A Striking Claim

Having spent much of my time in the first few years of sporadically writing here attacking right wingers for appropriating morality, spending more time on Twitter has led me to start feeling obliged to attack those more closer to my natural leaning, lefties, for varying reasons.

One is for a general lack of evidence to support claims made.  This has led me into very long and protracted discussions with two folk in particular on Twitter, @unlearningecon and @austerity_sucks. I've been labelled a hack by the latter for questioning the certainty with which we can make policy conclusions based on econometric evidence, whilst the former sided with the latter despite later very openly critiquing econometric methods in a separate discussion.  To me this seems inconsistent, but that's not my point in this post.

Regardless, the most recent unsubstantiated claim I decided to pick up on was by @unlearningecon, and was:

Students & the public are turning against economists and all they can do is be smug. Won't help them in the long run.
— Unlearning Economics (@UnlearningEcon) October 29, 2013

The subsequent (seemingly) endless discussion that followed didn't really address the main point: What is the basis for such a striking claim?

The claim(s) are:

1) Students are turning against economists.
2) The public are turning against economists.
3) Economists are just being smug in response to this.
4) This being smug won't help them in the long run.

So three empirically verifiable claims, and one forecast (which we won't be able to appraise for a while, if ever, due to its vagueness - what's the time horizon, for example?).

So, (1).  Students are turning against economists.  What does this mean, exactly?  Does it mean students are stopping taking economics courses because they realise how utterly vacuous the subject really is?  However, the numbers do not appear to support this (not had time to see whether economics is above/below any general trend in applications). From UCAS we can find that since 2006, the number of applications has risen by about a third from around 36000 to about 50000.  Maybe it's the graduates that are feeling the pinch?  Sadly I haven't the time to explore graduate destinations for students across subjects, but the data must exist (for example, see here).

Claim (2) ought to be explorable in an objective way (rather than simply one person asserting their opinion without any evidence provided to support), and ideally it would be.  Are economists getting increasingly more virulent tweets directed at them, are feeds like @unlearningecon starting up, is Twitter reflective of "the public", etc.

Claim (3) is more tricky.  But from further dialogue, being smug means "asserting your critics are ignorant without explaining".  Now academics in general (not just economics) are remarkably good at being smug, aloof, and generally socially inept, so let's try and ignore that.  I'm open to what smug would look like - and ideally it would be something where we can observe movements over time.  A clear implication of smug is that there's no debate taking place (or at least a one-sided debate), so maybe again Twitter is an interesting place to go - can we identify economists on Twitter (probably), and can we work out whether they are increasingly ignoring criticisms being made of them, or otherwise?

The forecast (4) we can't appraise just yet, but it would be great if a bit more clarity could be provided:
a) What is the time horizon?
b) By what metric (student enrolments, journals in existence, etc.) should we judge the forecast?
c) Based on that metric, what exactly is the forecast?  (i.e. 50% fewer applications/enrolments, 50% fewer journals, etc)

Now, of course, those that provide such striking statements as @unlearningecon may object at this point: (1) We can't use data for everything, and (2) I'm being pompous and smug.

(1) This is true, but it's important if one is making striking claims to be able to substantiate them.  This claim is a big one, and if true it's one economics needs to take very seriously indeed.  If they can't be substantiated, then why should anyone take them seriously?

(2) It is not pompous or smug to ask for some clarity on an important and striking claim regarding the future of one's subject.

Arguments I'm tired of hearing on Twitter No. 2: Model X is WRONG!!

This is a very common argument on Twitter, especially by those keen on criticising "economics" (whatever that means - see some future post).  Specifically, the assertion is that the efficient markets hypothesis (EMH) is WRONG, caused the crisis, and shouldn't economists be apologising for this?

The problem is that models and theories can't be wrong - there is no absolute metric for judging them, only relative - and relative to our current level of understanding.

And that level of understanding, contrary to those who think economists are just behind the curve on getting to a point where they know enough, will never be sufficient to say a model, or a theory, is wrong.

The simple reason is Type I Errors, couching ourselves in terms of statistical language.  We may falsely reject a correct theory because we just cannot know whether it's true or false.  We can collect data, we can observe the world, we can even come to something close to accepted fact in some cases, but we cannot know what leads to Y happening after X has happened.  We are just not privy to the kind of knowledge regarding how and why nature or some other higher force.  The name of this blog makes it very clear my beliefs regarding higher powers - but you don't have to be a Christian to recognise the obvious with levels of knowledge - as Sir David F. Hendry (anything but a Christian!) points out in the introduction to Dynamic Econometrics.

Given that we can't know things, as a result we can't know a theory is WRONG (or RIGHT), we can only document where the evidence supports, or disputes, a theory.  If we reject theories out of hand we run the risk of rejecting good theories out of hand.  If we accept them out of hand, we run the risk of accepting bad theories.

The point I'm making isn't that we should protect bad theories endlessly, it's simply that they are bad theories, rather than WRONG theories.

A side argument.  It's often asserted furthermore that bad economic theories were responsible for the financial crisis - the idea being that economists advised politicians and they put in place regulatory regimes that subsequently caused the crisis.  The interesting thing here is that the focus is on EMH, rather than all the myriad other policies put in place by governments that assume anything but EMH and some very different model of economic behaviour.  The idea is that we can pinpoint everything that went wrong around the economic crisis to one single bad theory, and everything else was superfluous (i.e. has no explanatory power above EMH).

A few things:

(1) What responsibility must be attached to the politician(s) putting in place policies that led to the financial crisis?  An argument is that economists oversold their favourite EMH theory and hence because they did that, they must accept some responsibility.  They probably should - any serious academic ought to be humble enough to accept responsibility if a recommendation of theirs led to things going horribly wrong.  The issue is whether there's a direct link from the economist recommending their theory and the events that went wrong.

(2) If an economist does ever sell a theory to a politician as being 100% true, they shouldn't be part of the profession (someone would assert I'm following the "no true Scotsman" cop out here, but the reality is I'm making an obvious statement that should apply to any academic profession).

(3) What about the various other government policies pertaining to financial markets that helped along the way in the crisis?  For example, the competition policy (no doubt influenced by economic ideas) which thought that having large banks able to compete on a global scale was important, thus creating "too big to fail"?  Is it really possible to argue without any doubt that the sole cause of the crisis was one bad economic theory?  How do we rule out the lender of last resort policy, and competition policy, as significant contributing factors?

