Archive for the ‘General’ Category

Today’s economic orthodoxy is heavily dependent on the idea of utilitarianism, because it is a convenient mechanism that allows economics to be taken more seriously as a natural science. It allows economists to bypass all the inconvenient complications that arise when delving into deeper considerations of ethics and human behavior. The adoption of utilitarianism allows for the use of an additive system that fits well into an economics that is based on mathematics, as we have today.

Before going further, it’s worth briefly exploring who Jeremy Bentham was, and what we mean by utilitarianism.

Utilitarianism, or the “greater good” argument, is the belief that is the idea that the “right” course of action is the one that maximizes the overall “good” of a situation. So actions should be judged right or wrong depending on whether they increase or decrease human happiness, or utility. In economic-speak, utilitarian is used as the rationale behind the crucial assumption of rationality of consumers – that agents (i.e. people) consume so as to maximize their “utility”. Bentham put it thus: “Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do.”

On the face of it, utilitarianism has some appeal. But a simple thought experiment, first articulated by American philosopher Robert Nozick in 1974, puts the simplicity of utilitarianism in stark focus. Nozick hypothetically proposes the “experience machine”: a machine that would give you any experience you so desire. So if you wanted to experience the thrill of climbing Machu Picchu, so be it. But all the while you would be hooked up to this machine, not knowing that you were there. In other words, you would actually believe you were climbing Machu Picchu. Would you plug yourself into the machine? As long as you’re living your hearts desire, does it matter whether its real or not?

Nozick believes that most people would choose not to be plugged into this experience machine. This implies that it is somehow important whether these experiences are real or not. The reality of life is important: people want to actually do certain things, achieve certain goals, rather than simply feel the pleasure associated with it. However, if utilitarianism held strong, then the pleasure associated with actions would be all that mattered, and we would choose the machine. It is clear then, that there are other things besides simple pleasure that people consider intrinsically valuable.

While different forms of utilitarianism have attempted to come to grips with this and other complications, this was not so for Jeremy Bentham. He proposed a form of ‘felicity calculus’, where the pleasure and pain that arises from different actions could be quantified and and determined by addition and subtraction. This sort of simplistic rationale is too tempting to resist for orthodox economists. For Bentham, different pleasures vary only in their intensity and duration, and not quality. He even said himself, “the game of push-pin is of equal value with the arts and sciences of music and poetry.” Reductionism at its finest. This form of thinking has given rise to “homo economicus”: economic man. Homo economicus, meant to represent each and every one of us, is a narrow, self-interested individual who’s only concern is to maximize his or her consumption of goods and services. In physical terms, the assumption that we are all homo economicus is akin to the assumption that, for practical purposes, all cows are spheres.

The concept of utility is core to understanding economic orthodoxy today, and yet the assumption of rationality is based on an outdated and unrealistic form of utilitarianism that is not, and has never been, applicable to real life. Luckily, we have fields of economics, such as behavioral economics, that have attempted to move beyond this mode of thinking, and incorporating knowledge from other fields such as psychology in altering models to be more realistic. But neo-classical economic theories are still based on this idea, and despite strong attempts from many directions to reform the discipline, it clings stubbornly to such discredited beliefs.

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Is University Education Missing the Point?

Posted: May 31, 2011 by Zeddington in General
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Up until high school, we’re trained in a variety of different disciplines: mathematics, natural sciences, language, art, and others. But once we pass the 12th grade, we’re forced to choose a specialization – although in some systems, such as in the US, you can put off declaring your major for a year or two while you decide what you want to do, which in my opinion is a very good thing. In other systems, such as the British system, you are afforded no such luxury. Why the rush? In order to make us ’employable’, as soon as possible.

I’ve found that this approach – in particular with the British system – is harmful in the sense that it does not provide a rounded education which is important in being a citizen of the world. Worse, students are trained to think in a particular way. I am a trained economist, and so I can speak with more familiarity about this discipline than others such as law or medicine. In economics, everything in monetized. The whole perspective of the economist is about efficiency in all that is done: maximizing output while minimizing posts, reaching equilibrium. Maximizing “utility” – a useful theoretical concept that has absolutely no bearing in reality. Utility is a measure of “happiness” – if you do something that makes you happy, it increases your utility. In economics, the language of utility is consumption. So consumption of more apples, more oranges, more iPhones means more utility.

