Muck and Mystery
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March 28, 2005
Disordered by Design

A previous post, Perpetual Poverty, dismissed the muddled ideas of Jeffrey Sachs' The End of Poverty and cited William Easterly's Wapo article rather than repeat the debunking of Sachs' old fashioned ideas. Sachs has replied to that Easterly article with an ad hominem attack:

William Easterly, who reviewed my book The End of Poverty (Book World, March 13), is notorious as the cheerleader for "can't-do" economics...

Easterly's simplistic approach fits well with many conservatives in Washington, who would rather blame the poor than help them. Somehow the world's poorest people are made out to be our enemy.

To which Easterly responded:
It's a shame that Jeffrey Sachs chose ad hominem attacks over intellectual debate. His colorful vitriol didn't leave him room to answer the key questions. Why didn't aid officials implement his easy solutions to world poverty already, after half a century of foreign aid? How will his top-down, many-pronged solutions conceived in New York get feedback from the faraway poor on whether they are actually getting what they most need? For example, Sachs says that modest sums would control malaria in Africa. Doesn't he have a little curiosity about why this easy problem wasn't solved with some of the $568 billion (in today's dollars) in foreign aid given to Africa over the last 43 years? His answer seems to be that there was too much aid going to emergency food relief (5 percent of rich-country aid to Africa from 1975 to 2003) and consultant salaries... 25 percent of aid to Africa over 1975-2003. Anyway, if it takes so little, the other 70 percent of the aid budget should have had enough room to control malaria, but it didn't. And yet there was progress in other areas, like increased vaccination and access to clean water in Africa. Shouldn't we examine why these things worked and others didn't? The piecemeal approach doesn't mean less money or less effort for the poor; it means redirecting resources away from the utopian schemes at the top (that have already failed) toward rewarding those at the bottom who find things that work for the poor.
The same confusion dominated many blog posts and comments about Easterly's original article. Though Easterly explains why Sachs' ideas don't work, have already been tried and shown to fail, and offers superior alternatives to achieve stated goals, he is in turn accused of being a dystopian who blames the poor rather than helping them. It's as if Sachs and his supporters are partially deaf, unable to hear some parts of the audio spectrum and so insist that nothing has been said.

Perhaps this Boudreaux post is relevant:

The very act of framing issues or describing problems as “social” entails thinking of society (usually in the form of a country) as the relevant unit upon which analysis is to be directed – as the relevant unit upon which corrective action is to be taken. Once this step is taken, it’s easy to stumble into the presumption that action must be taken by government, for government is the only institution that claims for itself the authority and the ability to act on society as a whole.

The idea of society being “the result of human action but not of human design” is extraordinarily difficult to grasp. We humans anthropomorphize so many things, it’s no surprise that we anthropomorphize society – that we think of it as a relevant and distinct unit with clear boundaries, with a life of its own, with purposes of its own – a distinct unit deserving and demanding attention to itself as a whole.

Boudreaux points to this James Buchanan comment on this Norman Barry essay for further development of these insights.
Norman Barry states, at one point in his essay, that the patterns of spontaneous order "appear to be a product of some omniscient designing mind" (p. 8). Almost everyone who has tried to explain the central principle of elementary economics has, at one time or another, made some similar statement. In making such statements, however, even the proponents-advocates of spontaneous order may have, inadvertently, "given the game away," and, at the same time, made their didactic task more difficult. . .

What, then, does Barry mean (and others who make similar statements), when the order generated by market interaction is made comparable to that order which might emerge from an omniscient, designing single mind? If pushed on this question, economists would say that if the designer could somehow know the utility functions of all participants, along with the constraints, such a mind could, by fiat, duplicate precisely the results that would emerge from the process of market adjustment. By implication, individuals are presumed to carry around with them fully determined utility functions, and, in the market, they act always to maximize utilities subject to the constraints they confront. As I have noted elsewhere, however, in this presumed setting, there is no genuine choice behavior on the part of anyone. In this model of market process, the relative efficiency of institutional arrangements allowing for spontaneous adjustment stems solely from the informational aspects.

This is insightful. Those like Sachs that have failed to grasp "The idea of society being “the result of human action but not of human design”" are further confused by the metaphors of those who attempt to explain the process. When they hear "that the patterns of spontaneous order "appear to be a product of some omniscient designing mind"", the minds of magical thinkers like Sachs slide into the well worn grooves of creationist thinking remarkably similar to that of the Intelligent Design religious community. Both of these groups misunderstand how natural systems work, especially the role of information in ordered systems. The attempt to centralize information in the mind of the designer or planner completely destroys the system so that it cannot possibly function. Information is the ordering force that is both produced and consumed (in the sense of source and sink, not that it is destroyed by consumption) within the system, even at the lowest levels, and the apparent order is the result of this process. In Barry's words:
The theory of spontaneous order, then, is concerned with those 'natural processes' which are not the product of reason or intention. The classic example is the free market economy in which the co-ordination of the aims and purposes of countless actors, who cannot know the aims and purposes of more than a handful of their fellow citizens, is achieved by the mechanism of prices. A change in the price of a commodity is simply a signal which feeds back information into the system enabling actors to 'automatically' produce that spontaneous co-ordination which appears to be the product of an omniscient mind. The repeated crises in dirigiste systems are in essence crises of information since the abolition of the market leaves the central planner bereft of that economic knowledge which is required for harmony. There is no greater example of the hubris of the constructivist than in this failure to envisage order in a natural process (which is not of a directly physical kind). As Hayek says in "Principles of a Liberal Social Order":
Much of the opposition to a system of freedom under general laws arises from the inability to conceive of an effective co-ordination of human activities without deliberate organization by a commanding intelligence. One of the achievements of economic theory has been to explain how such a mutual adjustment of the spontaneous activities of individuals is brought about by the market, provided that there is a known delimitation of the sphere of control of each individual.[4]
It isn't just economies that work this way, all natural systems have these features. From human social systems to colonies of slime mold it is neighbors acting with only local information that co-ordinate the system as a whole and result in what appears to be order from an external view. It is important to grasp that even human communication and transportation systems that span the globe don't disrupt these processes, they just redefine "neighbor" independent of time and space: virtual neighbors so to speak.

The peicemeal approach to poverty reduction that Easterly advocates is in this sense biomimetic or sociomimetic, more like a natural system since it adresses Easterly's concerns about how "top-down, many-pronged solutions conceived in New York get feedback from the faraway poor on whether they are actually getting what they most need?" The confusing part for magical thinkers like Sachs is understanding how the myriad small acts of piecemeal aid can result in an ordered reduction of poverty when there is no high level or mid level plan to coordinate it all. As Boudreaux says, this is extraordinarily difficult for some to grasp, and as Buchanan says it may help to drop the idea that it "appears to be a product of some omniscient designing mind". The metaphor blinds them to the reality rather than assisting them to grasp it.

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