The World Bank, which leftist Indians revile, helped China rise up rapidly. Edwin Lim has told this story well. When he was transferred to India in the early Nineties, Lim thought he had died and gone to Heaven. Why? It was because the senior people he was interacting with- men like Manmohan & Montek- were excellent economists. Lim was preaching to the choir. Yet he failed. Why? He says it was because the Indian activist/ public intellectual gets a bigger reward by preventing Development for some 'woke' reason thanks to the various Good Samaritan International Foundations and NGOs which hand out money for 'second order' public goods (i.e. agitating for more first order public goods while saying 'boo to Fascism').
Kaushik Basu has just published a book describing his years as Chief Economic Advisor to Manmohan's second administration during which the 'activists' kept demanding more and more entitlements even though this meant more corruption and worse outcomes for everybody. This is what paved the path to Modi becoming Prime Minister and the BJP wholly displacing the INC as the default National Party.
Basu recounts his problems with the 'activists' from Sonia's National Advisory Council with respect to the Food Security Bill. '“My problem is my instinctive sympathy with these activists. Most of them are genuinely well-intentioned, and have little interest in money. I like that. I am aware that they often make mistakes. I have had lots of arguments with these activists wanting to enshrine everything as a ‘right.’ I keep reminding them that to enshrine something as a right, when you have no way to ensure that the right can be fulfilled is to diminish the value of a right.” What Basu should have said to each of them was- 'listen you fucking virtue signaling cunt, I will expose you as a media-whore and jholla-wallah cretin whose academic credentials are based on shit. I will use my sharp, satirical, pen- and my bully-pulpit in Amrika to make you a laughing stock. Fuck off, and let the country prosper or I'll put a fucking bulls-eye on your back. You won't get any more money from Soros or the Ford Foundation or get invited to nice Conferences and so forth.'
Basu did no such thing. None of his ilk did. That's why Bengali economists, more particularly those with a penchant for trespassing into moral philosophy, are reviled- in India- as a bunch of virtue signaling wankers who are incapable of saying anything true or useful.
Is this the fault of any single buddhijivi? No. Is it the fault of every buddhijivi? No. It is a combination of hysteresis effects (i.e. initial dynamics affecting subsequent trajectories) and the incentive landscape as well as a certain common cultural background and its cliques and citation cartels. But for any given Bengali economist, we can imagine a better trajectory if they had gone into some, private sector, applied field and attained ideographic knowledge and domain expertise. Indeed there are plenty of competent O.R or I.T or Fintech mavens who, only in their private life, are just as pig headed as the more exalted, Ivy League, sort. Essentially these guys always express ‘surprise’- which rapidly mounts into moral indignation- that people who were ethnically cleansed express fear and hostility towards the group which killed and expelled them- more especially if it shows signs of doing so again.
Kaushik Basu must be aware of the opprobrium in which budhijivis of his stamp are held by other Indians. He knows we don’t blame any individual buddhijivi nor do we think the group as whole is incapable of reform if the right incentive mix arises. Yet he writes-
Listening to the laity discuss group morality can be a disturbing experience.
Buddhijivis are very precious little snowflakes. They are easily disturbed.
Listening to scholars discuss group morality, with an attentive ear, can be equally disturbing. The former is conducted with a parsimony of reason and evidence.
Which does not matter, if the judgment is true or useful.
The latter is conducted with complex reasoning and evidence, but, on closer examination, leaves one puzzled.
We will soon see that only stupidity- strategically simulated or otherwise- could cause this puzzlement.
One reason for this is that, when we see something good or bad happen, it is a natural human instinct—to the laity, the philosopher, and the economist, alike—to place the responsibility at the doorstep of some agent.
This is perfectly reasonable if there is in fact an agent who claims to be responsible and/or who is getting paid in return for assuming ‘command responsibility’. This is a justiciable matter.