Any non-economist can see the benefits of such an approach, but also the limitations. Well, you say, life doesn’t really work like that, does it? And you’d be right in saying that, but after three, four, five… maybe even ten years being trained as an economist, you lose perspective. Having been tried for much of your academic (and professional) life to think like an economist, it becomes hard to think like a normal person.

But it’s not just economics. If you’ve been trained as a lawyer, chances are that you’ll see problems in life in the framework of existing laws and precedents – what is legal and what isn’t. A student of management (and, by optimistic extension, a big-shot CEO) is trained to thing of nothing but the bottom line. Sure, there’s a lot involved in management in order to maximize that bottom line, and that involves a lot of areas and a lot of creativity – but in the end of the day its about the bottom line. And so on.

Sometimes I wonder if those without a university education are in fact in the best position to understand our world. They have not been trained to see the world from a certain angle (at least not academically). For all the fuss about higher education and the virtues of it, perhaps it is those who have not been forced into adopting a certain method of thought that are best placed to understand the world around us.

Morning all.

A few days ago, The Huffington Post was bought out by AOL in a deal worth some $315 million. Initial reaction by people commenting on the Huff Post boards was overwhelmingly negative – the gist of it being that they sold out. That reaction is hardly a surprise: while the Huff Post was hardly a bastion of revolutionary leftist thought, it did represent a sizable and increasingly important number of the liberal and leftist population of the United States. The signs of “sell-out” were already there (increasing corporate advertising on the website), and so for me personally the fact that the sale was made isn’t much of a surprise, although it happened sooner than I thought.

The reaction in the mainstream media has, for the most part, missed the point. This article from The Telegraph (UK) completely misses what this means for the most important aspect of The Huffington Post – it’s readers. Even this, from CNN, makes only passing reference to whether the editorial stance of the site will change. The article does make the valid point that the Huff Post is not particularly leftist anyway. It pretends to be, but that’s partly because the concept and definition of what it means to be on the ‘left’ is quite centrist anyway.

Perhaps the reason that not many are giving this question much attention is that Arianna Huffington herself seemed to avoid it herself. In her initial announcement on the website, she waffles a lot about things that most readers don’t really care about, using a lot of media-friendly and business-friendly rhetoric, to conveniently skirt around the point. Of some relevance, she finally says:

Remember my New Year’s resolution? It’s coming true — and it’s only the beginning of February. Let’s go down the checklist: Local? AOL’s Patch.com covers 800 towns across America, providing an incredible infrastructure for citizen journalism in time for the 2012 election, and a focus on community and local solutions that have been an integral part of HuffPost’s DNA. Check.

Original video? AOL’s just finished building a pair of state-of-the-art video studios in New York and LA, and video views on AOL have gone up 400 percent over the last year. Check. More sections? AutoBlog, Music, AOL Latino, Black Voices, etc, etc, etc. fill gaps in HuffPost’s coverage. Add all that to what HuffPost is doing with social, community, mobile, as well as our commitment to innovative original reporting and beyond-left-and-right commentary, and the blending will have a multiplier effect. Or, as Tim and I have been saying over the last couple of weeks: 1 + 1 = 11.

Far from changing our editorial approach, our culture, or our mission, this moment will be for HuffPost like stepping off a fast-moving train and onto a supersonic jet. We’re still traveling toward the same destination, with the same people at the wheel, and with the same goals, but we’re now going to get there much, much faster.

That’s great, Arianna, but most of your readers don’t care for how many sections you have if you don’t give them what you want. This nonsense about fast-moving trains and supersonic jets does little to reassure if your editorial stance changes, and you’ve already indicated that it will (see bold text above, as well as this interview).

Of course, this could all be a cunning plan by Ms. Huffington, infiltrating and AOL and getting a wider audience for her evil leftie-commie views. If so, she ought to let us know somehow before she alienates the left.

So, to the Zeddington Toast. Never meant to be a replacement to the Huffington Post, or anything near to that, but hopefully we can provide some commentary and insight on whats going on. I will try to get some more people contributing in the next few weeks and months, and hopefully have some fun with this.

Have a good day.