Hard Problems
If we consider progress to be an improvement in traditional measures of human welfare-life expectancy, leisure time, and the goods and services available for consumption, a definite pattern can be seen over time: the long march of human history has yielded both progress and an increase in the rate at which progress has occurred. This pattern is heartening- the trend so far is for the situation of humans to not only get better, but to get better faster. This trend even extends beyond the traditional measures of welfare; we can define “progress” much more broadly, as the degree to which issues of concern are addressed, and the same patterns tend to emerge.
There is reason to believe that this trend of accelerating progress may end. The end of the growth of progress will probably not come due to overpopulation, global warming, or nuclear holocaust, although any of these could theoretically create havoc. Rather, the human race could soon see its rate of progress slow significantly as a result of the simple fact that it has already tackled most of the easy problems and is facing diminishing returns to ingenuity.
(Be forewarned: this is a longer post than usual)This is not a new idea; consider the following quotation:
“At the beginning of the 21st century, our political economy seems paralyzed. The economy is stagnant, with a high level of inflation and unemployment. Fundamental problems, such as the energy crisis, exist but cannot be solved. We have lost the ability to get things done. A successful man-on-the-moon project could be launched in the 1960s, but in the 2000s energy independence is beyond our reach.”
This quote, with “at the beginning of the 21st century” replacing “at the end of the 1970s”, and “2000s” replacing “1970s”, is a modified version of a passage from Lester Thurow’s 1980 title “The Zero-Sum Society”. In it, he argues that the United States has reached a point of political paralysis as a result of the fact that any policy changes that could improve overall economic performance would involve significant losses to concentrated interests. As a result of the fact that we’ve already taken advantage of all the easy ways to improve economic performance, every decision now involves an implicit distributional judgment-somebody’s getting the short end of the stick.
Examples of this phenomenon can be seen in many different issues addressed during the 20th century. When looking at problems as diverse as civil rights, the environment, and macroeconomic policy, we see a definite trend from relatively simple measures that produce large net positive outcomes toward increasing complexity and decreasing payoffs.
Consider how the fight for civil rights and equality for blacks has evolved over time: freeing the slaves, recognizing blacks’ right to vote, desegregation, removing other abominations like miscegenation laws, all accompanied by a declining trend of lynchings and other violence. As each battle was won, other, lesser problems became more pressing, and each new victory yielded slightly smaller returns than the last. For example, while desegregation corrected a major injustice in American society, the injustice corrected was far smaller than that of slavery. Today, the major issues are those of entrenched socioeconomic differences and unequal opportunities– a vicious cycle that will be impossible to fully remedy in the short-to-medium run. This impossibility is born of the fact that any short-run socioeconomic gains for blacks must come at the expense of gains for other groups, making short-run gains a politically infeasible goal at best. Thus, a pattern of diminishing gains is clear in the battle for civil rights and equality.
The environmental movement has progressed along a compressed version of the same curve. While the environmental movement has perhaps not hit the same wall as the civil rights movement, it is certainly less effective at creating change today than it was in the past. The major pieces of environmental legislation on which most advocacy groups rely were passed during a four-year period between 1969 and 1973. It was during this period that the National Environmental Policy Act, the Clean Air Act, and the Endangered Species Act were passed, and Congress approved President Nixon’s creation of the Environmental Protection Agency. Progress has been made since that time, but at a diminished rate (and only in fits and starts, due to changes in the political climate). Highlights include portions of the Clean Air Act Amendments of 1990, particularly the innovation of a cap-and-trade system for sulfur dioxide emissions and the implementation of the Montreal Protocol, which limits emissions of ozone-depleting substances. The cap-and-trade system is a perfect example of environmental progress through policy, but this area is probably the one in which environmental progress is diminishing most quickly.
