Posts Tagged ‘John Nash’

Beautiful and troubled minds

June 3, 2015

Hat tip to Jack C

John Nash was killed in a car crash on May 23.

What happened to our dreams of freedom?

April 24, 2015

The Trap: F*** You, Buddy

Adam Curtis makes documentaries for the British Broadcasting Corporation that are remarkable for revealing hidden connections and bringing out the unexpected consequences of ideas.  His weakness is that he sometimes connects dots that, in my opinion, are not connected in actuality.  His strengths and weaknesses are apparent in his three-part series, “The Trap.”

The first two parts of the series show the working out of the ideas of three brilliant economists.

Friedrich A. Hayek believed that governmental power is dangerous and counterproductive.  It is better, he thought, to allow the economy to be regulated by an automatic system, the free market.

John Nash of the RAND Corporation saw human beings as selfish and suspicious, but, for that very reason, predictable.  He worked out the implications of “prisoner’s dilemma” situations, in which rational people are unable to cooperate for their mutual benefit because they cannot trust each other.

The USA and USSR could not give up atomic weapons because neither could trust the other not to cheat.  Instead the road to peace supposedly was for each to be armed to the teeth and ready at retaliate as soon as they were attacked.  Because each could predict the other’s behavior, the situation supposedly was stable.

James Buchanan, who won the Nobel Memorial Prize in economics, was the creator of “public choice” theory.  He asserted that politicians and administrators are selfish beings who worked to their own advantage and not the public whom they supposedly served.  Idealistic politicians and officials are the most dangerous, in this view, because they could not be controlled.

Curtis documented how these ideas played out under Britain’s Prime Minister Margaret Thatcher and her successors.  Many governmental functions were sub-contracted to private companies.  Since government employees, according to public choice theory, could not be trusted to exercise their own judgment, they were given incentives to meet measurable targets.

The idea was that this is liberating because people are not subjected to the arbitrary personal judgments of people over them, but to objective and neutral measurements.

This kind of thinking is also playing out today in U.S. corporate and government administration.  The result is a micro-management that diminishes individual freedom.  And it doesn’t work.   The incentive is to figure out ways of meeting the target which is a different thing from doing your job well.

Curtis asserted that psychological studies show that the only people who behave according to the Nash-Buchanan theory are economists and psychopaths.  That is an exaggeration.

There is a measure of truth in what Nash, Buchanan and also Hayek say.  The problem is that human beings are diverse and complex, neither altruists nor selfish calculating machines, and no one-dimensional theory can sum them up.

The Trap: The Lonely Robot