(4) Intervening to regulate markets further relies on economic theory regarding market outcomes - by and large another economic theory that's very hard to generate falsifiable predictions based upon (at least at the macro level).  Why should we rely on those economic theories, but not on others?  On what basis do we judge economic theories given that RIGHT and WRONG has to be ruled out?

Arguments I'm tired of hearing on Twitter, No. 1

The more I frequent Twitter, the more I end up simply arguing/debating with people - usually on all sides of the political spectrum, although it's worth noting oddly that I seem to end up countering lefty arguments more than right-wing ones on Twitter, whereas it's the opposite on Facebook. Not sure why.

Anyhow, argument number one I dislike hearing on Twitter but can't express why easily in 140 characters: The failure to predict the financial crisis (even GFC to some) presents an existential crisis to economics.  E.g.:

Economists who can't predict a GFC or the value of the Aus dollar, yet attack Scientists complex models #qanda #auspol

— steve (@steveUsername1) October 21, 2013

Not true on so many levels, but the simplest is the following. It confuses economics and forecasting, and it's very easy to argue that better economics models will not necessarily forecast better.

Forecasting depends on the thing you forecast being predictable - i.e. you could throw something in (another economic variable usually) and you'd reduce the forecast errors of forecasts over just using a random walk to predict (i.e. predict for tomorrow today's value).

So, even if we assume something *is* predictable, and we then construct a wonderful model which explains what's going on perfectly well (unlikely in economics but never mind), what happens if tomorrow a structural break happens and the variable becomes totally unpredictable? Then you've failed to forecast what happened next (other than by total fluke).

Upshot: Better economic models will not forecast better in a world that is constantly changing. So therefore economists don't need to sit around worrying about their existence because their best models generally failed to spot the crisis coming.

Clarifications:
1) This argument is based on one commonly used by Sir David Hendry, which doesn't make it right by the sheer fact of the size of his brain, but just to give credit where credit is due.
2) This argument doesn't imply I think the economics profession can instead be complacent about itself, or become arrogant again about any of its models. They are all subject to this critique. As Keynes once mused, I'd be delighted if economists were thought of as humble and competent as dentists.
3) Equally I don't make this argument because I think economics has already processed everything to be learnt from the crisis and hence is immutable to criticism related to that. Many criticisms are very valid, I just have an issue with this particular line of argument. 4) This argument is very different to the kind of argument put forward by @unlearningeconomics in his point 2 about why economists haven't got a clue in that it's obviously not based on any economics models (e.g. EMH) but instead on forecasting theory and econometrics.

Later comes argument 2: Model X/Theory Y is WRONG!

Off Topic but a Fascinating Discussion

In the last few days I've ended up in a very long debate with @unlearningecon on Twitter on the state of economics. My protagonist writes a blog with the same name: unlearningeconomics.wordpress.com/.

It's clear that while Twitter is good for a great many things, it can be constraining when it comes to meaningful debate, as 140 characters gets a bit too few, and sending multiple tweets gives the impression of badgering someone.

unlearningecon essentially writes that economists are a pretty out of date, aloof bunch whose models are so woefully inadequate that they aren't fit for purpose. These models aren't fit for purpose because along a number of meaningful dimensions, it's quite easy to point out where some of the basic models taught to undergraduates fall down. He then at length points out where he believes heterodox economists have pushed alternative theories but been ignored by the mainstream in its pursuit of mathematical beauty at the expense of empirical validity.

In my discussion with him it seems that much of his thrust is against macro theory and DSGE models - the wonderful representative agent (or agents).

What I think he fails to understand is (a) how any discipline must be taught, and (b) the distinction between basic textbooks and research, and (c) the basic process of research. I could of course be totally wrong on this, and I await correction. As he appears to have got particularly angry in recent exchanges, I decided it best to spend some time trying to set out my position in a format that might help make things clearer without fanning the flames.

On (a), he is clearly a very incisive person, however he does not appreciate that the ability to abstract and think about modelling the world around us is not something that comes naturally to most undergraduate students. Furthermore, it would be a very unusual teaching method that launched straight into the most complex alternative theories to explain individual behaviour in the marketplace, as microeconomics tries to. Hence we begin by teaching the simplest models to our students, fully aware of their faults. And we then use those faults to enable students to start grasping at the difference between a model and reality, and the purpose behind modelling - to try and better understand that reality. I suspect he hasn't been faced with a room full of undergraduate students waiting for a microeconomics course, but I'm happy to be corrected on this.

On (b), he appears to think that economics research simply builds on the foundations of stuff written decades and even hundreds of years ago, unquestioningly. I've pointed him in the direction of New Economic Papers in the hope that he looks at a few of the recent papers in, say, microeconomic theory in order to help him realise that even micro theorists are looking at better ways to understand individual behaviour.

The reality is that most research is attempting to empirically validate (or otherwise, most likely) the various theories economists have proposed over the years. He criticises behavioural economics as a minor tweaking of the basic neoclassical framework that he thinks is the source of all the ills in economics. However, behavioural economics quantifies all the biases individuals exhibit in their day-to-day decision-making, and in that sense can hardly be a minor modification of the assumption of rationality on the part of individuals. Eventually, with empirical and experimental work to boot, hopefully behavioural economics will help us better understand how we make decisions and develop theories that fit the data and results we find.

I sense unlearningecon is totally unaware that this is the purpose behind most research carried out in economics.

Finally, for (c), unlearningecon appears to blur the distinction between claims and facts, making regular unsubstantiated comments (subsequently getting angry when challenged on them).

He asserts, for example, that physics has a much better empirical and forecasting record than economics. This may well be true, but it is simply an assertion and without any evidence to support it, remains that. It may well be that physicists have developed some excellent models that forecast very accurately - but how do we compare that accuracy to models developed in economics? unlearningecon appears to do this based on his personal perception of various economic theories, which he finds implausible, and on an unquestioning stance towards assumptions made in other fields.

What is needed in order to compare the forecasting record of physics and economics is a metric upon which comparisons can be made. A metric such as mean squared forecast errors might be one, yet this may well ignore the intrinsic uncertainty (unpredictability) of many processes we seek to forecast in either field. Yet without it, we are comparing apples to oranges and can make no progress. unlearningecon has got frustrated with me making this point, and appeals to it being a supposedly well known "fact" that physics forecasts better than economics. Maybe people have already conducted an exercise like that set out here, and if so I'll be interested to read it. In the meantime however, unlearningecon is simply pushing an assertion and getting angry that I contest it.

