound like no, you can't do that if you're going to do welfare economics, you can't take that approach. You can't think that you have a priori, an ideal to shoot at just because you understand the fundamentals of interdependence of markets and things. But at the same time he thinks you don't need that in order to address specific problems.

1:06:27 Wes: So he's famous, right, for this capability approach.

1:06:30 Mark: Tell something about that. It's fine to get more background on these guys because I don't have that much on him.

1:06:34 Wes: It's this idea that you take into account something other than people's self interest. Not just their subjective well being or what they want, their preferences, let's say, but the things that we take to be objectively part of the good life. There's a very Aristotelian bent to this. Actually it sounds a lot like a sort of application of virtue ethics to economics. Just what I read up on. So you don't just let things happen according to the sum aggregate of what people want and how they behave based upon that, but you take into account what's good for people. And there's this talk of well, Seth may have a better.

1:07:11 Seth Benzel: Yeah, so I can't actually speak to the details of the capabilities approach. The book he wrote on the subject is the Idea of justice. So I would recommend people to that. But I have not read it. I guess what I'm going to say is that he's a consequentialist, right? That's the one thing he's kind of committed to. And the second that you want to say that something like inequality is something you care about or, or the health of the people is something you care about or giving people more freedom is something you care about. Well then practical concerns come into play and economics has a role in that.

There's a million different ways to lower inequality. Should we just have a progressive tax system? Should we raise the minimum wage? Should we fix the price of bread? There's now a ceiling on the price of bread so everyone can afford it. Should we raise unemployment benefits? Should we have this kind of health care system versus that kind of health care system versus a third kind of health care system system. These are all things that an approach to society that's actually trying to think about interactions in a quantitative way. You need some quantitativeness.

And so Sen thinks that economics is inevitable even if he's got a lot of problems with the way it's practiced in 1986 and all these have been solved now. Yes. No, actually, you know, I got my My professor, he's got a list of policies. Look them up on the purple plan dot com. Just do all of that stuff and society will be perfect.

1:08:33 Seth Paskin: Yeah.

1:08:34 Mark: Who's your professor?

1:08:35 Seth Benzel: Kotlikoff here at bu. Good guy.

1:08:37 Seth Paskin: Will. Unfortunately, economics will only be partially corrected and fulfilled as long as Seth Benzel is still a PhD student.

1:08:45 Seth Benzel: Yeah, give me some time. I don't want him to fix everything before I get there.

1:08:48 Seth Paskin: Yeah, no, no, he's got a. That's what his dissertation is going to be, solving all the problems.

1:08:53 Wes: Is there a real conflict between what we read with the Hayek and then the criticisms of Sen? So Hayek said things like in the Road to Serfdom, you can prohibit poisonous substances. You certainly could have regulations. And he says things like to limit working hours, to require certain sanitary arrangements is fully compatible with the preservation of competition. And he goes on to say things about other sorts of regulations to protect the environment or to protect the poor or to prevent fraud is the kind of approach that Sen seems to be suggesting.

I know we can't say a lot about this since we didn't really read about the capability approach, but is he advocating interference in the market or is it he simply advocating something that's actually compatible with the idea of letting the market do its work and then using these add ons that both Smith and Hayek seem to advocate to sort of mop up some of the problems with the market?

1:09:39 Seth Benzel: So you'd be hard pressed to find an economist who doesn't think that there are market failures that call for interventions.

1:09:45 Wes: Right.

1:09:46 Seth Benzel: I don't know enough precisely about what's going on in Hayek's background to say whether he is a welfarist, which is to say he thinks the only good thing is people have more utility. Certainly Sen thinks that people have more goods than only their utility. And once you believe that, well then at least the naive Pareto efficiency, like at least the basic version, doesn't work anymore. Let me back up. The reason you want the Pareto efficiency as a criteria is because you guys talked all the way back in your utilitarianism episode about how interpersonal comparisons of utility. It's just super hard. It almost seems like a failed project from the start. Right?

1:10:25 Wes: Say why that is just to remind

1:10:27 Seth Benzel: listeners, just think of any hard example of utilitarianism. Is it better to save one person's life or to let 10,000 people be inconvenienced?

1:10:38 Mark: If we lowered all the speed limits to 25 on the highways, we would definitely save some lives. Yes, and how do we weigh that against how much that slows down everything?

1:10:46 Seth Benzel: Exactly.

1:10:47 Seth Paskin: Millions of people will be lame.

1:10:50 Seth Benzel: We got Homer Simpson here. So that's exactly Sen's point. So maybe you're not a welfarist, maybe you think there's lots of different considerations that come into play there, but you have to be a consequentialist to answer that question. So there's ways economists do that. So there are people who do cost benefit analysis where we choose a value for a human life. You say, I think it used to be. Recently I looked, it was like $20 million or so. And you see, are everybody else going to be inconvenienced to the tune of $20 million dollars? And if not, you know what? Let him keep on speeding. That's kind of a naive approach, but it's at least one way to make that decision. And it's hard to think how you would otherwise make the decision about optimal speed limits.

1:11:27 Wes: You were in the middle of saying something though about Pareto efficiency.

1:11:30 Seth Benzel: Interpersonal comparisons of utility are hard given that you just get Pareto efficiency. We're welfarists. We want everyone's utility to be as high as possible. And we're consequentialists. Right. So we should judge an action based on that. But we can't just add up everyone's utility because you just can't add up people's utility. I will now pause and say there are economists who just add up people's utility. There's a popular model to talk about optimal taxation systems. So you might think, okay, there's too much inequality. The way that we're going to fix that is we're going to tax poor people less than rich people.

So you can plug in different parameters and get different answers. So you might say, I want the Rawlsian tax system. And so the Rawlsian tax system, it's the system of transfers that make the poorest person as well off as possible. And then maybe you care about the richer people after that, it's not going to be 100% tax on the rich because then they wouldn't work at all. So maybe it's just merely extremely high. Maybe it's a 70, 80% tax on the rich. Or you might on other extreme, take just a pure utilitarian approach and just say, I want the tax system that maximizes everyone's utility in total.

