Eliezer Yudkowsky on Facebook, so quoted in it’s entirety here for posterity:
Bryan Caplan’s Simplistic Theory of Left and Right says “The Left is anti-market and the Right is anti-Left”. This theory is half wrong, and will for this reason confuse the Left in particular. It ought to be a clue that if you ask the Left whether they’re anti-market, most of the Left will answer, “Of course not,” whereas if you ask the Right whether they’re anti-Left, they’ll answer “Hell yes we are.” People may understand themselves poorly a lot of the time, but they often know what they hate.
My “Human Theory of the Left” is as follows: The Left holds markets to the same standards as human beings.
Consider a small group of 50 people disconnected from the outside world, as in the world where humans evolved. When you offer somebody fifty carrots for an antelope haunch, that price carries with it a great array of judgments and considerations, like whether that person has done you any favors in the past, and how much effort it took them to hunt the antelope, and how much effort it took you to gather the carrots. If you offer them an unusually generous price, you’d expect them to give good prices in return in the future. A low price is either a status-lowering insult, or carries with it a judgment that the other person already has lower status than you.
And that’s what the Left sees when they look at somebody being paid $8/hour. They don’t see a supply curve, or a demand curve; or a tautology that for every loaf of bread bought there must be a loaf of bread sold, and therefore supply is always and everywhere equal to demand; they don’t see a price as the input to the supply function and demand function which makes their output be equal. They see a judgment about how hard an employee works, and how much they need and deserve.
So of course they hate whatever looks at a poor starving mother and says “$8/hour”. Who wouldn’t?
Ask them and they’ll tell you: They don’t hate markets. They just think that the prices and outcomes aren’t fair, and that tribal action is required for everyone to get together and decide that the prices and outcomes should be fairer.
If this post gets shared outside my own feed, some people will be reading this and wondering why I wouldn’t want prices to be fair.
And they’ll suspect that I must worship the Holy Market and believe its prices to be wise and fair; and that if I object to any regulation it’s because I want the holy, wise and fair Market Price to be undisturbed.
This incidentally is what your non-economist friends hear you saying whenever you use the phrase “efficient markets”. They think you are talking about market prices being, maybe not fair, but the most efficient thing for society; and they’re wondering what you mean by “efficiency”, and who benefits from that, and whether it’s worth it, and whether the goods being produced by all this efficiency are actually flowing to the people making $8/hour.
You reply, “What the hell that is not even remotely anything the efficient markets hypothesis is talking about at all, you’re not even in the right genre of thoughts, the weak form of the EMH says that the supply/demand-intersecting price for a highly-liquid well-traded financial asset is a rational subjective estimate of the expectation of its supply/demand-intersecting price two years later taking into account all public information, because otherwise it would be possible to pump money out of the predictable price changes. The EMH is a descriptive statement about price changes over time, not a normative statement about the relation of asset prices to anything else in the outside world.”
This is not a short paragraph in the standard human ontology.
“So you think that $8/hour wages are efficient?” they say.
“No,” you reply, “that’s just not remotely what the word efficient means at all. The EMH is about price changes, not prices, and it has nothing to do with this. But I do think that $8/hour is balancing the supply function and the demand function for that kind of labor.”
“And you think it’s good for society for these functions to be balanced?” they inquire.
The one is willing to consider the force of the argument they think they’re hearing–that the market is a weird and foreign god which will nonetheless bring us the right benefits if we make it the right sacrifices. But, they respond, is the market god really bringing us these benefits? Aren’t some people getting shafted? Aren’t some people being sacrificed to save others, maybe a lot of people being sacrificed to save a few others, and isn’t that worth the tribe getting together and deciding to change things?
And you clutch your hair and say, “No, you don’t get it, you know the market is doing something important but you don’t understand what that thing is, you think the markets are like arteries carrying goods around and they can get blocked and starve some tissues, and you want to perform surgery on the arteries to unblock them, but actually THE MARKETS ARE RIBOSOMES AND YOU’RE TRYING TO EDIT THE DNA CODE AND EVERYTHING WILL BREAK SIMULTANEOUSLY LIKE IT DID IN VENEZUELA.”