If one considers much of the progress made within the past twenty years, it has come as a result of two factors: the discovery of new problems, and technological progress. Each new problem (the hole in the ozone layer, global warming, etc.) creates new opportunities for relatively large, cheap gains compared to issues that have received attention for some time. Thus, while progress is being made in the overall area of “the environment”, it is still following a pattern of diminishing returns on individual issues. The opportunity for technological progress, on the other hand, can make cheap gains possible that were not an option before, offering a more real extension of the curve than the discovery of new problems. Consider, for example what a breakthrough in nuclear fusion could offer in environmental benefits. This opportunity for technological progress distinguishes many environmental issues from most social ones, and creates a different angle from which to approach policy. In a larger accounting of the returns to ingenuity, however, one must also consider the capital investments required to make the technology available. Thus, the overall trend of diminishing returns stands– simple solutions have given way to a complex policy mix that has been more difficult to implement.
Macroeconomic policy shows a similar pattern, and to draw the outline in very broad strokes, control of inflationary policies and Hamilton’s creation of a central bank (not to mention his other actions as Secretary of the Treasury), combined with the elimination of interstate trade barriers, provided enormous economic gains to the United States. Since then, the gains provided by more active control of the money supply are in great dispute but generally regarded to be positive, and the weakening of tariff barriers and increased accountability in capital markets have both yielded significant gains. It becomes obvious once one considers these policy changes that these historical moves yielded much more gain, particularly given their relative simplicity, than promised by any proposals on the table today.
It is clear, then, that a broad spectrum of concerns display this same phenomenon; the world, or at least a great part of it, is encountering diminishing returns to human ingenuity. Obviously, the degree of progress and thus how difficult future progress will likely be– where we are on the curve– varies depending on the issue and nation in question. The developed world is farthest along the curve on almost all issues, and the developing world shows much more room for easier improvements. This would imply that the gap between developed and developing countries would be expected to close, were it not for the fact that ingenuity is not the only input to progress. The most notable other input is energy, which has quite literally fueled much of the progress in the developed world and may well be far more scarce by the century’s end.
If we accept this idea that there is a broad trend towards slower progress, there are then significant implications to be considered. Foremost among these is the ability of institutions that have formed during a long period of accelerating progress to serve a useful purpose in the new environment. In the United States, at least, the political system and society at large both show signs that they will cope poorly with this trend towards slower progress.
The political system of the United States is largely the product of accident. Its core document, the Constitution, is often lauded in high-school history classes for its brevity and adaptability. These plaudits are not entirely undeserved, but when one considers how the political system has evolved, and the unintended consequences of the Constitution’s form, it becomes rather clear that it’s less than ideal for today’s world. The Electoral College, for example, dates back to a fear of populism, but as the allocation of electoral votes within each state has evolved into democratic means, it no longer prevents popular rule (a questionable goal to begin with). Instead, it reduces the power of some citizens’ votes and shifts this power to others in a manner both unintended and undemocratic, as discussed before.
In addition to the explicit specifications that do not suit today’s climate, some omissions, such as the rules governing the House and Senate, have generated their own problems. The rules of the Senate have come under some scrutiny of late, as a result of the battle over judicial confirmations. This scrutiny has highlighted the odd nature of these rules– they are intricately designed to provide a certain dynamic, but surprisingly easy to subvert. Equally important, the rules date to a time when the scope of government was a fraction of what it is today, and more importantly, the problems it addressed were less complex– or if the problems themselves were not, the nation as a whole certainly was. This simplicity minimized unintended consequences.
Today, legislation is far more complex, due to a number of factors. Naturally, one major factor is the increasing complexity of the problems that we face, the phenomenon of hard problems that is beginning to slow our rate of progress. Another is the increased size and heterogeny of the U.S. population, and a third is the increased complexity of the modern economy– people and other entities are interconnected and interdependent in more ways than ever before. For legislation to effectively address an issue in the context of this complex environment, it often must consist of a complex array of provisions. These provisions can often minimize the unintended (but anticipated) consequences of a piece of legislation, but often have unexpected consequences of their own. Worse yet, as a bill requires more provisions to effectively address an issue, it becomes more sensitive to amendments that can undermine key components. Despite all these changes, the rules remain such that it is nearly impossible to push together a significant bill as a cohesive package. Our political system is thus more prone in the present day to create pork than it is to address the issues of the day; consult the recent energy bill if there is any doubt on this point.