Then there would be much less redistribution. Now, how do you get from income to utility? You also have to make some assumptions in there. But that's an example of how you might use what they call a social welfare function that isn't just only thinking about Pareto efficiency. You could add something else on top of it. But Sen will say that it's still inadequate because just a one dimensional measure of how good someone's doing, it's just completely inadequate. And so the one thing he's sure about is that what people choose, they either choose their choosiest thing, they either choose the thing that maximizes their agency, they're choosing the thing that they choose, or they're choosing the thing that's best for them.

And so I choose what's good for me. And what Sen points out is, and what you guys have been talking about is those might have a lot to do with each other. Maybe a lot of the time I choose something that's good for me. But they almost certainly don't align perfectly. Maybe there are some systems and values in which everyone only creates their values through choice. I don't know. If you want to bring existentialism into

1:13:32 Wes: this, that'd be awfully convenient for economists, wouldn't it?

1:13:36 Seth Benzel: Well, yeah. If you talk to my friends who are more hardcore libertarians and they're very hands off, they'll make that argument. They'll say there's no objective value, just let people get more of what they want. That's the only good thing, getting people what they want. People should get more of what they want.

1:13:52 Mark: Well, and when the alternative sounds like you don't know what you want, we know better, then it just sounds implausible and arrogant and. But it's not taking into account, I think, facts about our human nature.

1:14:04 Wes: Yeah, I think it's definitely true. So for instance, in the Sandel episode, one of his criticisms of liberalism is that these more robust conceptions of the good, beyond having our rights and our basic needs met and things like that, sort of reminiscent of again, Aristotelian virtue ethics. But the question was, do we want a state level endorsement or enforcement of those more robust senses of the good? It's not that they're not really important.

1:14:31 Seth Benzel: Are we confident that society can implement them in a satisfactory way?

1:14:35 Wes: Yeah, without becoming authoritarian. I mean, that's Hayek's point and I think it's a real question. I think it's naive to say the good is simply what people want and there's something outside of that and they can be very, very wrong about what they want. But then the question is the extent to which we try and nanny state them or enforce some good for them. And the obvious Ways in which that can go wrong and lead to authoritarianism and all sorts of other horrors. And I don't know how that translates exactly to economics. It's more a complicated question. With economics. I'm still not even clear on whether Sen is calling for anything that even counts as a market fiddling in Hayek's terms. I'm still wondering if Sen's approach isn't actually consistent with Hayeks at some level.

1:15:19 Seth Benzel: Just from reading these two essays, I would guess that Sen would be more optimistic about paternalistic approaches. If Hayek sees an individual doing something that seems non self interested, Hayek would probably be more aggressive in trying to interpret that as self interest. And Sen would be a little bit more cautious and say, well, maybe it's not self interested behavior, maybe it's something else. That's one of the big ambiguities that decision theorists and behavioral economists deal with, which is that there are a million different kinds of behaviors that are maybe rational, maybe irrational.

I'll give you an example. In intrinsic versus extrinsic motivations, rationality seems to entail, or at least a lot of versions of the axioms that we assume about human behavior would entail something like, if I give you two good things, that's better than one good thing, right? So monotonicity.

1:16:13 Seth Paskin: Do you guys have a silly word for everything?

1:16:15 Seth Benzel: Yes, we have a silly word for everything. Yes.

1:16:18 Seth Paskin: Okay, well, if I give you two good things is better than one good thing.

1:16:22 Wes: Assuming the two good things have the same goodness.

1:16:25 Seth Benzel: Yeah, assuming they don't like, interact in like a negative way. But we can come back to that.

1:16:29 Wes: I mean, one good thing with a goodness value of two is worth two good things with goodness values of one.

1:16:35 Seth Benzel: Let me give you an example. Let me give you an example. So you meet a woman on a date and you say to her, hey, would you like to head upstairs? Would you like to sleep with me? And so maybe she'll say yes, maybe she'll say no. So suppose she says yes. Great.

1:16:51 Wes: I found that, by the way, to be very Pareto inefficient for getting laid. But go ahead.

1:16:59 Mark: That you're adding pleasure to your life detracts from the pleasure of the female.

1:17:07 Seth Benzel: Well, she agreed to it in a mutually beneficial exchange, right?

1:17:11 Seth Paskin: Yeah, I was just thinking that that sounded very much Seth, like the way an economist would make a pass. Excuse me. Would you like to come upstairs and have a mutually beneficial sexual encounter with. Yeah, I promise nobody's utility will be lowered.

1:17:27 Seth Benzel: That's how you know it's A good choice. Now suppose you go to that woman and you ask her now, hey, would you like to have sex with me? I'll give you $10. I would really not be surprised if she said no. So on the surface that seems to violate a kind of rationality, right? Because she already showed that she likes having sex with you, right? But now she's saying, but I don't want $10. And having sex with you, that's kind of weird. And so you can either say, you

1:17:59 Wes: could phrase it, you want $10 plus having sex with me

1:18:05 Mark: to offer the money first.

1:18:07 Seth Benzel: There you go. So on the surface you might say that's irrational behavior because she likes money and she likes sex, so why doesn't she like the combination? But then you might like, not be stupid for a second and then you'd say, no, there's something a little bit more subtle happening here. I'm giving her information about my lack of social understanding and now she won't want to sleep with me. Right. So that would be a rational reason to deny the example. And it doesn't. Examples like that maybe there's some ambiguity between the rationality and the irrationality. Maybe that's not a good one.

1:18:40 Mark: Well, no, like you said, you can always give a reinterpretation of why this is actually rational. This allegedly irrational behavior is irrational according to some standard.

1:18:50 Seth Benzel: And so some stuff decision theorists have to tie themselves up into knots to understand in an axiomatized way. And some stuff is straightforward and some stuff, you know, you might just throw up your hands and say the easiest and simplest interpretation is that somebody's making a mistake here or they're making decisions in a way that economics is not going to have a good time describing.

