Knowledge Problems

Since we're doing Kevin Williamson (and markets) today, his piece on Davos has a very strong middle. It begins and ends in easy mockery, but in the center he makes a well-crafted argument.

There exists in every human being, in every human organization, and every human system a sort of epistemic horizon, a real and meaningful boundary on the amount of knowledge and cognitive firepower that that person or agency can bring to any given problem. This is a fact that is at some level known and understood across the political spectrum: It is the cornerstone of the progressives’ case for diversity, in that people with different knowledge inventories, different experiences, and different perspectives are more likely to discover effective solutions to complex problems than are groups that are more intellectually homogeneous. For conservatives of a Hayekian bent, this is the familiar “knowledge problem,” the understanding that markets will allocate resources more productively than political agencies will because markets are the only effective means of aggregating usable information about specific economic situations.

We understand the problem of the epistemic horizon, but we do not apply that understanding nearly broadly enough. Progressives believe that “diversity” increases when an organization dominated by white men who are overwhelmingly graduates of the same five law schools, who have read the same books, watch the same television shows, and hold the same relatively narrow range of political opinions adds to its personnel a white woman or a black man who is also a graduate of one of those same five law schools, who has read the same books, watches the same television shows, and holds political views within that same relatively narrow range. Conservatives, to their credit, generally understand that intellectual homogeneity is different from ethnic or sexual homogeneity, but they, too, are generally too unwilling to carry through the more radical implications of that knowledge.

The intellectual homogeneity of policymaking elites is a serious and underestimated problem. To take an obvious example: The American policymaking class includes both progressives and conservatives, but it is overwhelmingly dominated by college graduates and people in occupations that are largely open only to college graduates. Unsurprisingly, our educational-policy debate is almost exclusively focused on how to get more people prepared for college, how to get more people through college, and how to help college graduates deal with financial obligations incurred in the course of a college education. Even a celebrity like John Ratzenberger (Cliff Clavin of Cheers), whose background is in carpentry and whose interest is in cultivating skilled labor, has a difficult time influencing that debate. This is not a result of ill will, selfishness, or malfeasance on the part of elites; it is just that it seems natural to them that the sorts of problems people like them tend to have are the ones that we need to focus on, and that what worked in their lives will work for everybody else....

People whose profession is the crafting of legislation or the application of regulation reflexively (and understandably) assume that if you want more of something, then the thing to do is to pass a law mandating it, and that if you want less of something, then the thing to do is to pass a law punishing it. The bigger picture — that laws and regulations and other aspects of policy interact with one another in unexpected ways — is generally invisible to them. If you are a lawyer, then you understand most social questions as a matter of law; if you are an economist, you understand them as questions of economics; if you are a teacher, you think that the answer to many social problems is better schools. This habit is only natural.

Conservatives are generally inclined to make a moral case for limited government... but the more important argument is the problem of ignorance. Even if Congress were populated exclusively by saintly super-geniuses, there is only so much that 535 human beings can know and understand. The more that decision-making is centralized in political agencies, or even in elites outside of formal government, the more intensively those decisions will be distorted by ignorance. This is true of market-oriented institutions, too, in the sense that big businesses make big mistakes. One of the lessons of the 2007 financial crisis is that the guys who run the banks do not actually know that much about how banks work, even if they know 100 times what the banking regulators know. Free markets offer a critical, if imperfect and partial, corrective to that in the form of financial losses and business failures, which is why things like cars and computers consistently improve while schools and welfare programs don’t. Big markets with lots of competing buyers and sellers are the biggest thinking machines we have, offering the broadest epistemic horizon that our species has figured out how to achieve.

There is a deep philosophical challenge for progressives in that: Progressives say that they want inclusive social decision-making, but the most radically inclusive process we have for social decision-making is the thing that they generally distrust and often hate: capitalism — or, as our left-leaning friends so often put it, “unfettered” capitalism.

I think progressives would be happier with the market if it came with a guaranteed income: the idea of inclusively deciding what we value by individually deciding what we'll spend money on would be more persuasive to them if people reliably had money to spend. This also may be a privilege problem for them more than it's a capitalism problem.