A lot of New Zealand policy discussion and debate is holisitc – we say we want a set of outcomes, these outcomes are desirable, these are the outcomes we need to achieve. In essence, they are saying there are a set of states “we” could be in as a society and we should strive to be in the “one” they are talking about.
Note: There are elements of holism that are ESSENTIAL, but I see them as part of reductionist philosophy as well. For example, the idea that the state of the world influences payoffs beyond the actions of individuals is fair. Also the idea that we can’t compute everything is acceptable. My argument is against the idea that we start with a “target” (top down) rather than starting with “guiding principles” (bottom up) when designing policy.
What is an example, lets say “sustainability”. The idea of being sustainable, of having sustainability, sounds nice – it is an overaching state that some people want us to have. If they are forced to define sustainability they will say it has a whole bunch of characteristics – however, why these characteristics are good is never touched – just the fact that it takes us to this “state” of the world that they normatively believe is desirable.
However, I’ve never, not even as a child, found such descriptions convincing. One of these states must be reducable to the sum of its parts, there must be a set of causes that lead to that state – either that or it is an impossible pipe dream.
This is part of the reason I found economics so attractive when I was young – just think of the production possibility frontier.
The PPF tell us that there are a whole bunch of states of the world where you cannot make someone better off without making someone else worse off – these are our “pareto optimal” states. However, there are a multitude of states below the PPF line where outcomes can improve, and a whole bunch of states above the line which are unachieveable.
Given this, we need to know how states come about, so that we know where they fall in terms of the PPF line. We may envisage a state that we truely believe is superior to the one we are in now – but without a reductionist model of how that state comes about it may just be a pipe-dream, in may be impossible to reach.
Unless we can describe how a state comes to pass, how can we talk about it? How can it be policy relevant? And yet, most policy discourse seems focused on pipe-dreams, and involves a complete unwillingness of trying to work out what the trade-offs involved with anything are.
As a result, I do not believe anyone when they say “New Zealand needs a measurable goal” or “New Zealand needs a target”. “New Zealand” just needs the opportunity to do the best it can with the limited resources it has, in terms of the happiness of its citizens. We can only achieve such an aim by using fundamental economic principles to illustrate trade-offs, not by setting over-arching targets of “matching Australia” or “sustainability”.
But Matt, what about if we have imperfect information about the causes of outcomes – if we just know that an outcomes is “good” why not target it!
This is the most common argument against my point.
I don’t like it. For one, if information is imperfect it may be the case that the poor information is better than using no information at all.
But lets ignore that. If the information available regarding causes is so poor that we don’t think we can use a reductionist method – then how the hell are we supposed to come up with policy that improves outcomes? If we don’t understand causes, how can policy makers introduce policies that the “know” will ex-ante make people better off.
I do not believe that we can just pick an outcome, say that it is achievable, say that it is better than what we have now, and then make it happen – all in the absence of any information. People that do this (and there are many) are working off faith, and I’m sorry but I fear that these people will damage peoples lives with their good intentions – not help them.
I can often tell the difference between my non-economist friends and my economist friends by the degree of “holistic argument” they are willing to make. Both groups are intelligent, beautiful, people – but the structure of the discussions I have with them differ, partially due to training, and partially due to self-selection in the types of people who will be willing to do a subject like economics.
I have found that some of my non-economist friends get frustrated because I’m putting their discussion in “my framework” – it frustrates them, they feel that by doing this I’m losing part of their point. On my side I can’t understand why you wouldn’t use a framework that captures scarcity, trade-offs, incentives, and choice – and given that ANYTHING can be justified in an economic framework I do not feel like I’m missing anything. In fact, I believe that I am just making their assumptions transparent.
Now this is all just an explanation for why I debate and discuss the way I do – it doesn’t mean I’m right in any sense of the word, but my very nature of discussion and analysis is strongly reductionist. Note that I used words like “believe” and possibly even “should” all through this – it is because I recognise that my choice of method could be seen as, in itself, a subjective choice. As a result, I used terms that made it clear that I do this because I believe it – not because it is some mystical truth passed down from the gods.