Thus, the political system in the United States is ill-equipped to adopt the nuanced approach to policy that is becoming increasingly necessary to advance the condition of its people. Legislation has always been a blunt instrument with which to address any issue; it is now a blunt instrument being used to do fine handiwork. American conservatives and libertarians have long argued for smaller government for this reason, along with the economic logic that any increased government interference in markets increases deadweight loss– meaning that subsidies, taxes, and price controls all negatively affect the overall wealth created in a market (assuming no negative externalities, more on that below). Libertarians in particular support free market solutions to problems; if properly structured, these can be far more effective than direct government intervention. A classic example of this is the market for sulfur dioxide emissions mentioned before: the government’s enforcement of a market met emissions targets at a far lower cost than traditional methods. This is largely due to what is known as the “knowledge problem” of Friedrich Hayek– no central planner can possibly have all the knowledge necessary to make optimal decisions, but a market can, because each individual participating in a market conveys all the necessary information through the price he is willing to pay.
Despite this potential for deadweight loss and knowledge problems and generally clumsy handling of issues, most Americans, if pressed, would acknowledge that the role of government in their lives is not entirely negative. Even in the field of economics, which seems to produce a disproportionate share of libertarian thinkers, the failures of markets recieve an enormous amount of attention– and many useful markets would not exist were it not for government action. Thus, it is possible for government to play a positive role, and perhaps, with some changes, to help address the deceleration in progress our society now faces.
Several changes in particular could help ensure that this occurs: modifications to the mechanics of elections and lawmaking, an overall reduction in the size of government, and a reduction in the returns to bad governance.
The first of these, modifications to the mechanics of our political system, is probably impossible but would be quite worthwhile. A good start would be changes like the two already mentioned in the pieces linked above– Electoral College reform and changes in the House and Senate rules.
The second, an overall reduction in the size of government, requires a thorough definition of what constitutes the “size” of government. A good thought exercise on the topic can be found at The Fly Bottle, but for the sake of this discussion, we will define the size of government only as the net economic benefit or burden it or any of its parts imposes. The questions to be asked are then as follows:
- Does this program create a net benefit or a net burden?
- Can this program be restructured in such a way as to create a net benefit or increase the existing benefit?
- What would be the distributional effect of restructuring or eliminating this program?
- Can we efficiently mitigate a concentrated harm caused by eliminating this program?
Such a line of questioning could reduce an enormous amount of unnecessary and wasteful subsidies, while minimizing undue disruptions to current beneficiaries. Of course, this line of questioning itself requires that the enormous issue of political pork be addressed.
This brings us to the third change, a reduction in the returns to bad governance. Bad governance is a subjective term, but if we take it to mean supporting programs that cause net economic harm, it is easily identified. The biggest incentives to the creation of political pork are increased chances of reelection and the attendant benefits thereof. Campaign finance reform is an obvious vehicle for improvements, but suffers from its conflicts with free speech, and can therefore only provide small gains. Making ethics violations in Congress, particularly receipt of treats like charity golf outings that cost far more than what is given to charity, matters of law to be prosecuted by an independent body, would be more effective. Equally effective would be term limits, for obvious reasons.
To even contemplate such structural changes, a larger issue needs to be addressed– whether the society itself is mature enough to handle a deceleration in progress. Another way of phrasing this question can be derived if one returns to the original problem, that the low-hanging fruit has been plucked, so to speak. Given that problems are increasingly difficult, we must ask whether our society is prepared to address a broad array of questions with the necessary level of understanding to reach conclusions that can help make marginal improvements to our collective well-being.
It will be many years before the issue is settled, but in the meantime, it is worth noting the major obstacles to such a development; namely, the desire for simple solutions to complex problems, an ignorance of tools that can help create solutions, the willingness of particular interests to deliberately mislead the public, the sheer number of issues at stake, and basic human tendencies, for a start.
