Category Archives: Psychology

The Progressive Playbook? Thoughts on a Slippery Slope

Is there a master plan behind the blunders of governments? Or are politicians just making it up as they go along? The cabal model is tempting. A lot of people tend to believe that it is not enough for their opponents to wrong; they must also have bad intentions. But usually, less sinister explanations, such as fallible politicians responding to incentives, are a better guide to fixing today’s political mess.

For example, President Biden recently announced that he is asking the Federal Trade Commission to consider using antitrust enforcement to fight rising gas prices. The economist Jeff Eisenach tweeted in response:

The Progressive Play Book: Step 1: Use regulations to restrict supply. Step 2: Blame the oil companies for rising prices. Step 3: Invoke antitrust. Step 4: See e.g., CITCO, Pemex. We are at Step 3.

One should not read too deeply into tweets. They lack enough space either to explain nuances or to define terms clearly enough to prevent misunderstandings. Sometimes, people are just making a snarky point, and they don’t have room for a disclaimer in a 280-character tweet.

Any or all of these situations could be the case here, but Eisenach’s playbook theory tweet has a clear—and common—slippery-slope logic that is worth a closer look. This is not to single out Eisenach, but to highlight a tendency among people of all political persuasions: to assume bad motives and master plans where there probably aren’t any.

Progressives often favor adding new economic regulation, and rarely favor rolling them back. So, it makes sense that progressives would respond to rising gas prices—largely caused by regulations—with more regulations. In Eisenach’s playbook model, this story presumably repeats until the energy sector is nationalized, as with Pemex, which is owned by the Mexican government, and Citgo, in which the Venezuelan government has a stake (though it cannot benefit from Citgo’s U.S. holdings because of sanctions).

This isn’t entirely drawn from thin air. Sen. Bernie Sanders (D-VT) really has proposed nationalizing the energy industry. The Green New Deal may not be a serious proposal, but it really was introduced as legislation.

But is the slippery slope really so deliberate? Just like the GOP’s own populist extremists, the Democratic party’s progressive wing has a high decibel level, but lower numbers and influence. Yes, progressivism touts lofty ideals, such as economic equality, democracy, and environmental protection, but in practice, progressive policies tend to be less lofty and more concrete.

If some people are having trouble making ends meet, pass a law raising the minimum wage. If other people have too much money, raise their taxes. If rents are too high, use price controls or impose a moratorium on evictions. President Biden’s antitrust threat against oil producers is similarly direct. Gas prices are going up, so do something about it. Such moves don’t involve much abstract thought about long-term competitive processes, tradeoffs, unintended consequences, or rent-seeking—what economist Thomas Sowell calls thinking beyond stage one.

If anything, President Biden’s proposal mixes a layman’s misunderstanding of the 1970s oil shock from early in his career with today’s hottest political trends, such as inflation and antitrust. Availability bias is a far likelier driver for his proposal than a playbook to eventually nationalize the energy industry.

Inflation and high gas prices were important issues in the 1970s. The two are linked together in a lot of peoples’ minds to this day. Today, inflation is back over 5 percent and gas prices going up again. In his speech, President Biden even singled out OPEC, which is long past its prime as a global economic villain.

Another factor that makes the current gas price increase appear even starker is that prices are rising from a low starting point. On April 23, 2020,  gas prices averaged $1.77 per gallon, the lowest since the 2008 financial crisis. Since then, gas prices haves been on an upward trajectory, rising to $3.17 per gallon by August 16, 2021. While that is a sharp increase, thanks in large part to that low starting point, gas is still cheaper than it was for almost all of the period between 2011 and 2014.

Inflation is also not the main driver of rising gas prices. Inflation is what happens when the supply of money gets out of whack with the supply of goods and services. If it isn’t monetary, it isn’t inflation. Today’s inflation is likely responsible for about 10 cents per gallon of the price increase, out of roughly $1.40. Most of the rest comes from a mix of supply, demand, and bad regulations.

The Jones Act of 1920, which is essentially a Buy American bill for the maritime shipping industry, makes shipping domestic gas artificially expensive and increases reliance on imported oil. Both of these make gas prices higher and more volatile. The Biden administration’s decisions to deny drilling and pipeline permits and to raise some regulatory burdens are also raising prices and squeezing supply. These are not inflation, but they are raising prices.

Coincidentally, higher prices and restricted supply are the same indicators used in finding consumer harm in antitrust cases, adding potential confusion to any antitrust cases stemming from Biden’s proposal. His recently proposed carbon tariffs on imported oil would further worsen the problem.

Repealing existing regulations and walking back proposed burdens would do more to lower gas prices than adding new restrictions—but that would require admitting mistakes. Politicians generally prefer to shift the blame and then publicly punish some supposed bad guys. That is not a conspiracy; it is rational political behavior.