However, we don’t do this when we castigate a group- e.g. Bengali economists- which is unstructured. Instead, we have ‘implicit knowledge’ that something went wrong with the group dynamics such that though the incentive landscape changed, hysteresis ‘baked in’ a certain characteristic type of dysfunction.
It leaves us uncomfortable not to be able to attribute agency to anybody or any collectivity.
This is not the case. Kids soon learn that a particular bunch of kids can go to the bad without anyone of them being particularly bad. The solution may be to get the ‘ring-leader’ into a different group- maybe one with older kids who will pass on sporting or other skills- while the others can be re-assimilated into healthier circles.
This is not an easy problem because to err on either side is likely to have grave consequences.
No. We are satisfied with punishing a few scapegoats and doing a bit of mechanism design so that bad behavior no longer pays.
To wantonly hold individuals responsible for bad group behavior can be dangerous.
Buddhijivis kept holding Modi responsible for the wickedness of Hindus. This was dangerous only to their own reputation and, in some cases, their sanity.
It can lead to the wrong person being punished, and promote facetious group labeling. On the other hand, to consistently hold no one responsible for bad group behavior is to risk encouraging bad behavior.
But even little kids know that beating a couple of bullies and breaking up their group is all that is required. The trouble with living the ‘life of the mind’- as buddhijivis claim to do- is you become stupider than a kid in primary school.
Changing the incentive system is important. It doesn’t matter if a buddhijivi keeps shouting ‘Modi is Hitler’ because, so long as Mamta rules West Bengal, they have an incentive to do so and thus we merely call them names. We don’t fear too much for their sanity- which, admittedly, may be negligent on our part.
It can result in the ‘tragedy of the commons,’
No. You have to change the expected utility of the average agent. Just vilifying or even hanging Dick Turpin won’t get rid of highwaymen.
which is, in turn, a manifestation of the ‘many hands problem,’ where a group of individuals drive society to a disastrous outcome, in a manner where no one person’s unilateral change of behavior can make any difference (Braham and Holler, 2009; Braham and van Hees, 2012).
But a change in the common knowledge information set can have exactly that outcome. True, there may be a ‘first mover’ penalty. No one wants to be the first guy to say ‘let’s kill Stalin’, but even little kids know how to instigate a ‘stalking horse’ to take that foolhardy step. The successor will be the guy who was pretending to be loyal.
This is a philosophical challenge with enormous implications for real-life outcomes, ranging from preventing large corporations from hiding behind the excuse that no one in the corporation is responsible for the damage it inflicts on society, to drafting laws for preventing climate change disaster.
So, this is not a philosophical problem at all. It is a problem for ‘Law & Economics’.
This paper follows the strategy of bringing concepts and arguments from game theory to investigate this problem.
But game theory has failed completely over the last fifty years in this respect. Yet much progress has been made by lawyers informed by the ‘Law & Econ’ school.
What is attempted here is however different from what happens in much of that literature. What this paper does is to study a counterfactual. Instead of asking what would happen if the individuals chose differently, I ask an antecedent question: What would happen if the individuals were different, becoming, for instance, moral creatures?
Basu is assuming that individuals chose according to their own preferences. Yet, in groups, people chose so as to maintain or enhance their position within the group while the group itself has a representative agent model whose welfare it notionally satisfices. The ‘opportunity cost’ of in-group action is determined by how easily a member could be replaced and what their transfer earnings are. But this consideration would already determine their function within the group. Thus, when Basu was Chief Economic Advisor to the Indian Govt. everybody knew he was a bird of passage. Still, he managed to get a towel allotted to him in the posh bathroom used by the top bureaucrats. That was an incredible achievement. But it didn’t change our opinion of buddhijivi economists.
In other words, I consider the fall out of a change in people’s motivation.
But you have failed to pick out what is most salient about group membership- at least for groups which exercise power or confer a benefit of some sort.
The problem is brought into sharp focus by creating a new game, the Samaritan’s Curse, which illustrates the paradoxical result where all individuals becoming moral makes the group’s behavior more immoral.