Middle Ground

"Cranmer" notes that the Pope has written to the British Prime Minister regarding various government policies.

Ignoring the obvious bizarreness of the letter more generally (why did Cameron feel the need to justify his policies to the Pope in the first place?), I wanted to comment on this section from "Cranmer" himself:

"Catholic social doctrine talks about taking care of those who can’t take care of themselves, people who need help," US Vice-President Joe Biden explained last year. For him, it's all about social justice. For his then opponent, Paul Ryan, the preferential option for the poor remains one of the primary tenets of social teaching, but it means you 'don’t keep people poor, don’t make people dependent on government so that they stay stuck at their station in life'. Roman Catholic social doctrine compassionately sustains poverty - it fails the poorest. David Cameron wants the poor to take responsibility for their indolence and inaction.

I've been thinking more and more about what it is that gets the Tory party known as the "nasty party" when it, to some extent, embodies policies many conservative Christians would strongly support, and I wonder whether this is close to that.

What I mean by "this" is essentially the last bit - the wholesale dismissal of any kind of social policy whatsoever as "failing the poor".  If we give them benefits, they become dependent on the state and hence never stop being poor.

Now of course the point is that people are still poor, and were 50-100 years ago hence such "liberal" interventionist policies in the form of various social insurance schemes, hence clearly there's some failure here.

I'm not convinced though, of course.  Yes, some will abuse any system that pays out benefits - but does that mean it's failed the poor?  Is it the same people that are poor in each generation?  Has work been done to look at this, in particular at inter-generational social mobility?

Why is it not the case that a welfare system providing insurance for the poor that they otherwise could not obtain has enabled many to launch themselves out of poverty and on to better things?

Fundamentally, the empirical success of the welfare state is something we as human cannot ever hope to know about - the data just does not exist for us to do proper appraisals.  The positions people such as "Cranmer" thus take are based on prejudice and extrapolation and not on evidence, and hence come across badly particularly to those who benefit from those systems and who take an opposite (usually also prejudiced) position - as nasty, in fact.

Reflections on Gay Marriage

In the last couple of days I've had some interesting exchanges on Twitter with a range of folk surrounding gay marriage here in the UK. The debate has profoundly affected me - as all debate should. A big part of my engaging in it was to work out exactly what my position is.

I figured since it's very easy for those entrenched on either side of the debate to paint those on the other side in rather ungenerous terms, I should set out my position in a form of media that allows more than 140 characters per post.

First and foremost, I am a Christian, and Bible-following one at that (in that I attempt as much as humanly possible not to pick'n'choose the bits of the Bible that suit me). Hence as the Bible does tell us all sexual activity outside heterosexual marriage is sinful, homosexual activity must fall in that bracket (as do many heterosexual acts), and I am forced to conclude that - uncomfortably.

However, that said, it does not mean that I hate gay people, or that I would wish they have a more difficult life, or a worse set of circumstances than I.  Christians must in their actions reflect that although they characterise homosexual activity as sinful, they themselves are thoroughly sinful and are saved only by the grace of God.  So no judging others is permissible, and furthermore there is no reason why the apparatus of the state ought to be used to favour Christians over any other group in society.

The difficulty with that latter statement is that it is very difficult indeed to ensure the state is balanced in its favouritism towards particular groups - and in reality, the government of the day simply appeals to whichever groups have the most political power.

Nonetheless, the principle is clear - the government should not necessarily thus pass legislation outlawing particular behaviours the Bible declares as sinful - clearly (for example) murder is a different category entirely in that all moral codes, be they biblical or otherwise declare murder to be wrong.

Hence there is no reason why homosexual couples (and long-term/stable heterosexual ones living out of wedlock) should be deprived the legal rights afforded to married couples - and for this to be the case is, to my mind, wrong. There ought to be full equality before the law of all these types of couples - the law shouldn't be judging whether one type of couple is more acceptable than any other.

But my sense is this. That equality before the law can be achieved without redefining marriage in the way proposed. If, instead, any remaining flaws in the civil partnerships legislation were ironed out, surely that would have the same effect.

However, having said that, one particular exchange on Twitter, along with observing David Cameron's reflections on gay (and lesbian - as later clarified...) teenagers "standing taller", suggests to me that something radical like that being proposed is necessary. It's horrible that homosexual youngsters (and older folk) feel vilified, get bullied and thus feel themselves to be on the fringes of society - it's a horrible outpouring of a fallen and sinful world that this kind of thing happens - sinners bullying fellow sinners.

Hence do we need something drastic like this redefinition of marriage to start to challenge long-accepted social norms and attitudes?  As an economist I think of a very different situation that perhaps acts as some kind of analogy.  Some economists argue that it took making the Bank of England independent in 1997 - a seemingly drastic move - to jolt inflation expectations down from their 1970s and 1980s levels. Evidence suggests it did, even though in essence the monetary policy being implemented (inflation targeting) didn't change. Maybe it's the same for how we perceive homosexuality, and particularly amongst younger folk as well as Christians - we're all made in the image of God, hence wonderfully beautifully created yet sinful.

Perhaps we do, but perhaps then we also need to think yet more radically about marriage, the church and the state. The church has its definition of marriage, contained in the Bible. That is something the government cannot change no matter how powerful it thinks it is. And by trying to change this, it is surely going to meet with fierce resistance from Christian groups. Yet the government can change the state's definition of marriage should it wish to.

So instead of messy compromises (banning the Church of England from carrying out gay marriages), why not simply do as happens in other countries (e.g. France, Canada), where the marriage officially takes place in a registry office according to the laws of the land?  This way the church's definition of marriage needn't change. There'd be no more signing of the registry (formally) at a church wedding, but is that really so much of an issue? The church ceremony would thus have no legal or public setting and hence (hopes) thus wouldn't be the focus of a test case by anyone wishing to have a church wedding whom a church determines is inappropriate to given their definition of marriage.

The final reflection I want to make is that compared to a group which until recently its behaviour was considered illegal (homosexuals), it seems churlish and hard to fathom that Christians whine about the difficulties equal marriage will cause them. The fear is of churches and registrars being prosecuted for failing to carry out a public duty - marrying a couple asking to be married. A fair sounding response is - why is it an issue, it's not like the Christians are forced to be IN the homosexual marriage.

