Tag: data

On Feedback and Data Gathering

Expressing an opinion is free.  Everyone will tell you they think your idea is good.  That’s not the same as giving up something to read it or listen to it or purchase it.  Focus groups, surveys, polls, and research can’t tell you as much as putting a product or idea out into the world.  In a marketplace where people have to trade-off other opportunities to take advantage of what you’ve made, you’ll learn more about its value than any test-case or lab experiment.

It doesn’t mean you can’t gather some facts or be informed.  But it’s more important to have a sound theory, and a clear bet on what gap you’re filling or value you’re creating than it is to have a lot of cost-less expressions from disinterested parties of whether or not they imagine it will be valuable.

Do it if it’s valuable to you and if you believe in your unique vision.  Do it if the process of answering the question, “Is this a good idea?” is exciting in and of itself.  Do it if you’re willing to fail to get the answer.

Ask Where Things Come From

Yesterday, I came across this quote:

“America: Less than 5% of the world’s population, consumes over 25% of the world‟s resources.”

This is meant to shock and shame.  How selfish of the people living within this geographical area to consume so much!  That sentiment may be warranted if life were some kind of reality TV show with everyone stuck in a house with a fixed pool of resources, but it’s not.  If we really want to understand the world, we need to ask a key question: where do those resources come from?

They come from production and trade.  Everything that is consumed must first be produced.  There ain’t no such thing as a free lunch.  In order for people in the borders of America to consume stuff, they must obtain it.  They can produce it themselves or trade something else they have produced for it.  In a free market, every exchange is voluntary.  In order for both parties to agree to trade, both must consider themselves better off after than before.  Because economic value is subjective, both walk away wealthier than before because they gave up something they valued less than what they got.

Now that we know some basic economics, what does the statistic about consumption tell us?  It tells us that, in order to consume a lot, American’s must have produced a lot.  It means what they produce must be more valuable to their trading partners than what they consume.  In other words, it means they are creating value for the world.

There is an exception to the rule that more consumption happens after more value creation.  Consumption can also happen after resources are taken by force, outside the operations of the market.  This fact is illustrated by another quote I came across yesterday on a list of common economic fallacies.  The commenter said a common fallacy is,

“Not asking where ‘G’ comes from.”

In macroeconomics, wealth is often measured (somewhat dubiously) in GDP.  The typical formula for measuring a nation’s GDP is: C+I+G+(X-M).  In this equation, C means private consumption, I is investment, G is government spending, X is exports and M is imports.

There are plenty of problems with this formulation, but leaving those aside, the math tells you that increasing any of these addends increases total wealth.  This is what leads many to advocate for increased government spending as a way to grow the economy.  To the true believers, any spending will do.  John Maynard Keynes famously suggested that the Treasury should stuff jars with bank notes and bury them in abandoned coal mines to be dug up again.

But where does G come from?  Government produces nothing, it only takes.  Every penny in the G category was taken from C or I.  This would not seem problematic at first for the economy as a whole, much as individual taxpayers may not like it, because the sum would remain unchanged.  Except that, as we have been reminded, economic value is subjective.

A dollar taken from someone and spent on her behalf is less valuable to her than keeping that dollar.  If this were not so, she would have given it up voluntarily.  People put their resources to their highest valued use, according to their own scale of value.  Any time resources are taken by force, value is destroyed.  Further, the choices people would have made would send signals rippling through the economy, telling entrepreneurs and producers what to produce more and better of.  When government puts resources to their uses, it signals entrepreneurs and producers to create more of what government wants, which diverts production and innovation away from the areas most valued by the citizenry.

The common problem in both scenarios – assuming the a high rate of US consumption means less for everyone else; and assuming an increase in government consumption means more for everyone else – is a failure to examine causal connections.  Static snapshots of data – whether a percentage of world consumption or GDP – tell us nothing about the ongoing relationships in our world.

These relationships have patterns and feedback and adaptations.  The data comes from somewhere, and it’s more than a simple path; it’s the result of a complex and constant churning of causes producing effects.  Freezing this dynamic process in time and measuring where a bunch of stuff is can’t tell you whether the process is just or efficient, or what the results will be over time.

Before you make data-based judgments about systems in the world, understand where the data come from.  What does the process look like that produced it?  What are the causal relationships?  What happens to the data through time?  Citing a lot data might make you feel smart, but if you accept data alone as proof of cause, it’s only a feeling.

Worldviews Matter

This is an article I wrote during the last presidential election for the Western Standard Shotgun Blog.  The election-specific parts are really not the crux of the post, so I think it’s still relevant.