This is silly. Everybody knows that people who think of themselves as saints, precisely for that reason, are more prepared to countenance devilish actions. The converse, too, is true. If you have a reputation for being devilish, you think twice before endorsing anything of that sort.
By constructing this example, the paper shows that not only is it difficult to allocate to individual members of a group moral responsibility for some bad action by the group as a whole,
Though the Allies had no difficulty doing so at Nuremberg or in Japan after the War. True, this is an ideographic matter. A nomothetic approach can’t say very much- which is why smart people don’t bother with it.
as already pointed out in a large literature, but that there are contexts where individual morality is in fact the source of the group’s immoral behavior.
Indians know all about this. Gandhi was very
moral. Congress, under his leadership, fucked up the country something fierce
for precisely that reason. It is obvious that a moral guy may prefer a
collective martyrdom so as to be holier than the other holier-than-thou nutters
he is competing with.
.The Samaritan’s Curse
Consider a game with two players, 1 and 2, with each player having three actions to choose from: A, B and C. In other words, person 1 can choose from the set of alternative possibilities {A, B, C}. And likewise for person 2. I should clarify that person 1’s A, B and C are not the same as 2’s A, B and C. Thus 1 may be choosing whether 1 should be a farmer, lawyer or philosopher and 2 may be choosing whether 2 should bea farmer, lawyer or philosopher. I could have labelled 2’s alternatives as A’, B’, C’, but I prefer to economize on the primes. The set of actions to choose from represents the alternative possibilities from which each person can freely choose and those are the only actions from which she can choose. The ‘outcomes’(meaning all possible eventualities) of the game are pairs of choices, one choice by each player. Hence, this game has nine possible outcomes: (A,A), (A, B), (A, C),(B, A), and so on, where an outcome such as(B, A) refers to the case where 1 chooses her B and 2 chooses his A. To describe a game fully we must specify what each player earns once an outcomeis reached. This is summarized in the ‘payoff matrix’, labelled The Basic Game in Table 1. Following standard convention, the rows represent player 1’s choice and columns represent player 2’s choice. Thus, if player 1 chooses B and 2 chooses C, the outcome is (B, C), and from the Basic Game matrix we can see 1 earns 80 and 2 earns 102. In each box, the first number is player 1’s payoff and the second number is 2’s payoff. Without loss of generality, I shall refer to the payoffs as dollar earnings of the individuals.
Thus, Utility is transferable. Good Samaritans would give money to charity. They wouldn't participate in a bogus game cooked up by a cretin.
… a ‘Nash equilibrium’ is defined as an outcome such that no individual can do better by unilaterally deviating to some other alternative. The Nash equilibrium is called ‘strict’, if every unilateral deviation actually leaves the deviator worse off. To see why the Nash equilibrium is the natural concept to use here, assume that the players are selfish, and playing the Basic game. It is reasonable to see that this society will get to (B, B). This is the only outcome from which no player has an interest in deviating unilaterally. For any other outcome pair, either player 1 or player 2 will prefer to deviate unilaterally. Hence, (B, B) is the only Nash equilibrium and it is the only place where this society would settle down. Since the Nash equilibrium is the only solution concept used here, I henceforth drop the adjective Nash. Thus the game I just described, shown in the left-hand panel of Table 1, has a unique equilibrium at (B, B). Note that there are other outcomes where both would be better off, such as at (A,C) and (C, C) but society can never settle there because someone will, in each case, unilaterally deviate. Note that in this interaction neither player paid any attention to the fallout of their behavior on bystanders (or the other player, for that matter). Bystanders are marginalized people whose well-being depends on the choices made by the players. As of now I have not even described how the bystanders fare. In a society with selfish players, such as what I described thus far, that is of no material consequence. Let me now describe how bystanders fare. Assume, for simplicity, that there is only one bystander, and the payoff to