The response, of course, of the Christian to that critique is much longer and more nuanced. For the church the problem is clearer - if that church is a bible-adhering church, then to be allowing gay marriages in its premises has to be viewed as giving approval to such actions - but clearly such a contradiction cannot be permitted if the church also teaches the bible's sexual ethics and wants to avoid being labelled hypocritical. The principle has to be the same for the Christian registrar: How can they in their daily work give permission for things that lead to them being hypocritical when, say, they talk to their children in the evening, or to other friends?

Outside the Christian cocoon, such "preaching" - essentially telling others that according to someone's moral code their actions are "wrong" - is not the done thing. Yet the Bible tells believers that they must engage in that - with sensitivity and with God's love (Jesus's approach with the woman at the well is perhaps a good example). So a Christian cannot live out their faith if they must be suppressed and forced into particular actions that are contrary to Christian teachings in their daily work life.

Now, of course, relative to having your actions declared illegal, forcing some Christians to change profession in order to be able to act with what they see to be integrity is mild - but if another way exists to ensure homosexual couples get all the legal (and social) recognition they should get, shouldn't we explore that?

The final final point this leads on to is the parallels with racism that are often labelled at Christians. On this, my only thought is that this relates to choice. We have no choice over the race we are born into, and the Christian is told in the Bible we are all created equal regardless of race, sex, age, etc. However, we have a choice about what to do about our sexual attractions. The Christians in a heterosexual relationship contemplating sex face the same pressure the Christian with same-sex attractions do - the Bible says it's wrong. The choice is not easy in either case - and it seems inherently wrong for God to determine that one of those couples can get married and have sex, yet the other cannot. At that point I can't go any further other than to say it's a crux point where some decide against God, and others decide to submit to God's reasoning on this, despite how hard it is. But it remains the case that choices are being made here, and hence the parallel with racism I don't think is appropriate.

Just some thoughts I've been having on what is a remarkably thorny issue. Please do comment - I would like discussion. I am a Christian but that doesn't mean I don't reason or think or have compassion - as hopefully this post makes clear.

An Obsession?

Who knows whose obsession I'm talking about - but anyhow it's interesting to contrast the posts from "Cranmer" and Gillan at God and Politics UK on Eric Pickles's latest comments on Christians in the UK.

For me, "Cranmer" reflects his usual desire to associate true Christianity with Conservatism (with a capital C), and assert that it's preposterous for anyone to be part of a different party, let alone socialist, and Christian. "Cranmer" willingly asserts Pickles must be Christian whereas Gillan only makes statements based on what is publicly known about his own faith. I imagine both are probably trying to say the same thing; I can't quite put my finger on why I'm much more persuaded by Gillan though without putting too much thought in during the day when I need to be doing other things work wise.

It pricks my conscience most of all I think because "Cranmer" basically suggests that Pickles is a true Tory, the Church is really Tory, and clearly thus, if we are to support and encourage Pickles in fighting for Christians in the corridors of power, we really have to be Tory. Maybe I'm inferring too much, but that's the impression I always get. On the other hand, Gillan ends by saying these wise words:

If Eric Pickles genuinely wants to fight this cause on behalf of the Christian faith, then we should all get behind him and offer our support, whatever our political persuasion.

Much better. I can quite easily sympathise with one or two members of a party if they happen to talk sense, just as I can baulk at the idiotic comments of others in that party (Ed Balls, George Osborne spring quickly to mind). Of course, at some point if I'm to vote (come 2015) I have to decide on balance which party to vote for.

But why do people, particularly "Cranmer", insist on always trying to make the case that it's Christian to be a Tory - to ignore all the parts of the party that are anything but Christian - to essentially call them "Blair" elements, to make them essentially Labour. Why not simply recognise all parties are a mixed bag of people appealing to the votes of people in their constituency in the way they see best. Some might say that to be open about being a Christian (or whatever faith they hold) is the best way to win votes, others might think it is a private thing. But why try to keep asserting that one party is "Christian", and the others are anti-Christian?

I personally always feel attacked by this sentiment, and it's the main reason I set up this blog with heady hopes a few years back now. No party is Christian, not the Tories, not Labour, not the Lib Dems. All have Christians in their ranks, and we should praise God for that.

Belated thoughts: Right-wing Christians and the Royal Family

As a left-leaning Christian, I find the level of attention afforded by Conservatives, and also those of a Christian persuasion, to the Queen and Royal Family more generally, a little perplexing.

From an economic point of view it just seems so internally incoherent. Talk all the time of living within our means, austerity, cutting back all that wasteful government spending, get government out of our way, then turn a blind eye to the funding of the Jubilee, forget the impact of an extra Bank Holiday, and be happy and jolly because our notional head of state has been on the throne 60 years. Intervene to ensure councils are having parties, even if councils don't really care to, and so on. I find it all a little too ideological really- that's the only way I can explain the contradictions just listed.

But added to this, for Christians, we're supposed to celebrate even more so because it happens this Queen does actually preach the Gospel when afforded a chance. Moreover, from what I understand we're supposed to support the monarchy on the basis that they are our God-appointed rulers. But if we got rid of the monarchy and replaced it with a republic, say, then why wouldn't the rulers then be appointed by God too? He would still be sovereign wouldn't he?

Now don't get me wrong, it's great the Queen takes her (rather arbitrary) role as head of the church seriously and makes statements consistent with the Gospel.

But why should my right leaning friends hate on my concern that the monarchy is really just one rather large use of funds that could just as well be put elsewhere?

Social Engineering, the Bible, Tradition and Political Ideology

Quite a grand title, and I'm not sure I'll manage to collect all those strands together in this quick (I hope!) post, but I'm responding to that person denigrating the name of Archbishop Cranmer once again.

In the post linked, he bemoans the whole gay marriage thing that's currently going on here in the UK. The simple gist of things is that the state is legislating for marriage to no longer be between a man and a woman. This is, unfortunately, affording many church leaders great opportunities to make statements that play into the media and general public's characterisation of them as out of touch and homophobic. "Cranmer" lists a few of these.

Then he goes off on one about David Cameron, the current Conservative leader and Prime Minister, who has put the full weight of his support behind gay marriage. "Cranmer" then says that in doing this, Cameron "aligns his conservatism with the rather antithetical socialist instinct to engineer society".