And what they hear you saying is “The markets are wise, and their prices carry wisdom you knoweth not; do you have an arm like the Lord, and can your voice thunder like His?”
Because, they know in their bones, when a corporation pays an employee $8/hour, it means something. It means something about the employer and it says something about what the employer believes about the employee. And if you say “WAIT DON’T MESS WITH THAT” there’s a lot of things you might mean that have short sentences in their ontology: you could mean that you believe $8/hour is the fair price; you could mean you believe the price is unfair but that it’s worth throwing the employees under the bus so that society keeps functioning; you could believe that maybe the market knows something you don’t.
And all of those things, one way or another, are saying that you believe there’s some virtue in that $8/hour price, some virtue transmitted to it by the virtue you think is present within the market that assigns it. And that’s a cruel thing to say to someone getting $8/hour, isn’t it?
Just look at what the market does. How can you believe that it’s wise, or right, or fair?
And they can’t believe that you don’t think that–even though you’ll very loudly tell them you don’t think that–when you are being like “IF YOU WANT THEM TO HAVE MORE MONEY THEN JUST GIVE THEM MONEY BUT FOR GOD’S SAKE DON’T MESS WITH THE NUMBER THAT SAYS 8.”
This by the way is another example of why it’s an important meta-conversational principle to pay a lot of attention to what people say they believe and want, and what they tell you they don’t believe and want. And that if nothing else should give you pause in saying that the Left is anti-market when so many moderate leftists would immediately say “But that’s not what I believe!”
Maybe we’d have an easier time explaining economics if we deleted every appearance of the words “price” and “wage” and substituted “supply-demand equilibrator”. A national $15/hour minimum supply-demand equilibrator sounds a bit more dangerous, doesn’t it? Increase the Earned Income Tax Credit, or better yet use hourly wage subsidies. Establish a land value tax and give the money to poor people, while being careful not to establish new paperwork requirements that exclude busy or struggling people and being careful about phaseout thresholds. Or if you really insist on looking at things in the simplest possible way, then take money away from rich people and give it to poor people. It’ll do less damage than messing with the supply-demand equilibrators.
I feel like I’m at a banquet watching people trying to eat the plates and they’re like “No, no, I understand what food does, you’re just not familiar with the studies showing that eating small amounts of ceramic doesn’t hurt much” and I’m like “If you knew what food does and what the plates do then you would not be TRYING to eat the plates.”
I honestly wonder if we’d have better luck explaining economics if we used the metaphor of a terrifying and incomprehensible alien deity that is kept barely contained by a complicated and humanly meaningless ritual, and that if somebody upsets the ritual prices then It will break loose and all the electrical plants will simultaneously catch fire. Because that probably is the closest translation of the math we believe into a native human ontology.
Want to help the bottom 30%? Don’t scribble over the mad inscriptions that are closest to them, trying to prettify the blood-drawn curves. Mess with any other numbers than those, move money around in any other way than that, because It is standing very near to them already.
People like Bryan Caplan see people in 6000BC wearing animal skins as the native state of affairs without the Market. People like Bryan keep trying to explain how the Market got us away from that, hoping to foster some good feelings about the Market that will lead people to maybe have some respect for its $8/hour figure.
If my Human Theory of the Left is true, then this is exactly the wrong thing to say, and eternally doomed to failure. To praise that which would offer $8/hour to a struggling family, is directly an insult to that family, by the humanly standard codes of honor. If you want people to leave the $8/hour price alone, and you want to make the point about 6000BC, you could maybe try saying, “And that’s what Tekram does if you have no price rituals at all.”
But don’t try to tell them that the Market is good, or wise, or kind. They can see with their own eyes that’s false.
Some good discussion in the comments, including from Caplan.