1:19:12 Mark: And why does it matter that economics can accurately describe all these individual things? When it seemed like you could just say that when you aggregate, then these things all wash out.

1:19:24 Seth Benzel: So the answer is because economists have gone really wrong by just assuming just by only looking at the macro level. So Keynesianism was dominant the 50s and 60s. But again, this is parable. I don't know if this is exactly how it worked. People noticed that the relationship between interest rates and unemployment that had seemed to underlie and explain and be the driving factor behind Keynesianism. It kind of stopped working. And then people said, well, no, actually you can't just make these upper level assumptions about what's going on. You have to look in the decisions of individuals.

And if you go to the decision of the individual, well, the individual is now able to say, hey, now I anticipate a higher inflation rate. I anticipate a certain kind of interest rates. Now in my individual optimization, I'm going to make a different decision. So economists don't like to make these ad hoc, potentially really far off assumptions about the way society as a whole works. You're better off starting at the individual level, starting with the individual agents. And sure, they're oversimplified, and maybe there's a good part in that. This oversimplification comes out in the wash at the macro level, but you're still better off starting with the individual.

And then we can talk about situations where we think rationality does a really good job of describing behavior. Certain zero sum games, or there's some evolutionary settings where game theory seems to really apply.

1:20:50 Seth Paskin: I wondered if we were going to talk about game theory.

1:20:54 Seth Benzel: So like, let me give you an example. The reason economists want to make these assumptions about human behavior is they want to make predictions. So suppose you just sat two people together to play a game of Tic Tac Toe. If you can't make any assumptions about both players wanting to win and both players understanding the game, and both players having an understanding of the game and trying to win the game, then it's going to be really hard to say where they're going to put X's and O's. But the second you say, okay, I'm going to say these are guys are both rational agents that are trying to win the game of Tic Tac toe and understand the rules and understand that the other person understands the rules, then you can start to make predictions about how they're going to play the game of Tic Tac Toe.

And so you might imagine that there are certain real life situations with very clear fixed rules that are analogous to that situation.

1:21:40 Wes: So what's an example of an economic principle or conclusion that you can get through this sort of analysis from bottom up from individual behavior.

1:21:50 Seth Benzel: So the classic example of a game like this that explains behavior is the duopoly problem. So suppose there are two firms, they're in the market, but there's only the two firms. So both of them have a little bit of monopoly power. There's Coke and Pepsi. They're the only people who make soda. They have to decide how much soda to make and what price to sell it at. The way that you maximize the total profits of both soda companies is for both of them to produce the amount that is half of the monopoly amount. Right, because the monopoly amount is the way that you extract the most profits possible.

1:22:23 Mark: From the system say something about how you determine the monopoly amount. I mean, it seems like you just have to try it. That is, can we make it the most expensive thing and only the rich can. Oh, but if I lower it this much, then this many more people will pick it up or at some point it's going to reach an equilibrium which I don't know how you could predict.

1:22:39 Seth Benzel: So that's a good question. And so now I'm going to appeal to. You could look at historical series, the amount of soda which is demanded and the price at which it's demanded. And you could kind of extrapolate from previous equilibrias of prices and quantities what the demand function kind of looks like. Suppose you have a kind of an idea of what the aggregate demand for soda looks like. The optimal for both of them is if they could coordinate and say, hey, look, I'm only going to make half the monopoly amount. You make the half the monopoly amount will split the profits.

But because unless they can cartelize, if they're really in competition with each other, that's not going to be the optimal amount for them. They're going to want to cheat a little bit on the other guy because they can make a little extra profits by producing a little bit more soda and lowering the price a little bit and steal all the profits of the other guy. It turns out that the equilibrium is somewhere in between the pure monopoly equilibrium in terms of the quantity and the price. The quantity and price. Quantity is going to be a little bit higher, the price is going to be a little bit lower than the monopoly, quantity is going to be a little bit lower, and the price is going to be a little bit higher than the perfect competition.

So that would be an example of how we think game theoretical situations are going to inform real economic behavior. And if you look at the world, you see this result, you see that the more concentrated the monopoly, the higher the profits and vice versa.

1:23:57 Mark: So the game theory is being played with regard to the producers and where they're going to set, not on the consumers.

1:24:04 Seth Benzel: Yeah. So in this example, the two producers are playing a game with each other. Each of them is trying to maximize their profits.

1:24:10 Seth Paskin: Why don't we bring this back a little bit to the why are we talking about game theory, at least in the context of this Sen article? It's part of his argument against the characterization of human beings as always maximizing self interest. Correct.

1:24:26 Seth Benzel: So do you want me to introduce the prisoner's dilemma?

1:24:29 Seth Paskin: Is that why we started off on that direction? Because we're now talking about Coke and Pepsi and Monopoly.

1:24:33 Wes: We started off because I was trying to figure out if Sen is actually inconsistent, how inconsistent he is with Hayek

1:24:39 Seth Benzel: and then how successful is the assumption of rationality.

1:24:44 Seth Paskin: Yeah, Wes, you're asking that question of Sen because based on that other background work you did on Hayek.

1:24:52 Wes: Yeah, based on the fact that, well, I didn't like Smith, I thought, well, you know, in the same way that Adam Smith, Smith is not inconsistent with these social programs is Hayek. And then he said the same sorts of things as Smith. So what I'm wondering is, does Sen's concern with these other sorts of goals, don't they both agree? Yes, the markets do some things very well, other things they don't do well. And so you mix a market economy with certain regulations and safety nets and then the question always becomes, well, how much do I regulate and interfere?

But there's no question about interference that's going to occur. This isn't really a debate between someone who's laissez faire and someone who's advocating intervention. So I'm wondering if there's a real conflict here or is Sen saying, no, it's not enough to simply tack on certain policies or social programs. There's a fundamentally different way. And part of this is just we haven't read enough of him to know. But, but is there a fundamentally different way to do economics? And again, and here we get into the whole problem of there's really two questions.