Does he?! Why exactly is the state stepping in and saying who can and can't be married anything other than socialist engineering? If the state says it's just men and women, that's social engineering just as saying it can be men and men and women and women. If anything, loosening this definition is a sign of less socialist engineering.

The bigger point here is another one that "Cranmer" appears lost on - it's the separation of church and state, which has to be a good thing - precisely because it should take us, in an ideal situation, away from social engineering (of course, in reality, the state just engages in a different kind of social engineering, the type pushed by the most powerful lobbying groups).

There's no reason why the state should impose Christian values via the marriage system, and in fact there's a very good argument why it shouldn't, put forward by a great friend of mine in a very insightful blog post this week: "What good is it, other than in a purely utilitarian sense, if a person is kept from sinning at the point of a bayonet?"

Provided there is no equality legislation forcing Christians to marry against their conscience (or athiests to do so, for that matter), then there is no reason why the state shouldn't change its definition of marriage. The church needn't change its. I believe in the linked post, "Cranmer" is too wedded to history and tradition, where the church has had a strong role in the state here in the UK, rather than relying on Biblical principles. I believe that is about as socialist as it gets - if socialism is defined as social engineering.

In case a reminder was needed...

...Jesus also most certainly was not a left winger either, or at least a left winger in the form of someone like Sunny Hundal. The blog is attempting to create some kind of outrage out of the fact that a Christian group called Christian Concern is holding a conference at Exeter College.

This Christian Concern (CC) group is simply labelled as bigotted, and homophobic, without at any point the case against them being put forward. Simply, it seems, Hundal has something rather sinister against Nadine Dorries, and hence any friend of Dorries's must also be very sinister.

Judging by past articles on the Liberal Conspiracy (LC) website, what CC have probably said at some point is that they believe something slightly different to Hundal on homosexuality. They have probably pointed out that some folk of a homosexual orientation are not comfortable with that (just as, presumably, some heterosexual folk are), and perhaps seek some help. Pretty innocuous? Nope - that's bona fide homophobia for you right there!

Thankfully, in reading the comments on Hundal's latest rant, it's clear there are plenty of people ready to put him in his place.

Confused?

I'm not sure I can follow the logic of this. It starts with a fairly commonplace swipe at anyone who happens to not be on the political right - how dare that nasty Labour government have given some folk in parts of the UK some devolved powers.

But then it goes on to rail against attempts to restrict power being devolved to local people - the right for people to utter prayers before a council meeting (does it really matter? I don't get why a conservative is so het up about something as trivial as this - shouldn't ministers' time be better spent elsewhere?).

I don't quite get it - if Labour devolves power it's an unmitigated bad thing, throwing away centuries of history (because history is all that matters when making decisions), yet if the Conservatives do it, it's localism, it's getting the government out of the way, it's an unmitigated good thing.

Does he want powers to be devolved, or not? Or does it just matter what party it is that's doing it?

Courts and Governments

A general stance of those on the right, Christian or otherwise, it seems, is to be anti-Europe, and also in particular, anti-ECHR (European Court of Human Rights). As the right-wing press usually bemoans, it gets in the way of us doing the things we want to. Ten a penny are the Daily Mail stories to this effect.

What I don't quite understand is why this is such a bad thing. If we assume first off that the Court of Human Rights is a court set up to defend the liberties of humans in a fallen world, and does so without bias (but with the odd mistake here and there), then is it a problem if it says to a government that it can't do something that stands in the way of civil liberties?

For example, with this cleric recently released from jail in the UK; the ECHR has stopped his deportation to Jordan because courts there may try him using evidence elicited via torture.

Now what I don't quite understand here is what the problem is exactly. Do right wingers want us to be a country that hands people over to be tried by courts that use torture to elicit evidence? Wash our hands of them and be done of it?

Now I appreciate this man is charged with something pretty nasty, but he is still a man, and still innocent until proven guilty, and what about the precedent of allowing someone to be tried unfairly, regardless of how unpleasant he or she is? The precedent isn't a great one. So thus, I don't really understand what the opprobrium from the right is here.

Governments generally set the rules; usually, I guess (I'm not an expert here by any means since I'm not a lawyer), they are also confined to act within a constitution. So what is wrong if a court is able to point out to a government where it is behaving illegally, domestically or internationally? Are we really happy to live under governments that feel able to do whatever they like, trampling on the civil rights of citizens? Why shouldn't governments be kept in check?

Of course both governments and courts make mistakes, are guilty of terrible things, but resorting to specific examples where courts made nasty decisions and governments were more noble (e.g. slavery) doesn't really answer the more general point I'm making here: Why shouldn't governments be kept in check? Why do we want governments to be unrestricted in what they do? If we do, then I think we are guilty of a contradiction - we are essentially slaves to governments in the latter situation.

Can someone enlighten me please?!

Christians and Kings

Today is the 60th anniversary of the current Queen of England ascending to the Throne, and Christians, particularly on the right, are lauding this.

I think leftie Christians are often slightly uneasy about this, and I've noted right-leaning Christians making a big play about the fact that this is wrong, that the Queen (and any head of state for that matter) is of course only there because God put him or her there.

This is undoubtedly true, and the fact that the Queen, it seems, does communicate the Gospel will is an added bonus - something to praise God about.

But I'm just not sure that the justification I've given here is a reason for right-leaning Christians to beat left-leaning ones (or even centrists ones for that matter). Surely the same reasoning says Gaddafi was the God-ordained leader of Libya for quite a few years, and Assad is currently God ordained for Syria, right?

Or have I got that wrong?

I almost forgot to comment on this trash...

...a blog post entitled "We Need More Tory Bishops". Oh we do, do we? Apparently, the writer is also "is firmly persuaded that the Lord wants Ed Miliband to become Prime Minister of the United Kingdom about as much as He wants Johann Hari to write the Third Testament".  Apparently all Bishops in the Church of England "pore over The Guardian every morning with their mint tea and muesli and intercede fervently for the amelioration of the fortunes of Ed Miliband".

Apparently though, this kind of thing is all humour, because right wingers have a better sense of humour than left wingers (to quote Michael Ehioze-Ediae).

