Tuesday, 31 December 2013

Jason Brennan's idiotic economics

A couple of months ago, Brennan, that great big designing baby or booby, posted a draft chapter, on Designer Babies, of a forthcoming book of his on BHL, in which he claimed to understand basic Economics. Yet, basic Economics requires Common Sense. So, can his claim possibly be true?

Judge for yourself. This is an extract from what he wrote.
'Consider what might happen if the planet Earth began trading with the Vulcans from Star Trek. Suppose a few hundred years from now, Earth is vastly more productive and technologically advanced. Suppose we Earthlings discover how to build starships. Shortly after we test our first warp drive, the Vulcans make contact with us. Suppose, for the sake of argument, that the all Vulcans are more talented than all Earthlings. The dumbest Vulcan is smarter than the smartest Earthling, the weakest adult Vulcan is stronger than the strongest Earthling, and so on. Suppose the Vulcans are also better at doing everything—growing corn, making computers, designing fashion—than Earth is. Everything we can do, they can do better, and they can do things we can’t do, too.
To those with little background in economics, it might seem like Vulcans would have no reason to bother trade with us. Or, to others with little background in economics, it might seem that trading with Vulcans would just put us all out of work, because everything we can do, they can do better.
But economists understand that’s a mistake. In fact, except in unusual circumstances, both the Vulcans and Earthlings would gain immensely from interplanetary trade. Each planet should specialize in its comparative advantage—that is, the form of production for which it has the lowest opportunity cost.
My response, which the stupid fuckwit has, of course, deleted on the pretense that it was 'trolling'- in furtherance of which claim he also tried to criminally extort money from me- is presented below-

'Your  designer baby post is fatally flawed because Vulcan is better off by wiping out the population of Earth and colonizing it with suitably modified hybrids. Similarly, the rest of your argument fails because the designer baby technology might lead to a speciation event such that the new 'supermen' displace or otherwise exterminate the descendants of stupid slobs like me so as to make more efficient use of the earth's resources
'Comparative advantage is irrelevant when Land is scarce. The guys with Absolute Advantage displace the others unless there are non-convexities or some arcane reason for 'reswitching' type multiple equilibria. Actually, come to think of it, you are bound to get the following type of 'reswitching'- the absolutely disadvantaged can just breed faster and faster and accept lower and lower entitlements so that they retain or even increase their demographic share in the final evolutionarily stable eqbm. In other words, designer babies could give you two speciation events- one for supermen and the other for subhumans. H.G. Wells predicted that the supermen would ultimately turn into Liberal Arts College attending snobs- i.e. limp wristed Eloi- preyed upon by meat headed Morloks with Engineering degrees from M.I.T'

In Econ, as in Philosophy or the art of conspiring to extort money under false pretenses, a little Knowledge is a dangerous thing.
In this case, it isn't the Theory of  Comparative Advantage that is wrong, it is just that Brennan is too stupid to understand that unlike average variable cost, opportunity cost isn't something your Excel spreadsheet can calculate for you. Coase, long ago, pointed out the global, inter temporal, and substantive nature of the concept which, in his opinion, Americans generally failed to grasp.
Brennan is a stupid man and, with the unerring genius of stupidity, he has put his finger on the two situations which best demonstrate the danger of applying Econ 101 in a mechanical manner.
Common sense tells us that if an alien species has absolute advantage in everything, and are selfish, then they will wipe us out and take over our planet. This is because habitable planets are scarce. However, if we are ready to blow up our planet rather than be completely exterminated then we have a bargaining chip. A Pollyanna President of the World Republic, who placed his faith in Brennan's argument, would be directly responsible for the extinction of our species.
Similarly, changing the genome isn't at all like changing education and training- i.e. the well springs of 'acquired advantage'. What if designer babies are created so as to thrive in a world in which we perish? Then, we wouldn't all be in the same boat w.r.t. things like the hole in the ozone layer would we? There incentive for poor and rich to come together to tackle common problems, local or global, would no longer exist.
In this context, Graciella Chichilnisky showed the importance of 'Goldilocks' preference/endowment diversity- not too much, not too little- as well as providing the mathematical tools to begin to capture the dynamics of unequal trade.
One final hilarious point, Brennan doesn't get that 'food' has a satiation point and, in any case, rational beings will overproduce for prudential reasons. Vulcan won't sell us starships for food they can't eat. More generally, primary and low value added goods have low Income elasticity and the terms of trade shift against their producers. This could by itself give rise to a repugnancy market- don't buy shoes made by starving Bangladeshi rape victims.
As for 'Designer babies'- this impacts on Hamilton kin preference, i.e. Price Equation calculi as well as Dawkins' extended phenotype type considerations. Suppose the market for 'designer  babies' has high artificial barriers to entry and large economies of scale and scope. Then we would predict an oligopolistic market with an essentially identical product marketed in a discriminatory way- i.e. the same soap with a bit of perfume is 'Deluxe', while if given an ugly German name, it becomes 'Masculine'...etc etc. If this is the case, then we can predict that parents as well as everyone else will have less Hamilton altruism towards the kids. Indeed, at a certain point, if there is no parental contribution, or if it is junk, then kids would be like cars- stuff you send to the landfill when tastes or commodity prices change.
Oh. Okay. I now get why Brennan is for Designer babies.
It's all part of Georgetown's unique approach to Ex Corde Ecclesiae

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