The state of politics is unhealthy. There are lot of changes needed at the cultural, institutional, and policy levels. While conspiratorial allegations of political playbooks and slippery slopes are tempting as explanations, a lot of bad policy simply involves politicians responding to the incentives they face with the limited knowledge they have—the same as everyone else does.

The economic recovery and the continuing long-run rise in living standards would be better served if reformers would focus their scarce resources on these, rather than on exposing sinister narratives that aren’t really there.

Partisan Reasoning and Evolution

From p. 32 of Jonathan Rauch’s forthcoming book The Constitution of Knowledge:

Think of it this way: humans are equipped with some of evolution’s finest mental circuitry to protect us from changing our minds when doing so might alienate us from our group. We have hundreds of thousands of years of practice at believeing whatever will keep us in good standing with our tribe, even if that requires denying, discounting, rationalizing, misperceiving, and ignoring the evidence in front of our nose.

This explains much of modern politics, and is one reason I highly recommend avoiding cable news. Some of the talking heads’ performance routines are impressive. But they are seeking peer approval, not truth or understanding.

CEI is hosting Rauch for a book forum on June 9. You can register here.

CEI Book Forum with Johan Norberg and Patrick Moore

Earlier today, CEI hosted a double book forum featuring Johan Norberg, author of Open: The Story of Human Progress, and Greenpeace co-founder Patrick Moore.

Video of the event is on YouTube here.

I also received a pleasant surprise around the 31:00 mark when Norberg, whose work I’ve long admired, quoted favorably from my recent review of Open.

Book Review: Open: The Story of Human Progress by Johan Norberg

On March 25, 2021 at noon ET, CEI is hosting a double book forum featuring Johan Norberg, the 2019 winner of CEI’s Julian L. Simon Memorial Award, and Patrick Moore, a Greenpeace cofounder and author of Fake Invisible Catastrophes and Threats of Doom. Register here, where video of the event will also be viewable afterwards.

Liberalism—in the correct sense of the word—needs fresh voices. The ideological conversation is different than it was a decade ago, and many market-liberal thinkers have not kept pace. Today’s debate is over whether society should be open or closed, not which side of the Iron Curtain was better.

This is where the Swedish economist Johan Norberg performs a valuable service. He is fighting the current battle, not the last one. His newest book, Open: The Story of Human Progress, is a superb defense of the pro-freedom side of the debate. And he defends it against the nationalists and populists who are attacking it right now.

People over a certain age on the political right tend to still use the word “socialism,” but often as a catch-all term for things they dislike. This is different from the word’s commonly understood meaning of state ownership of the means of production, belief in dialectical materialism, teleological stages of history, or any of the other things socialists actually believe in.

People under a certain age on the political left often say they favor socialism. But they, too, have given the word a new and different meaning. They typically define socialism as a more-or-less market economy with a large welfare state, as in the Nordic countries. They are also often careful to add the qualifier “democratic” as an implicit nod to what socialism’s original meaning entails.

When people give the same word different meanings, confusion reigns. When people today lob the s-bomb, they are often talking  at each other, not to each other. The real debate is elsewhere.

This tactic is great for getting people riled up, though. The heat-without-light approach has advanced the careers of people like Fox News host Tucker Carlson and former President Trump on the right, and Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez on the left. But it makes substantive debate difficult.

Openness and liberal institutions have generated more wealth for more people than any other socioeconomic system in history. But they are also unpopular. Norberg has some ideas on why, drawing on a mix of history, economics, and psychology. He sums up his thesis on page 6:

As I will argue, the reason that the Enlightenment and the Industrial Revolution started in Western Europe was that this region of the world happened to be the most open, partly just out of luck. It has been repeated in every place that has gone through similar institutional changes. It is not the triumph of the West, it is the triumph of openness.

First, the history. The last two centuries have seen a mass enrichment unlike anything in human history. As economic historian Deirdre McCloskey has pointed out, people today are 30 times wealthier than our ancestors were in about 1800. Not 30 percent more, but 30-fold. As President Biden once said about a different issue, this is a big deal. Since the Great Enrichment began, life expectancies have doubled. Infant mortality is down by more than 90 percent. Famines today have political causes, not natural ones. Violence, both intentional and accidental, are sharply down across the board. A few years ago, the percentage of world population living in absolute poverty—$1.90 per day or less—fell below 10 percent for the first time ever. Almost every long-run trend is showing improvement.

This historical process is as important as the taming of fire or the invention of the wheel. This is what Norberg defends. And it needs defending, because the openness and liberal values that made it all possible are unpopular. Psychology helps to explain why.

People respond to threats more sharply than to good news. In lab experiments, people feel the sting of loss about twice as sharply as a gain of similar amount. Psychologists call this loss aversion. We evolved this trait because mother nature is a superb economist. People have only so much attention to give to things, so we have evolved ways to economize on it. When things are going well, we can leave them alone, and save our scarce attention for dealing with threats. We are hardwired to pay more attention to threats, because long ago there was a survival advantage in doing so.