The post, as us usual from this really rather abhorrent imposter of a probably caring, compassionate and non-judging historical member of God's church, descends into a prejudiced and deliberately misleading rant, as perhaps best exemplified by this: "How in the name of St Gemma could an income of £2000 a month be considered poverty?".

Has "His Grace", as this blogger pompously calls himself, considered who might actually get the full amount of benefits?

Has "His Grace" thought about the determinants of this? I guess he probably figures we should shut up such people as his lovely (and totally non-judgementally named) St Gemma in some ghetto areas of town, the slums, rather than have the possibility, shock horror, that they might actually live somewhere near decent, sophisticated people.

Sophisticated people that read the Telegraph and studied A-level economics and thus think they are entitled to judge on exactly how the economy should work, and what governments should and shouldn't do.  But, of course, in writing that, I slip right into the category of "His Grace" in making judgements about people.

The bottom line is this: I'm yet to find a right winger, particularly one who is a Christian, talk about benefits and the poorer in society, without resorting to such vague generalisations about the "kinds of people" who claim benefits - based on no more evidence than what they read in the Daily Mail. The idea that the "kinds of people" that are on benefits are our neighbours, and thus we should love them, as Jesus exhorted, seems very lost on these people.

Go on someone, surprise me.

Sons and the Welfare State; an update

A few days ago I wrote about my tentative thoughts about applying the parable of the prodigal son to our thoughts about the welfare state. My main purpose was to solicit the thoughts of those more theologically learned than I am, and I was very pleased to get the thoughts of one particularly more theologically learned scholar who doesn't nail his political colours to the mast.

The bottom line was that since Jesus is using a story in the first place, then clearly he has in mind the interpretation he wants to that story, and it's to spiritually lost people, rather than materially lost folk in need of some welfare state and perhaps the intervention of a government. So I guess it's applying an application, one level removed than I'd previously thought about, and that was a good thing to ponder on.

I was seeking objections to making the link, and a few have emerged. One is that the younger son only received the father's welfare state when he came to his senses and recognised how broken he was. In that respect he became deserving rather than undeserving. My favourite right-wing vessel is full of horror stories of families seeking to live off benefits rather than do an honest day's work. Lefties I think do down these stories, righties overstate them. Such folk undoubtedly exist, the question is to what extent - but even that is somewhat moot here. But if these folk do that, taking advantage of the system deliberately and manipulatively, they remain undeserving poor, and if we were to apply this parable to the welfare state, then the objections of righties remain. They haven't returned to the father/Father/government.

What's left then? I thus don't think that the parable can be used as I previously thought; it doesn't change the fact that right wingers think there are millions and millions of scroungers, while lefties think these guys are deserving because of the way the market system has manipulated them. One group is sceptical about those out of work, the other about those that put them out of work, and surely both have their faults.

What are we to be as Christian though? Matthew 5:47 and surrounds point out that if we respond, like for like, we're no better than pagans. So should we be harsh on such scroungers, dock them their benefits, throw them to the dogs? Or should we be gracious?

But should we be a doormat? Equally we shouldn't be doing that; I guess if forced as a non-theologian to find the Biblical reference to back that up, I'd point to 1 Timothy 5:20, but even then I think the context is wrong but that's by the by. Those that are having kids just to get benefits, who refuse to take work because being on benefits is easier, should be rebuked.

I'd like to think that reflecting on the lost sons should make us reflect on whether our attitudes towards those less fortunate to ourselves are not cynical, not judgemental, and instead gracious, but not to the point that things become ridiculous. But I suspect everyone I know who leans to the right would say they already are at that point, whereas all those I know that lean to the left, myself included, would probably say the same. I guess this kind of makes this a rather pointless post!

The Prodigal Sons

It's taken me a little while, but at the end of November I was challenged by a set of talks given by Richard Brewster on our church weekend away about the parable of the lost son. Particularly, it was suggested that there were actually two lost sons, as the elder son who gets upset when the younger son returns and is welcomed, is also lost to his father.

The parable points thus to two sinful sons. The younger is foolish, impatient, aberrant and blows his wealth enjoying the world and all it offers. The elder though is self-righteous and also has a substandard relationship with his father because of this, throwing a strop because the younger son is forgiven, and revealing in doing so that he also doesn't have a good relationship with his father either.

What struck me during these talks was the parallel with the welfare state. The elder son essentially rails on about the deserving poor, wondering why generosity is afforded to those who do not deserve it. It sounds quite familier - a lot like what many are saying about benefits recipients at the moment. The elder son is in the same boat as the folk that complain about the level of benefits: They are forced to live in a system that takes from them and redistributes to others who they see as undeserving of that.

But does the parable really mean that we should thus submit to a government that redistributes? Is the role of the father in the parable, and hence the Father that the parable points to, really to be taken up by governments, or should it just be the role of individuals giving voluntarily? After all, God loves a cheerful givers. I'm not a theologian, so I don't want to push the theological links any further and appeal to those who know much more than I.

My only concern with the privatised situation is that charitable giving, by definition, has positive externalities. This means that the free market outcome will yield a level of giving that is socially sub-optimal, even though it is privately optimal, because private individuals don't realise the full benefit of their giving. Of course though, the solution is not necessarily that we totally nationalise the redistribution system - the optimal solution would be some kind of subsidy to the process, in theory. I haven't really thought fully through whether that would work, nor even bothered to look into what people have written on this in the academic literature. But it intrigues me.

Are those that moan about the excessive levels of benefits simply elder sons, and just as estranged from their Father as those who frivolously waste the Father's good gifts?

The Occupy Movement

Naturally, the Occupy movements around the world are generating quite a bit of media attention, and not a little bit of right wing scorn, and some left wing support.

I wouldn't want to make sweeping statements about what one side or the other says, but I can't help noticing that the essential point being made by right wingers, once again, is that you can't be socialist, or have sympathy with non-business owners, and also be Christian.

The man imposing as Archbishop Cranmer is at it once again, with his last of the linked posts somehow comparing what Fraser did at St Pauls inversely to what Jesus did in throwing traders out of the Temple in John 2:12-25.

In the Torygraph, Tim Stanley writes that those who profess support for the protesters are "more socialist than Christian". What about saving souls, he writes? Well, what about the fact that currently there's a whole load of non-Christians camped at St Pauls? What about the fact that St Pauls isn't throwing them out but instead engaging with them? Stanley justifies his attack on Fraser in particular in the same way that "Cranmer" does - that Fraser is a liberal Christian, and of course once again we're into the internal bickering that goes on, rather than focussing on "saving souls" - it may be that Stanley needs to begin practicing a little more of what he preaches.