One is about predicting people's behavior regardless of your own goals for the economy. So Sen seems to be saying, well, if I were able to take into account people's goals that don't have to do with self interest, their normative goals or their group loyalty, these other things, I could better predict behavior and I'd be a better descriptive economist. But then there's the other part of it where I, the economist, have these normative goals for the well being of people within a society. And so what economic policies do I use to achieve that? So those are the two different things.

And anyway, I'm wondering, because we only got a little taste of this, what the real practical upshot for an economist, I think Mark was kind of pointing this. It seems implausible that you could say I'm going to have a function that takes into account people's different group loyalties and things like that for doing things, and I'm going to be a better predictor of economic behavior based on that. That seems to me to be implausible

1:26:54 Mark: on its face, but you can get more. Again, you don't need a perfect model in order to achieve enough insight to then have the levers at your disposal to move some things. So he points out Smith thought that famine was just a matter of ultimately availability. Right. You have famine if there's not enough food, and thought that we just need to remove barriers. So he was against tariffs or something was brought up in this. But Sen comes out very clearly. I think he says that in opposition to Smith. It's been recognized it's a common economic knowledge that has to do with a lot of different interdependencies and not to do with just scarcity.

1:27:34 Seth Benzel: It might just be people are too poor to buy food.

1:27:37 Mark: Right. And so how do we look at the cycle of the stuff that we worry about between of employment and skills and the situations, what character, you know? So you get a whole lot of complicated issues in terms of how do you unravel those dependencies. Like Wes, it wasn't clear to me, I was reading into Sen. That he was more open to any kind of intervention that would work, even if it completely makes something, not even a market commodity anymore, which seemed to be off the table. As far as what I was seeing in Hayek, though, Wes is saying, let

1:28:10 Seth Benzel: me try to answer Wes's question. One of the big things Sen is doing. So if you read Hayek, the most important paragraph is the first paragraph where he says two things. One, he says the economic problem is easy. A, once we have our ranking of social preferences, and B, once you know, the ranking of social preferences, all that remains is to set marginal rates of substitution equal. Right? So Sen spends this entire essay, especially the third lecture, talking about why making a social ranking is really, really hard. Even though you might want to be a consequentialist, there are still issues of, you know, he brings up Agamemnon's daughter. Right. Is it better to burn your daughter or to win the war? Right. That's just a hard question and you're not going to solve that question.

1:28:58 Mark: Although the way you put it, it's actually quite clear.

1:29:02 Seth Benzel: No Game of Thrones spoilers.

1:29:03 Mark: It is better to win the war than burn your daughter.

1:29:06 Seth Benzel: Well, yeah, well, so Sen. Sen says it's not clear. And the answer can't just be, well, let Agamemnon have preferences over burning your daughter and winning the war, and then once you have preferences, just choose the one you prefer. Right. That doesn't seem to be a solution to the problem. Whereas Hayek is taking a system of preferences as Given. And in order to get that marginal rates of substitution be equal result, you're going to really need to assume something like welfarism. Right. Something like everyone has a unidimensional good and you maximize the total good, or you get an efficient result by setting the substitutions of goods according to such and such a rule. Right.

1:29:49 Wes: So I thought we stipulated that when we created the model that it's simplistic and it doesn't account for everything and that we're going to have to jerry rig it after it's all over.

1:29:58 Seth Benzel: Yeah. So then to answer your question, the answer is I don't know enough about Hayek to know how much he thinks that there are other things than utility. But I mean, Seth, you read Road to Serfdom, maybe you can speak to this.

1:30:10 Seth Paskin: I'm not sure that that's the right question here. And what I mean by that is I don't know that Hayek is going to have as much of an issue with arguing about the notion of rationality. Hayek's point is going to keep coming back to this notion of, of central planning and policy making. And so the real question is what's the jumping off point? So Sen has, you know, we haven't really talked in detail about it, but he has a whole slew of arguments about why the narrow version of rationality doesn't work. It's not reflective of how people actually make choices about why. You want to take a broader view that he takes from Adam Smith, which he says, by the way, is the secret underpinning of economics is stoicism. Because he talks about how Adam Smith was influenced by the Stoics.

1:30:58 Wes: Yes. This prudence. Prudence thing with Smith.

1:31:01 Seth Paskin: Yep. Prudence is the union of reason and understanding and self command. And the self command comes into play when you have to sublimate or compromise your own interests and desires for that of the greater whole, which is a central part of Adam Smith's moral theory that doesn't show up in later economics according to Sen. Then he talks about utilitarianism, which you mentioned, the three aspects of utilitarianism, which are consequentialism, welfarism, and some ranking. He likes consequentialism. He doesn't like the other things. Then he talks about duality of the person and ethical calculation that we just focus on well being and we don't focus on agency.

Now this is the part where I think we start to see where there might be a difference. Sen says, you know, we're talking about maximizing well being. What's the connection between Pareto efficiency or the fundamental welfare theorem and utilitarianism? Well, Pareto efficiency, which is a state at which nobody's utility can be increased without decreasing, and somebody else's is, in philosophical parlance of utilitarianism, the greatest good for the greatest number. And he's trying to make the point that Pareto efficiency is the logical extension in economics of that utilitarian maxim.

So he says, here's a bunch of reasons why utilitarianism conceived that way is not right. And it's all the standard ones. You know, one is how do you measure it? One is how can you have incommensurate values for goods, how do you compare those types of goods, etc. It's the Socrates dissatisfied or the pig satisfied problem. He goes further, just to say, on top of that, if you look at a person as an agent, as a human being and as a rational agent, or sorry, as an, as an acting agent in their own life and in the community, to see them simply in terms of their well being and their utility is extremely limited.

You need this other aspect, which is what he calls agency, which is really focusing on not just their focus towards their own well being, but geared towards their sense of freedom, their sense of what possibilities are available to them and extending out to the types of choices that they are capable of making, the types of things from which they can choose. And I think this is where I start to see something where Sen is. Can distinguish himself from Hayek because, well, that's not even that important. We just happen to read these two things together.