The desire to address complex problems with simple, sweeping measures has been noted many times before. To quote H.L. Mencken, “For every complex problem there is a simple solution… and it is wrong.” This desire finds its expression on bumper stickers on the backs of cars nationwide; this is both a symptom of the problem and the problem itself– intelligent policy solutions do not produce good slogans. It’s much more difficult to sell a complex approach that requires a great deal of background and patience to fully understand than it is to sell a general principle. In one real world example, this translated to a movement for nuclear disarmament, which, while well-intentioned, did not understand that the large nuclear stockpiles held by both the United States and Russia actually did far more to prevent a nuclear war than disarmament ever could. Such thinking can therefore not only impede progress, it could get us all killed.
Much newer is the problem posed by the lack of public understanding of tools that can identify and help create solutions to problems. The adage that there are “lies, damn lies, and statistics” is a delightfully glib way to dismiss reports with which one disagrees, but this way of thinking is quite dangerous. It is true that statistics are often misreported or deliberately misrepresented, but this fact should lead to calls for a wider understanding of a useful tool rather than its abandonment. Of course, those who deliberately mislead through statistics and otherwise are entirely culpable as well. The individuals who engage in this practice, which seems to be quite common as of late, are enemies of the common good. However, a large fraction of the people is complicit in this deceit.
This complicity is derived from a basic human practice, well-established by psychologists: that humans tend to ignore or devalue information that challenges their worldview and embrace information that affirms it. This selection based on beliefs rather than objective validity creates horrifying rifts between reality and large portions of the population. A good example is Paul Krugman. Like everyone else, he has his shortcomings, but he does tend to be quite accurate– he’s not one of the best-respected living economists for no reason. So when he criticized the Bush Administration’s economic plan in early 2001, one would have thought that everyone would have–should have listened. Or maybe everyone would have listened in the four years since then, when the numbers vindicated him? No, instead he has been denounced as “shrill” and reduced in the public eye to the level of merely another partisan.
This careful selection of what information individuals accept has perhaps been made easier as a result of the internet and the proliferation of cable news channels. These developments have enabled individuals to pre-filter the information they receive by selecting sources that give more play to stories that support their views and less, if any, to stories that challenge them. The worst of this phenomenon can be found across the web, particularly on weblogs. A good hint is this: if a weblog post uses the phrase “MSM” to refer to the “mainstream media”, it’s the product of conservative or liberal groupthink.
There is a bias in the media, but it is not the liberal or “corporatist” biases that different groups allege, it’s a bias towards using as few resources as possible to cover the stories of greatest interest in a way that makes them as interesting as possible.
This bias is most clear on the 24-hour cable news networks, which cover a broad range of issues in 60-second spots– to quote Jon Stewart, “they don’t have time for journalism. The only have time for reporting.” During the day, they then discuss the issues on “debate” shows that feature opposing partisan hacks trying to spin issues to their advantage while somehow managing to avoid actually engaging in thoughtful exchanges. The mode of operation is clear: it is not necessary to be right, it is only necessary to avoid admitting that you’re wrong.
These societal problems will certainly impede progress– progress in addressing decelerating progress. OVercoming these societal problems is thus almost perfect, in a way. To do so would be in and of itself working on the margins, the very challenge that we as a society face.
Change will come slowly. It is instructive that movements which were once large and vibrant have become mired as their progress has decelerated. In the arena of civil rights and equality, organizations like the NAACP have become increasingly marginalized as they have failed to adapt, and now face internal struggles. The environmental movement is in a similar situation, as noted previously. The one catalyst for positive change could well be the opposite of what the struggling institutions (and individuals) have done: they– we– must embrace rationality rather than retreat into long-held beliefs. When challenged, it is natural to revert to ideologies, but as we have hinted at before, it is this tendency that sets our society back. Thus, it will be rationality and patience that minimize the deceleration in progress. If anything will improve the human condition, it will be reason.