This tendency is not unique to humans, and long predates us. In a way, the modern life we all enjoy runs counter to hundreds of millions of years of natural selection processes. No wonder liberals have an uphill battle!

In the last two centuries or so since the Great Enrichment began, threats have become progressively less menacing. People don’t have to worry nearly as much about famine, disease, or violence. But that same impulse still exists. Now it gets channeled differently. Socialists—actual ones—viewed capitalists as threats. Populists, from William Jennings Bryan to Josh Hawley, frame various elites as threats. Nationalists view immigrants and foreigners as threats.

Who and what people consider to be threats changes with the times. But that core psychological mechanism remains constant. Some kind of outside Other always poses a threat to the in-group, which must always be defended. This in-group can be a family, tribe, race, nation, political party, or just about anything else. People can also have multiple in-groups at the same time, and can shift seamlessly between them. A Republican and a Democrat who would be enemies in one setting might become fast friends at a baseball game if they like the same team, then go back to being enemies when the game is over.

The key point is that the in-group/out-group dynamic is in everybody’s DNA, and is where the urge to close society comes from. Norberg here draws on the political psychologist Karen Stenner’s 2005 book The Authoritarian Dynamic, which argues that about a third of people have an underlying authoritarian impulse in them—but it doesn’t express itself unless people feel threatened. During normal times, they are just as open and amiable as anyone else. But when they feel threatened, “they react explosively,” Norberg writes on p. 343. “They become intolerant of diversity and dissent and willing to restore unity by government control, even if it wrecks rule of law and free speech.”

Liberal institutions are powerful enough to double lifespans and increase prosperity 30-fold in a handful of generations. At the same time, they are vulnerable to attacks like this.

Prior liberal flowerings got started in societies as diverse as Ancient Greece and Song dynasty China. But none of them lasted. The general intellectual climate wasn’t open enough to openness. Plato was executed essentially for nonconformity. After Mongol invaders ended the Song dynasty, the succeeding Ming dynasty responded to the threat by destroying the world’s most advanced fleet of oceangoing ships and banning nearly all foreign contact.

That vulnerability is why the open society will always need defending, especially as its attackers change tactics every generation or two. Norberg’s defense is perfectly suited for this generation’s emerging threats. Populist and nationalist governments have come to power in recent years in countries such as Brazil, Mexico, Hungary, and elsewhere. President Trump’s trade war, immigration restrictions, race-baiting were slowing the longest economic expansion in U.S. history and causing cultural divisions even before COVID-19 hit.

Even after he cost his party the House, the Senate, and the presidency, the Republican party is continuing along a national populist trajectory. The progressive wing of the Democratic party is pushing similar policies in different packaging, on issues from international trade to technology policy. The United Kingdom’s Brexit debate, which should have been about escaping the European Union’s burdensome regulatory, agricultural, and tax policies, was instead hijacked by ugly nationalist impulses, and became divisive for all the wrong reasons. Strongman governments and nationalist political parties are springing up in places that should know better, such as Eastern Europe, which bore the brunt of both fascism and communism in the 20th century.

Norberg writes clearly and persuasively, with passion, and without anger. It is an impressive performance, and a joy to read. He has only one notable slip in 384 pages, and that is his support for a carbon tax on pages 330-331. Ironically, this comes in a section about the knowledge problem in economics. A centralized body such as Congress is unlikely to have the on-the-ground knowledge it needs to put an accurate price on carbon emissions.

Perhaps more significantly, the carbon tax suffers from public choice problems—which basically means that politicians tend to behave like politicians. A cardinal rule of politics is that policies are made and enforced by the government we have, not the government we want. Even if Congress did overcome the knowledge problem, it is unlikely that people like Nancy Pelosi and Mitch McConnell, or whoever succeeds them down the road, would craft a carbon tax on the merits. For Norberg, a carbon tax is “supposed to be an incentive, not a source of revenue.” This is surely not how a carbon tax would work under a real-world government.

That quibble aside, Open is one of the best books of its kind to come out in years. It is the right defense of the right values at the right time.

Norberg is not the only voice in favor of openness. Recent works by economists Virgil Storr and Ginni Choi, psychologist Joseph Henrich, and experimental economist Bart Wilson are other recent contributions. Matt RidleySteven Pinker, and Deirdre McCloskey have all been flying the flag for openness, tolerance, and dynamism for years. But just as Julian Simon was in his day, these voices of reason are too often drowned out by a chorus of doomsayers.

Markets are inherently dynamic and ever changing. No one is in charge of them, and no one directs the process. Markets work best when people are open, tolerant, and cooperative. People need to get along with people who look different, speak differently, and may live far away. It takes trusting strangers. That not natural to the human brain, which evolved to fit a hunter-gatherer world. But open markets have gotten us this far. If we let them, they can take us much farther. Whether we do or not will be this generation’s defining debate.