They aren't necessarily. They could be complementary or contradictory. But is that, I think what Sen is pointing at with that is something like the distinction between meaning and happiness. And it's very odd that just this week I came across Viktor Frankl's Man's Search for Meaning and read an article about Frankl and you know, he talks about how happiness is an outcome and that meaning is something that we need, that human beings actually need. And I got. Maybe it's just because I was reading these things at the same time, but I feel like when Sen talks about meaning and agency, he's trying to recast what freedom would really mean for somebody.

And not in the economic sense that Hayek talks about, which is the ability to pursue whatever using your own skills and knowledge, but something more existential, as you mentioned earlier, where you have a freedom to generate meaning for your life and that he's making a call that economics somehow needs to incorporate that in the way that they view human agency. I think this is where it starts to jump off and it gets to that end point of he starts saying that if you start thinking in those terms and you start taking that into account, then you get pushed towards talking about the way people value their existence and not just the choices they make, and that the valuing system is much more complicated than we make it out to be.

Then you get into the decision problem for both individuals. And from a policy perspective, where an institution might have to make a decision, where you have these conflicting values that aren't monist. That's how I read that whole essay coming together in that way is that he's ultimately defeating the fundamental welfare theorem by saying the reality is human beings value things in different ways from each other and also at different ways at different times. And this complexity in the valuing system is what we really need to focus on. And the way we do that is by throwing out all this other apparatus and enriching our view of what human behavior is, et cetera.

1:35:36 Seth Benzel: I don't know if he wants to throw out all the other apparatus, but he certainly wants to enlarge the apparatus.

1:35:41 Wes: Well, he has all kinds of caveats at the beginning about how he's not saying that traditional economics and the engineering approach isn't useful for a lot of things.

1:35:51 Mark: Not only is it useful, but it can inform our ethics. Did you guys find that a particularly convincing point that he just throws that out?

1:35:58 Seth Paskin: That was just a sop to his critics.

1:36:00 Seth Benzel: I think maybe I can bring in Arrow's impossibility theorem. Maybe that's something he's thinking about here. Right. So one of the things that I was thinking about when I listened to the Sandel episode is he said, okay, well, the answer to all these problems of how should we weigh these different values is we should all get together and talk about it. And then after we talk about it, we'll all have a vote, and then we'll choose the value system that we all like.

1:36:25 Mark: That wasn't clear, but go ahead.

1:36:27 Seth Benzel: But there was a conversation that happens, and then we get a better social outcome. Okay.

1:36:31 Mark: Yes.

1:36:31 Seth Benzel: What Arrow's impossibility theorem says is that there is no voting system that's going to be able to resolve these questions in an obviously correct way. To give an example, suppose Wes prefers social outcome A to B to C. Seth prefers social outcome B to C to A. Mark prefers social outcome C to B to A. I don't know. I missed the middle one. You're following me. So what happens here is if we have a head to head vote on these different issues, A is going to beat B, B is going to beat C, but then C is going to beat A. So we have intransitive preferences when we set up all these options together.

1:37:11 Mark: And that's how Trump wins.

1:37:17 Seth Benzel: But what you get out of this is that not only is this just a problem with the voting system that I proposed, which is you put two things head to head and you choose the one that has the highest votes. There is no conceivable voting system which gets always chooses the Pareto dominant choice and the answer doesn't depend on which options are presented, that you can present the options in a different way and get a different answer. And there's some other. Those are the two interesting ones. And so economics therefore has something to say about. Here's a way you can't solve this problem, which is we all vote on what our values are.

1:37:55 Wes: So how is that related to.

1:37:58 Seth Benzel: So you asked, is there anything economics can say normatively? And so maybe that's something economics can inform ethics in a way there.

1:38:06 Wes: Oh, I see.

1:38:07 Mark: Yes. Ethics being in the enlarged sense of that. Aristotle took it. It's not just determining what the good is, but in a practical sense how to actually achieve it.

1:38:17 Seth Benzel: Yeah, well, I mean, if you're king, you still need to choose an option and it seems like you should choose the most ethical choice or whatever. And so here would be one way that you might choose the ethical choices you have. Everybody have a vote and that doesn't work or it's got problems. At least that's a little bit too far.

1:38:31 Mark: So I think the problem that we were having, at least what I was having with these readings, is that we're walking into the middle of a bunch of disputes and it's sort of unclear what the players are or what's at stake in these disputes. So, I mean, Hayek starts out his essay, what is the problem we wish to solve when we try to construct a rational economic order? And I wasn't even clear, like, what does that really mean? Is he trying to do that? Is he.

1:38:56 Seth Benzel: Well, he says it in the next sentence. I want to get the best. You know, once I have a ranking of social outcomes, I just try to get the best social outcome possible.

1:39:03 Mark: Who is he arguing against? The central planner, you know, that seems to think that just like I'm going to commies. Plan the. Yeah. Plan my house, plan the expenses of my house. I want to plan the expenses of the entire nation, of everybody in the nation. I mean, is that really, that was a live option at the time.

1:39:24 Seth Benzel: What do you call communism? Right, that's central planning insofar as possible, who gets what, who works where, what's produced, five year plan, increase iron production 3,000 times, blah, blah, blah.

1:39:37 Seth Paskin: Yes, it was a live problem at the time. It is no longer a live problem. Except in the case of China.

1:39:44 Wes: Well, not in China, really.

1:39:46 Seth Benzel: Well, you know, they have a mixed system, but I will say very amusingly, so Chile under Allende actually tried to like implement. You got to look at this picture, man. I think it's like Cybersyn or something like that. They tried to make like a command center for Chile where everyone had like these high tech chairs and they would get constant streams of information from all of the factories and all of the farms in Chile and they'd be able to make real time adjustments and tell, oh, this truck go there and that truck go this other place and centrally command their economy. And it was a debacle in ways that are unsurprising to an economist or

1:40:25 Wes: just anyone with a practical bent.

1:40:30 Seth Paskin: Oh, man, I like that idea, though.

1:40:35 Wes: You dislike the Star Trek kind of.