Nonetheless, the point of this post isn't so much to attack others as to set out my take, and probably along the way justify being slightly left of centre (I'd hesitate to call myself an outright socialist) and also a conservative Christian. My position I believe is based on basic economic theory which I've learnt over the years (and supposedly teach), but also on the Biblical principles also.

Of course, we must start with the Fall, and acknowledge the sinfulness of man. This gives us the context in which to study all human interaction, something which economics also attempts to do. Economics essentially splits up interaction into a spectrum, with what is often called the non-cooperative solution at one end, where we all individually go about out own interests in our own way, and the social planner solution at the other end, where some benevolent social planner decides what will happen. The latter is essentially unachievable since as any Christian knows, the possibility of a benevolent social planner (outside of God) is essentially zero in our sinful world, but nonetheless this possibility does bound the spectrum of possibilities.

Now, right leaning folk, including those of a Christian variety, are rightly suspicious of power concentrated in one person's hands - any dictator. Left leaning folk should also be wary too but for some reason aren't - the Bible tells us we are sinful, hence any system which concentrates power in the hands of one sinful person cannot be good. Hence we have the idea that capitalism, and markets, are good because they do not concentrate power in the hands of one particular individual.

The problem though, is that this conclusion is based on a number of conclusions in a simple theoretical model called perfect competition. The conclusions from perfect competition that we all like are bound up in the first and second theorems of welfare economics, notably that equilibria from such competition are Pareto optimal in that we cannot improve the resulting allocation of resources without reducing someone's welfare.

But moreover, these conclusions are based on a number of conditions holding, notably that there are no barriers to entry for firms, no barriers to trade, and an infinite number of traders hence no one of them can influence the price - not to mention perfect information, and an absence of any missing markets, or what economists sometimes call externalities (things that cost you but for which you aren't compensated - or vice versa).

As a result of one or most or all of these simple assumptions failing, usually the price mechanism fails to do its job, and this often concentrates power into the hands of a small number of individuals, those who can play the system to their advantage. There are plenty of results in economics which tell us about the adverse selection (the market selecting not the best producer of a product) that results, and the consequences of this. Peaches and lemons, anyone?

So, those of us who lean more to the left at this point say: Shouldn't something be done? Shouldn't we protect those that are the victims of abuses of power, misselling, etc?

Those on the right say, rightly, "not necessarily". There are market-based solutions. Car dealers that sell dodgy cars get a bad reputation and hence nobody buys from them in the future - better dealers offer warranties to send a signal to potential customers that says "I'm reputable".

However, there are decisions and markets in which bad reputation in the light of an unfortunate trade is no concolation. In healthcare, if you happen to pitch up to a shoddy disreputable provider (Nick Riviera in the Simpsons, for example), the cost to you could be death, or severely impaired health afterwards.

The principle is this: If the cost of information being provided to all in markets is high (it isn't, for example, in PC markets via PC magazines), if the cost of a bad decision is high and irreversible, then there is a case for intervention, and it is unlikely that the market can provide solutions.

Extreme right wingers at this point say "how do you quantify these costs" and still choose to ignore them at this stage, but we'll ignore them in the interests of getting along.

What we've established is a role for government. Not for a socialist dictatorship, which it would seem is what any right winger thinks all left-of-centre yearn for (see "Cranmer's quote: "The moment you rail against capitalism and economic liberty, you usher in tyranny, despotism, absolutism, totalitarianism and dictatorship." - utter dross when we have already identified here that the market system does not provide liberty for the person duped into the dodgy healthcare procedure that went wrong). Sure, we open up the possibility of cronyism since governments have their own incentives and are highly corruptable - but that cronyism is there anyway when businesses cosy up to governments - what's new here exactly?

What we've also established is that a fully free market system would likely lead to considerable inequality as those who can grab hold of the levers of power (appeal to the legal system is all well and good, but we all know that most people without scruples don't play by the law and get out while they can). Such situations can lead to great levels of social unrest, ordinary folk on the street with depressed incomes noticing those on much higher incomes seemingly benefitting from something unfair.

Now one response is to in a condescending manner tell people they shouldn't envy. I'd have loved to have seen these right wingers wandering around London in August telling the amassed hordes not to envy. Now, of course, we shouldn't - God doesn't permit us to covet our neighbours. But we are sinful and hence we do, and God also makes it clear it is not for us to judge others with haughty eyes.

As "Cranmer" rightly writes, "Caring for widows and orphans, feeding the starving, and clothing the naked, are at the very heart of the Christian vocation", and indeed he is correct. But the bottom line is this: the free market will underprovide charity because it has a positive externality. Should we just wait for Heaven and say "the government shouldn't force me to be charitable"? I believe the Bible is equally as scornful of those waiting for Heaven and doing nothing here as it is of those who lose sight of Heaven and think they can make it here somehow.

So my bottom line is this: The market system is the best system in a fallen world, but it is not perfect. Its imperfections should not be idly observed, they cause genuine pain and grievances and social unrest and most importantly for (Christian) right wingers, deprive people of their liberty, being made in God's image. Our job is not to judge thus those engaged in that, feeling that, but instead to think about what could be done about it. For sure, protest might not be the most effective way, and in particular protest in a church (!), but the bottom line is that those on the right sitting back and judging ("Cranmer" and Stanley amongst others) are just as wrong as the Pharisees were and any of the other many characters in the Bible for which God devotes his distaste.

The Conservatives: The gift that keeps giving...

I try to keep this blog as free from politics as possible, which may be hard to believe given its title refers to the political spectrum, but nonetheless I do try. Again having said that, a motivation to set this up was friends of mine who are Conservative voters suggesting to me it was the "Christian" thing to do, much to my consternation.

I think the main reason I try and keep away from politics and government action is that I don't think that governments should be forcing people to do "Christian" things; so I don't think abortion should be outlawed, and I think all other government actions that discriminate unfairly against people made in God's image is wrong.

I believe Christians vote Conservative because they believe that small governments better enable people to get on in life; bigger governments stifle effort and creativity, crowding out small business and entrepreneurship. But this involves a healthy level of confidence in market mechanisms to deliver, and I believe too high a view of the goodness of man - particularly too high for Christians aware of how sinful man is.

