Doughnut Economics: Forget GDP; See the Big Picture

In her Doughnut Economics: 7 Ways to Think Like a 21st Century Economist Brit academic Kate Raworth imagines the human world as a doughnut. If you penetrate the Ecological Ceiling or fall through the Social Foundation, here there be dragons, and you must call in and submit to the activist elite.

Raworth's first Way is to attack the idea of GDP as the be-all and end-all of measuring the welfare of society. But the ancients considered "household economics" as and art and "Aristotle distinguished economics from chrematistics, the art of acquiring wealth."

So Raworth thinks that the GDP growth fixation is like a cuckoo in the nest. It makes its host feed the baby cuckoo instead of its own chicks. But there is another way, with "human welfare, not wealth accumulation, as the goal." Notice the passive voice in the quote.

Chilean economist Manfred Max-Neef  proposed that development be focused on... fundamental human needs -- such as sustenance, participation, creativity, and a sense of belonging[.]

Thus the Doughnut.

Below the Doughnut's social foundation lie shortfalls in human well-being... such as food, education, and housing. Beyond the ecological ceiling lies an overshoot of pressure on Earth's life-giving systems, such as through climate change, ocean acidification, and chemical pollution. 

All the world's experts agree that we should set a target date for every human living above the social foundation, including "gender equality, social equity, political voice, and peace and justice." But the Great Acceleration in humans living above the social foundation has caused "an accompanying surge in ecological impacts." And this could mean the end of the Holocene climate optimum of stable, warmish climate of the last 12,000 years. Experts propose keeping CO2 below 350 ppm, keeping 75 percent of once-forested land forested, and limit fertilizer use to 62 million tonnes of nitrogen and 6 million tonnes fertilizers per year.

But how do we get into the Doughnut "safe and just space?" It takes: population control; "equitable distribution" of resources; control of aspiration for "faster cars and slimmer laptops, for exotic holidays and the latest-craze gadgets;" technology to replace private cars with urban transit, fossil fuel with rooftop soar power, self-heating self-cooling buildings; and governance "that is suited to the challenges we face."

Yes. Well, I tell you something, Kate Raworth. You educated government-funded experts are not up to the job of doing all that. Because human society is not a top-down administration like a government bureaucracy or a university. It is, at the very least, an emergent, network phenomenon that nobody really understands.That is the point of economics. It is a first, limited guess at how things work. To Be Continued.

And the question is: what if you are wrong? And how would you know? The advantage of GDP as a guide for government is that it is "real simple" as they say in The Manchurian Candidate. Any politician can figure out that he is in a whole heap of trouble if the GDP goes down. But nobody can figure out what is up or down with the complicated top-down agenda of the Doughnut.

Having told us how wise and credentialed government-funded experts should run things, Kate Raworth now proposes to de-legitimize the two brands of economics of the past half-century: Paul Samuelson's economics that, to her, is symbolized by his simplistic Circular Flow diagram, and the "neoliberal" agenda of the Mont Pelerin Society founded in 1947 by Friedrich Hayek, Frank Knight, Karl Popper, Ludwig von Mises, George Stigler, Milton Friedman and others. Actually, La Wik regards the term "neoliberalism" more circumspectly than Raworth. And I would suggest that it has become yet another left-wing pejorative; Raworth, born 1970, probably only knows it as a pejorative. Against the pathetic narrative of Samuelson and the Mont Pelerin Society Raworth proposes a different narrative, the Doughnut narrative.

Here is a table of the two narratives.

	Mont Pelerin Society	Doughnut Economics
EARTH	which is inexhaustible -- so take all you want.	which is life giving -- so respect its boundaries
SOCIETY	which is non-existent -- so ignore it	which is foundational -- so nurture its connections
THE ECONOMY	(no entry)	which is diverse -- so support all of its systems
THE HOUSEHOLD	which is domestic -- so leave it to the women	which is core -- so value its contribution
THE MARKET	which is efficient -- so give it free rein	which is powerful -- so embed it wisely
THE COMMONS	which is tragic -- so sell them off	which are creative -- so unleash their potential
THE STATE	which is incompetent -- to don't let it meddle	which is essential -- so make it accountable
FINANCE	which is infallible -- so trust in its ways	which is in service -- so make it serve society
BUSINESS	which is innovative -- so let it lead	which is innovative -- so give it purpose
TRADE	which is win-win -- so open your borders	which is double-edged -- so make it fair
POWER	which is irrelevant -- so don't mention it	which is pervasive -- so check its abuse

Notice that the "neoliberal" Mont Pelerin Society narrative is represented as basically a Do Nothing philosophy. Since I know something about the Hayeks and Miseses and Poppers and Stiglers and Friedmans that founded the society, not to mention their lives, their ideas and their tendencies, I would suggest that Raworth's take is profoundly dishonest.