1:40:37 Seth Paskin: I like the idea of sitting in a chair and having information flow to me. That's right, yeah.

1:40:42 Mark: If so many of these issues we've discussed here are epistemological issues, then yeah, the question is very natural. Like, well, haven't we made advances in, you know, if it's a communication problem and that's why the centralized planner is having trouble, or Hayek talks about people actually look down. They think it's almost contemptible to have specific knowledge. Anyone who by such knowledge gains an advantage over somebody better equipped with theoretical or technical knowledge is thought to have acted almost disreputably. So just for instance, knowing that the price for something is slightly different over the border, so your whole business just becomes buying that thing from the one place and driving it to the other

1:41:19 Seth Benzel: place and driving down the price difference. Yep.

1:41:22 Mark: Yes. So we think that's slimy somehow, he thinks, but yet that's actually, it's doing what is socially good. It's evening out the need.

1:41:30 Seth Benzel: Yeah, it's an essential function. So let me, let me give you an example of why you might think that's sleazy. So like the sleazy version of this is you have a stockpile of oil that you've saved up and then there's an interruption in the world supply of oil, and you say to your community, ha, ha, ha, I have the. All the oil. Now I'm going to charge You a very high price. So he had the private information of knowing that there was going to be an oil interruption. Now again, introduce the problem of monopoly. But if there's enough people who know about the oil interruption, then there's a lot of people who store it up. Yeah, yeah.

1:42:05 Mark: So it seems all those dynamics have changes. Like just even knowing that something is a slightly lower price over the border. Like, well, now with the Internet, can't you just check that?

1:42:14 Seth Benzel: So, but think about the kind of extraordinarily detailed information that you need. Right. That's the kind of the easy problem. The hard problem is if I really wanted to, you know, just distribute goods, how many tomatoes should Seth get? And how many bottles of gin should Mark get? And how many tables should Wes get?

1:42:35 Wes: Oh, thank God I got the tables.

1:42:37 Seth Benzel: Those are the kinds of things you need to know.

1:42:39 Wes: Yeah.

1:42:40 Mark: And those are the kind of things that even now, companies are not very good at knowing.

1:42:44 Seth Benzel: Yes. So, I mean, so that's kind of the big long term question. With the rise of big data and Facebook watching you all the time, maybe Facebook knows how much more you need a chair than a table. Probably not. Maybe they'll get there in some distant century, but we're certainly not there yet.

1:43:03 Wes: I mean, even if we had the central planner who had perfect information, let's suppose the economic God.

1:43:11 Seth Benzel: Sure.

1:43:11 Wes: What would be the drawback of that?

1:43:13 Seth Benzel: I mean, so then there's two problems. So suppose you get economic God. So you still have three problems. Problem number one, why is he going to act in the interest of the community rather than be an angry God? Okay. Problem number two, you still need people to act according to your instructions. So you might say, okay, Seth, I've decided that the socially optimal thing is for you to go work in the salt mines. Right. It might very well be the case that that is the socially optimal thing. But the central planner's still got to figure out a way to incentivize you to do that. And then I think those are the two big problems. I had a third problem in mind.

1:43:49 Seth Paskin: You don't need a third problem after that second one. Because social optimality, if my job is salt mining. Yeah. Well, so there's that live problem that we started off discussing. And it's obviously was less live for, what is it, 1986? So what, the wall came down in 89, is that right? Yeah, I got my years. Okay. You know, the bigger issue and part of the reason why I'm interested in this subject is I try to understand economic principles as they apply to what's happening in our society, because I feel like things have become so complex and society is so economically driven that part of what you need to be an informed citizen is you have to understand some of what goes on.

And then you find out, no fucking way can you do that. Like, there's no way an ordinary human being, even with tens or twenties of hours of study, can get a good sense of the mortgage crisis, the banking bailout, the Greece debt crisis. And there's just stuff that's happening underneath all of this. There's layers and layers of slime. The banking and the international financial systems and all this stuff. The way these things move to impact our lives is really severe. So, you know, I'm interested in this because I'm trying to understand. But the one thing that when I listen to podcasts on economics or when I read articles or books on it, I'm trying to understand is that you hear these people get into this debate, oh, it's regulation versus the free market and the regulations didn't work.

Or no, it was the wrong regulations. Or maybe we shouldn't had regulations. We should add more transparency. Well, you know, the lenders were incented by the government. It's Fannie Mae and Freddie Mac's fault because we wanted everybody to be a homeowner. So everybody starts talking about human behaviors, whether it's the way humans behave when they consume, the way humans behave when they run financial institutions, the clowns at the Federal Reserve, you know, whatever, and so the clowns.

1:45:59 Seth Benzel: You're calling Janet Yellen a clown?

1:46:01 Seth Paskin: No, I'm thinking of her predecessor, Bernanke. Yes. And what seems to come down over and over again is a really, really immature conception of what it means of how human beings act. And also a real lack of normativity to just say, oh, well, the reason why Goldman Sachs and the bankers of Goldman Sachs did all these things is because the financial incentives were there. For them to do it is like saying, well, you know what? There was a gun on the table and a piece of paper, there was a handwritten note that said, hey, it's okay to kill people. So, yeah, that's why he killed him.

It does not answer the question, and it does not hold these people accountable for acting like fucking human beings that live in a community, in a society. And that's. This is the thing that I keep hearing over and over again. And it's really frustrating me. And so part of the reason why I've been pushing for this is I'm like, there has got to be Some really basic flaw that I don't understand in the way that economics sees human behavior. And I need a better way of articulating what that is and I need a good solid philosophical foundation to do it.

I have my ideas, but that's part of what was motivating this for me.

1:47:13 Seth Benzel: Did this help?

1:47:15 Seth Paskin: Yeah.

1:47:16 Seth Benzel: Are you going to have to invite me on for a new episode where we look at some actually applied papers instead of just this abstract theory?