———————————————————–

A colleague sent me this article by Michael Knox Beran for the City Journal, titled, “Obama, Shaman”. The article is fantastic, not because it is a critique of one candidate from one party, but because the insights are far broader and can be applied to nearly any political or cultural folk-heroes of today. Beran draws upon strains of thought throughout ancient and classical literature and philosophy to highlight two very different worldviews.

America has a strong tradition of the worldview that sees man as fallible and existence as including pain and discomfort. Indeed, this worldview sees any life without some form of pain being a life without cause and effect, without choice; a robotic reality that would really be no existence at all.

The other worldview, the author points out, has surfaced in various forms throughout history and is the impetus for movements that nearly always result in a great deal of concentrated power. Since man need not be fallible, giving “the right person” unlimited power to do what is good for all is not viewed as dangerous, but rather necessary. From Machiavelli to Saul Alinsky, strategists have created a playbook for an ascent to power by those believing pain can forever be alleviated if only they are given the absolute power to enact their reforms. But the strategists only lay the plan; the philosophy that engendered the belief that such a plan could (or should) actually work came first. In the article, Beran describes many of those who have championed a paradigm which makes this belief possible.

As I’ve written before, paradigms are powerful, and hard to change. The lens through which one views the world, especially the human world, will determine the conclusions drawn from any set of data. Data, sensory perceptions, are completely devoid of actionable meaning without a theoretical framework through which to interpret them. For this reason, establishing and continually re-evaluating one’s framework becomes the constant task of the honest intellectual.

All good political philosophy and economics is essentially an effort to synthesis data and extract some kind of meaning from it – to create from observations a viable paradigm of human action. Knowing human nature is the most important and foundational element of ethics, political philosophy and economics. As the old adage goes, “knowing thyself” is the best place to start. I submit that the best way to know thyself is to find out what your worldview is (you have one, whether you know it or not).

What kind of lens do you look at the world through? What are the assumptions you take with you into every situation? Know your worldview, analyze it for logical consistency, test it against observation, discard or reform it if need be; this is the most difficult, rewarding and necessary task of human understanding.

Some snippets from the Beran article below should whet your appetite to read the entire piece:

“In his unfinished treatise Economy and Society, Max Weber defined charisma as “a certain quality in an individual personality by virtue of which he is set apart from ordinary men and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities.” Weber was able to do little more, before he died in 1920, than give a pseudoscientific élan to an idea that had been kicking around for centuries. Most of what he said about charismatic authority was stated more cogently in Book III of Aristotle’s Politics, which described the great-souled man who “may truly be deemed a God among men” and who, by virtue of his greatness, is exempt from ordinary laws.

What both Aristotle and Weber made too little of is the mentality of the charismatic leader’s followers, the disciples who discover in him, or delusively endow him with, superhuman qualities. “Charisma” was originally a religious term signifying a gift of God: it often denotes (according to the seventeenth-century scholar-physician John Bulwer) a “miraculous gift of healing.” James G. Frazer, in The Golden Bough, demonstrated that the connection between charismatic leadership and the melioration of suffering was historically a close one: many primitive peoples believed that the magical virtues of a priest-king could guarantee the soil’s fertility and that such a leader could therefore alleviate one of the most elementary forms of suffering, hunger. The identification of leadership with the mitigation of pain persists in folklore and myth. In the Arthurian legends, Percival possesses an extraordinary magic that enables him to heal the fisher king and redeem the waste land; in England, the touch of the monarch’s hand was believed to cure scrofula.

It is a sign of growing maturity in a people when, laying aside these beliefs, it acknowledges that suffering is an element of life that sympathetic magic cannot eradicate, and recognizes a residue of pain in existence that even the application of technical knowledge cannot assuage. Advances in knowledge may end particular kinds of suffering, but these give way to new forms of hurt—milder, perhaps (one would rather be depressed than famished), yet not without their sting. We do not draw closer to a painless world.”

And…

“The danger of Obama’s charismatic healer-redeemer fable lies in the hubris it encourages, the belief that gifted politicians can engender a selfless communitarian solidarity. Such a renovation of our national life would require not only a change in constitutional structure—the current system having been geared to conflict by the Founders, who believed that the clash of private interests helps preserve liberty—but also a change in human nature. Obama’s conviction that it is possible to create a beautiful politics, one in which Americans will selflessly pursue a shared vision of the common good, recalls the belief that Dostoyevsky attributed to the nineteenth-century Russian revolutionists: that, come the revolution, “all men will become righteous in one instant.” The perfection would begin.”