this person is as shown in the ‘Bystander’s EarningsMatrix’ in the right-hand panel of Table 1.The way to read this matrix is to first find out what the outcome of the game is (that is what the players do) and then read off how much the bystander earns. Thus if the players choose (B, C), the bystander earns 10. I shall henceforth do what I have already done, refer to the full description of the two players plus the bystander as a ‘society’. Table 1, with the two matrices describes the full society. With selfish players, since the equilibrium will be (B, B), the bystander will geta payoff of 6 in equilibrium. In this society, when the players make their decision, they do not pay any attention to the effect their actions have on the bystander. Now suppose a good Samaritan comes to town. She is dismayed by the moral degeneracy of the players, and the fact that they pay no attention to the poor bystander’s well-being. Here they are, rich individuals, earning 104 dollars each, whereas the poor bystander gets only 6. Observing this, the Samaritan gets down to teaching the players some basic morals. Morals can be of many kinds. For simplicity, I shall suppose that the Samaritan focuses on a consequentialist ethic--a kind of utilitarianism, with some attention to equity, which seems like a natural moral in this context. Thus the Samaritan tells them: Your choice of (B, B) gives you (104, 104),but do you not see this leaves the bystander with a miserable payoff of 6?If you, the super-rich, opted for (A, A),you would each lose only 2 and the bystander would get 20. Surely you should be prepared to sacrifice $2 for an additional $14 for the poor bystander? Ignore the other player, if you wish, since she is super-rich like you, but be mindful of what happens to the poor when you choose. With that the Samaritan vanishes.
Suppose the players now become moral creatures, who value the earnings of the bystander (or anyone who is below the poverty line of less than, say, $25) as much as his or her own payoff.
Then, since both don’t know what they other will do, they will both transfer more cash than they would have done if they could coordinate their actions. Beggars can get rich because passers-by assume that they themselves are much more likely to give a little money than ‘normal folk’. There is a 'Samaritan's curse' such that altruism leads to 'poverty traps' or other such counter-productive outcomes.
However, where there is an altruistic intention and only a few ‘super-rich’ players there is no problem in implementing a cooperative solution. Since there is no selfish motive to defect, the thing is robust.
Basu doesn’t get this. He thinks there will be
a ‘consolidated payoff’.
If the outcome is, for instance,(A, B), player 1 gets a consolidated payoff of 84, which consists of 80 for herself and 4 for the bystander, and player 2 gets a consolidated payoff of 124, consisting of 120 for himself and 4 for the bystander.
This is double-counting! The
bystander gets 4. Yet the payoff for the two agents has risen by 8!
The consolidated payoffs for both players, for each of the possible outcomes, gives us a new game, The Samaritan’s Curse.
But this ‘new game’ is based on double-counting! It is stupidity, not mathematics!
Basu thinks the rich guys will choose C,C. This is crazy. Both guys have to shell out 11.5 dollars to bystander to bring him up to the 25 dollar threshold. Thus they get to keep only 94.5 (less if the other guy defects) which is 5 dollars less than if they chose A,A.
Basu’s double counting and his not getting that transfers are the way to go has caused him to write nonsense.
There is no ‘dilemma’ here. This is stupidity simply. Basu cooked up some numbers to show something everybody knows is possible- viz. peeps being 'Samaritans' can fuck things up, for e.g. by creating a perverse incentive for mendicancy- but he was too stupid to keep the numbers straight. He talks nonsense about just giving cash to the poor guy 'not being in the feasible set'! He says
In short, every individual can be genuinely moral, try to do whatever he or she can do to enhance the modified utilitarian objective but nevertheless find that they have collectively taken society to an outcome that all of them consider morally inferior.
Moral people set up charities and identify the
needy and help them achieve a social minimum. This may not be in Basu’s
feasible set- and may also be why Indian Governments which have appointed buddhijivis as Chief Economic Advisor have fucked up so badly.
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