1:47:23 Seth Paskin: You know what? I think if we. I definitely thought the Sen paper helped to articulate some of the, what I would say, philosophical deficiencies in the notion of rational behavior. And the idea that, you know, this utilitarianism is internalized as a kind of quasi ethical, in a weird way, an ethical system there. So it's helped me with some of that. Now I need to go back and kind of revisit something like some of the. Some of these specific issues that we've seen. Like maybe we go back and we look at the mortgage crisis and we look at how it came about and what the response was, and then we start asking ourselves this question.

If Obama wasn't the president, or should. Let me rephrase this. If the president of the United States didn't have such close ties to the banking industry and the financial industry, if there wasn't this free flow of people and knowledge and influence between the public sector and the private sector around these sorts of things, if being a government official wasn't simply preparation for a lucrative career as a lobbyist or a consultant, would decisions have been different? And this idea that somebody convinced themselves that we couldn't just allow these companies that basically should have gone out of business for bad business practices because it was going to cause this massive ripple.

We have to protect the American people or the world economy by propping up these banks. Like, I don't know, maybe I need. Now I go back and look at that and see if it makes any more sense. And I don't know that it will, even though I feel like I have a better understanding of some of the underpinnings of economics. Maybe there's something else going on that I just don't understand.

1:49:12 Seth Benzel: The short answer is that that's a positive question. So believe it or not, that's actually kind of a big open question. There's a lot of debate. I'm kind of working a little bit in the area of optimal banking regulation policy, and there really are some unanswered questions. But the way that you're going to solve these questions isn't by giving up on economics. In fact, I think economics is the only field in which you can answer these questions. Questions of would it be optimal to let the banks fail or would it not be?

1:49:42 Seth Paskin: Listen, I'm.

1:49:42 Mark: This is.

1:49:43 Seth Paskin: I'm interested in it and I think it's. I'm interested in it for good reason. And there is definitely a way to answer Mark's question to some extent. There are principles of what we'll call logistical economics which do shed light on human behavior and can help us inform. So I'll give you a good example. There's a really good episode of Econ Talk, which is this a podcast on economics by this guy Russ Roberts, who's part of Stanford's Hoover Institute and he's got a regular guest on named Mike Munger, who's also an economist. And they have done a couple of episodes about price gouging during natural disasters.

So after hurricane hit North Carolina, you know that there were people that had water and they went and sold that water to the people in the affected areas. And they have a very sensitive, meaningful, interesting and illuminating conversation about how that all works and what the issues are on both sides of it. You know, is it fair for the government to restrict what the people who have the resources the water can charge when those people took a risk because they went into a devastated area? You know, it goes on. There's a very.

1:51:05 Seth Benzel: Although I will point out, like the whole welfarism thing is like we don't care what's fair, which is what's the optimal thing to allow it or to not allow it, but keep going.

1:51:12 Seth Paskin: Right, right, right. No, I'm just saying that's an example of a discussion between economists about an economic issue, but talks specifically about the human impact and illuminates that situation in a way that a couple of philosophers, I think philosophers would do it differently. In other words, it's something, you can actually learn something from it. Now what I have learned from all of the things that I've studied in this and is that the market is getting violated constantly and that it's almost meaningless to say that we have a free market because we don't.

There are billions of dollars in subsidies to giant corporations. There's cronyism, there's asymmetrical information. I mean, you want to talk about banking reform, you know, fuck the regulations. How about transparency? You know, how about actually having a view about what these guys are and gals, I guess are doing, but everything's hidden, right? You know, they don't want to put labels on food to tell you what's in it. They don't want to tell you what goes on, that you can't understand what banking instruments are when they package up mortgages and do things like this.

All this stuff is hidden in secrecy, which should be the first red flag. First of all, it's the first thing that tells you the market's not free. Secondly, it should be a red flag that somebody is doing something they shouldn't be doing. When we're ready to have that conversation, you want to slash all the subsidies for agriculture and you know, we want to change all the rules and have a truly free market, then when Rand Paul says that, then I'll believe he's really a libertarian. Show me a libertarian who's ready to truly have a free market and I will show you a unicorn.

1:52:49 Seth Benzel: Hey, listen, I don't see it all or nothing, but I'm not a libertarian. I totally agree that the stance that hardcore libertarians take, that all government intervention is unethical, it can't be a consequentialist stance. It has to be a rights based stance. You can only argue that from the Nozick angle, not from the utility angle, right?

1:53:12 Seth Paskin: Yep. And you can only argue it maybe from the lunatic angle, but that's.

1:53:18 Mark: Well, after that very long closing, I feel like I shouldn't add very much myself, but I have much. This has obviously been building up for a long time in you. Yeah, Mr. Paskin. So I'm glad you got to have this initial explosion here. I didn't find the readings difficult. They were very easy to read. But I again did not feel like I understood who was being addressed. I kept trying to relate it to the things that I personally worry about. You know, even if you think that, of course, the price system has to be the norm, I still think all the necessities, or at least most of the necessities out of the market system. And, you know, you don't need to have godlike powers to know that everybody needs protection from fires. Okay, okay.

1:54:04 Seth Benzel: So I mean, where do you end? Necessity. Right. Where does need end and want begin?

1:54:09 Mark: Well, that's the ongoing conversation that Sandel referred to that I didn't hear any indication that it would end with a vote, you know, maybe a provisional vote should we do this particular thing. But it's an ongoing philosophical, you know, it should be our main thing as a culture to sort of get ourselves more talking about and aware of what it is we actually want. You know, that's when people talk about what, oh, we need to Have a conversation on race. Well, that's partly. That is a real thing. It's a conversation of trying to figure out, well, what actually would equality be and what measures could we actually take to achieve that? And that should be an ongoing thing in terms of all areas of welfare, what counts as a need, what is the human good? And don't just sort of arbitrarily say, oh, well, it's just whatever people choose, or, you know, any kind of easy answer like that.

1:54:56 Wes: Yeah, but we don't have that kind of society. I mean, there's more than the market at work in this society. We have a sort of welfare state. And I think the same thing goes for most economies in the world today. It seems like Hayek is just saying you don't have state ownership of the means of production. But who would argue against that? This is my confusion about how inconsistent Sen is. Do any of us really think the state should own the means of production at this point, with all the disastrous examples of how that didn't work, where they simply own and run the companies?