Why do I say this when from Adam Smith onwards, economists have espoused the virtues of the market in mitigating man's own greed and enabling it to contribute towards the greater good? Because there are plenty of situations in which the price mechanism fails. It doesn't need government intervention for the price mechanism to stop doing its job of revealing relative scarcity and relative abundance, it just needs unscrupulous men and women.

I've mentioned in previous posts how a "nice equilibrium" where everyone does a good honest job and hence everyone trusts everyone to do a good honest job - the incentive is there for someone to deviate and do a bad job, and get out while they can (and even if they fail, their actions will succeed in destroying the good equilibrium since now people know with non-zero probability there are some bad people about).

All this by means of an introduction to what I was planning to write about - recent Tory announcements regarding the economy. In particular repeated comments on the 50% tax band, and also recent talk about abolishing all employment protection.  The bottom line of these is a trust that despite bosses being unscrupulous, the end product is a much better, clean, shining functioning economy because of competition - the bad bosses, the nasty ones, will be weeded out and left on the scrapheap if they don't become nice shiny bosses.

If I sound a little sarcastic there, it's because I don't buy it. Those proposing it probably think it has basic economics on side, but it may do: Very classical economics that hasn't considered much recent economic study into areas such as industrial organisation, game theory and behavioural economics. There's no point in me repeating what Chris Dillow writes about much more elegantly, but if you want some demolitions, here are a couple.

Now the question is, as Christians, what should we be doing?  James 1:27 says "Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world."

I seriously wonder how scrapping the 50% tax rate on those earning above £150k (polluted by the world?!), and stripping away all employment rights of workers (usually pretty low paid - widows and orphans in their disress?!), counts here. The hardest of hard Tories would say "Charity should do the hard work", yet this again ignores some basic economics: If there's a positive externality (net social benefits greater than net private ones) the market (charity) will underprovide it. As was evident before the Welfare state.

Of course, I'm proposing little positive in this post, just getting some things off my chest. The main one being this idea that a small government is what we need, and that it's somehow more Christian, if that were possible.

Executive Pay

Apparently, it's up 50%.

As always, Chris Dillow has something interesting to say about this from a left-of-centre perspective.

What do I think as a Christian, and someone who leans left of centre (but not all that much to the left)? Is it immoral that folk get paid the marginal product? Nope, but then the question is whether they are being paid their marginal product, and that's something that Chris pushes at in his blog.

Your libertarian, right-leaning person (Christian or otherwise) will say that we shouldn't stand in the way of this: The market is determining the right level of remuneration for these individuals, yet is it? Is the price mechanism really at work here?

Basic economic theory says that as well as wages being determined by the marginal product of the worker, it also points to the existence of economic rents that can be exploited by either the principal (employer) or agent (employee) in any given wage situation - there is wage bargaining going on. Right-wingers of an extreme form would say that there exists no power without government, but executives certainly have some form of power to extract the kinds of rents they extract - i.e. the kind of pay they manage to get, which seems to be entirely independent of their performance (again see Chris's blog linked above).

Funnily enough though, I think the solution to the problem is to free markets a little bit more. From my limited understanding, the shareholding structures of big companies is skewed in favour of larger investors (which are usually institutional investors), and these large investors do not necessarily exert the kind of influence that might be hoped for. If instead legal structures were such that the voices of small investors were given more say, then we'd certainly see more shareholder activism, which might not be a bad thing in helping bring companies more in line with social marginal costs and benefits rather than just private marginal costs and benefits.

My Supposed Hubris

I do macroeconometrics, if pushed to define one of my research areas. This is a classic area for criticism by those towards the right of the political spectrum, not least Arnold Kling. Kling has an essay entitled Science of Hubris, in which he carries out his usual attack on what he calls scientism, i.e. any attempt to put really precise numbers on things that we can't be precise about. In Kling's mind, we just can't be precise about any kind of economic aggregate, notably GDP, or investment, because there's just too much going into them, and these aggregates are made up of very different things too.

So essentially, he dismisses the entire field of applied macroeconomics because statistical agencies aren't able to add things up particularly well, and because, well, economists shouldn't be thinking in such broad terms; they should only be thinking at the microeconomic level. Those who practice is, apparently, are the very epitome of hubris; that is, to have "excessive pride or self confidence" as my Mac's Dashboard dictionary tells me.

Of course, anyone who puts their head up above the parapet is liable to accusations of hypocrisy, but folk like Kling at EconLog, and Boudreaux at Cafe Hayek are remarkable examples of precisely this. Kling and Boudreax (and others on their respective blogs) have remarkable confidence in one thing, and one thing only: The price mechanism in a fully free market. They are scornful and incredibly bitingly sarcastic (esp. Boudreaux) of those who dare to suggest anything otherwise, who dare to imagine that government intervention could possibly be a useful thing. To be that requires a heck of a lot of hubris, from what I can see.

And it's not limited to that; Russ Roberts and David Henderson at EconLog had a number of posts about Ideological Turing Tests, and how those on each side of a debate characterise the other, declaring (of course), that those on the right, those nearer to the libertarian school of thinking, were much better than those anywhere else on the spectrum at accurately describing the position of their opponents. Then just today, a post about confidence, where the application is not to Austrians with their remarkable over-confidence in the price mechanism in many inappropriate contexts but, yes, you guessed it, Keynesians (or at least, their crude caricature of them). Utterly stunning the amount of times I think about pot calling kettle when I read Hayekian/Austrians on their blogs.

But back to macroeconometric models. What I struggle to understand is this. If an econometric model is built that happens to include all the relevant explanatory variables for an aggregate variable (e.g. inflation) such that the residuals are white noise, then to all intents and purposes, that aggregate variable has been explained. A humble presentation of such a model would not make bold predictions about the future (forecasting is entirely different to macroeconometrics), but would instead make suggestions at what had been learnt from this exercise. But Kling and those in his camp would disregard it entirely.

Kling et al suggest that one of the most dangerous things about Keynes and his teaching was that he let loose governments and convinced the common man that there was intellectual rigour behind their own whims and desires. Equivalently though, via their scepticism of absolutely everything other than what they previously believed in, Kling et al promote an unhelpful atmosphere of scepticism through which genuine academic progress is hindered - all because of their ideology rather than any desire to be scientific in their pursuit of knowledge.