So the conversation is much more subtle than that. And to say there are all these flaws in the market or there are lots of market failures isn't an argument against the primacy of the market that Hayek is talking about, at least as far as I can see. But I wish I knew more about Sen to see how if he's advocating anything that, that goes further than social programs and regulations and the sorts of things that I don't see as inconsistent with a market economy, I don't see

1:56:02 Seth Benzel: them as being particularly inconsistent either. And I think where these readings leave us is that these kinds of interventions call for a case by case analysis. And we can have a conversation about what we value and try to control, construct a outcome of social rankings. And then when we evaluate policies, we shouldn't enact them because maybe this is a strawman too. But we shouldn't enact policies because they feel like they should do the right thing, but rather we're making informed decisions based on what we have observed empirically as interdependencies between different things and are backed up by theories that it sounds like people will act in the way that is necessary for these outcomes to come to pass.

1:56:50 Mark: Well, I think we should legislate based on gut.

1:56:54 Wes: The Trump method.

1:56:55 Seth Benzel: Just gut, just gutting. Just, you know, just go up there. The decider.

1:56:59 Mark: What has God told you about what the outcome of this economic decision will be? That's the only question, really. Speaking of next time we're Going to be talking about stoicism, like we said. Epictetus 135 CE. The Handbook, also called Enchiridion, since that is the underpinning of economics, then. Well, everything we discuss this time will be unraveled with that discussion, surely. Yeah, well, thanks for putting up with our ignorance, Mr. Benzel. Did you have any other. I know we really enlightened you.

1:57:36 Seth Benzel: I got some good papers episode

1:57:39 Mark: I

1:57:39 Seth Benzel: brought a quote here that I find really inspirational and brought me to the study of economics. And it's a quote by Keynes on the study of economics.

1:57:48 Mark: Do your best.

1:57:49 Seth Benzel: Keynes voice I don't know what he's

1:57:51 Mark: A study of economics.

1:57:54 Seth Benzel: The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science. Yet good or even competent economists are the rarest of birds. An easy subject at which very few excel. The paradox finds its explanation, perhaps. And that the master economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together.

He must be mathematician, historian, statesman, philosopher in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch the abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his limitations must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood. As aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.

And so that's why I like economics.

1:59:00 Seth Paskin: Wow. Good luck being that guy.

1:59:05 Mark: He must know when to hold them.

1:59:09 Wes: He must know when to walk away and when to.

1:59:11 Seth Benzel: When I was reading Sen's essay, I was put to mind of the immortal words of Public Enemy. You got to give them what they want. You got to give them what they need. Our freedom of speech is freedom or death. You must fight the powers that be.

1:59:23 Seth Paskin: There you go fight the powers that be.

1:59:27 Mark: Awesome. We are supported by your donations. Please go to partiallyexaminedlife.com to make a contribution. Big donors since last time have included Sam Hitt, Jesper Hansen, Mark Gwyn Landry, Charlene Mendoza, Luke Tilbury, Stephen Couch, James Roberts, Ian Foxworth, Harry Lovestrom, Faith Kossick, Gary Hellman, Robert Coldron, Cheryl Swain, Kerry Shaw, Ken Combs, Timothy Adamson, William Mascioli, Jordan Batchelor, Paul Honan, Sam McLean, Jacob Rosen, Stephen Gelber, Paul Kennedy, Peter Copeland, Wade Ains, Joel Carter, Gonzalo Roque, Michael Rosati, Kenneth Stewart, Tyler Schnobelen, Mario Calamango, Douglas Potter, Alexander West, John Graves, Bjorn Dalby, Nina Gershowitz, Jeffrey Williams, Dean Van Ur, Rebecca Ott, Hugh Schultze, John Ellis, Paul Simmons, Thomas Knight, John Lago, Penny Park, Malcolm Hanson, David Kirk Barton, Jared Logsdon, Matthew Kelly, Clinton Deaner, Chris Green, Megan Edwards, Rodrigo Capra, and Melanie Zenz.

Thanks also to the many smaller donors, including those who are newly or on a continued basis signed up for our $5 a month citizen site. Now, we understand some of you are poor. It's fine. But another thing you could do to assuage your guilt is go on the itunes store and leave us with a nice rating. If you want to interact with us more, go to partiallyexaminedlife.com check out the blog, you could join our Facebook group, you could follow us on Twitter. And if you live in the Pittsburgh area, on Saturday, September 26th, we will be doing a live recording of episode 125 covering Hannah Arendt the human Condition.

This is part of the second annual Pittsburgh Continental Philosophy Network conference. It's going to take place at Point Park University. The theme of the conference is Theory and Public Space, devoted to critical examination of the public sphere, analysis of public space, as well as analysis in public space. It takes place that whole weekend, the 25th and the 26th. We're going to be there the whole time. We're going to be doing a Q and a on the 25th in fact, and partying with anybody that's in town on the evening of the 25th. The Hannah Arendt portion of it is going to be from 6:30 to 8:30pm on the Saturday.

That's Eastern time and everybody should know that because we are planning to do a live simulcast of that. So keep an eye on partiallyexaminedlife.com for details of how you can watch that as it's happening. And we'll of course take the edited audio and make the episode out of

2:01:49 Seth Benzel: Was a lot of fun, guys.

2:01:50 Wes: Thanks so much. Yeah, thank you for coming on.

2:01:53 Mark: Yeah, good night everybody.

2:01:54 Seth Paskin: Good.

2:02:05 Mark: They take all abortions too large. People will suffer distraction they might ignore everything that you say or interpret you as they please way Words are always disrupted by something you might say driven you might say obsess by something that made a big not one of the best people. Lazy they often look the most variable from anxiety. People who throw away will have none left to spend on you unless you're part of the scheme of the moment. And when that fails, you'll be gone. People who throw away love are pitiful when they are strong. People who throw away people who love them are sick and human wrong.