But the nagging question for me, as a racist-sexist homophobe that profoundly mistrusts the educated ruling elite, is who gets to "do" all the things that Kate Raworth wants done? And who gets to appoint them?

And that was the concern of the Mont Pelerin Soiety "neoliberals." The reason that they proposed to "do nothing" was because they mistrusted anyone once they were given the power to direct traffic. "All power corrupts, and absolute power corrupts absolutely." Said Lord Acton.

For instance, who is the who that gets to embed The Market wisely? And how would we know?

Who gets to make Finance "serve society?"

Who gets to make The State "accountable?"

Who get to "unleash" The Commons "potential?"

Who do we trust to check the "abuse" of Power?

Let us just take The Commons as an example. Raworth uses the work of Elinor Ostrom who researched the Commons and found that "successful commons were governed by clearly defined communities with collectively agreed rules and punitive sanctions for those who broke them." But, she adds,

the commons have, for centuries, been encroached upon by the market and the state alike, through the enclosure of common land, the division of enterprise into workers and owners, and the rise of market-versus-state rivalry."

Well yes, but how do you split the difference? My understanding of the commons in the Middle Ages was that the common land was land that the feudal lord was not interested in using. So the peasants within his domain got to use it and decide how to share it out among them. How did common land get "enclosed?" Because the lords of the land started to learn that they could "improve" the land and make money off it. And they needed the money to strut their stuff as courtiers in the capital. So, get out of there, peasants.

Just axin', but who would be the guy to curb the enthusiasm of the lord for "improvement" and "enclosure?" The king? The Church? A colloquium of wise Doughnut economists?

Five Books for Liberals to Worry About

Cass Sunstein, the advocate of "nudge," is warning liberals that they may have a problem. He puts it politely, suggesting that even though Obama and Clinton are the best thing since sliced bread, liberals might want to read some books. Not that it would change their minds, but that it might help them understand why some people down there among the deplorables and the irredeemables  might disagree with them.

He starts with James C. Scott's Seeing Like a State. He tells his readers that

Scott argues that modern governments, relying on top-down knowledge, tend to be clueless, because they depend on “thin simplifications” of complex systems -- and hence lack an understanding of how human beings actually organize themselves.

Hmm. But Scott also says that the basic plan of the modern state started with the absolute monarchs, who needed to break through the mediating institutions of the time, the guilds and land-owners, so that they could tax and draft individuals rather than merely deal with intermediate notables and power-holders. The same plan is going into effect as the globalists attempt to "piece the shell of national sovereignty."

Hey, liberals could also read Tocqueville's French Revolution and the Old Regime, which tells how the top-down administrative system of the French ancien régime killed all sense of belonging and loyalty to the regime and thus set up France for the debacle of the Revolution and the Terror.

Then Sunstein moves on to A Matter of Interpretation by Antonin Scalia, which I have not read. Progressives don't like Scalia, writes Sunstein, because he was an opponent "of affirmative action, abortion, gun control, and campaign finance legislation."

But what Scalia cared most about was clear, predictable rules, laid down in advance. In this book, he argues for approaches to interpretation that produce clarity, generality, and fair notice, and that sharply constrain the discretion of federal judges.

Yeah, well, that's the problem innit? What liberals want is complete freedom for their nominees to be able to administer as needed, without regard to any rules laid down in advance. And that issues from the very nature of top-down administrative government. Just like with Obamacare, the ruling class cannot predict in advance what unanticipated problems will occur, so it needs complete discretion for the administrators to clean up the problems and patch them with additional billions without having to go back to Congress for additional legislation.

And that leads Sunstein into Side Effects and Complications: The Economic Consequences of Health-Care Reform by Casey Mulligan.

Mulligan’s central claim is that the Affordable Care Act is imposing large implicit taxes on full-time employment, producing real reductions in wages. The result, he argues, is that many employees would do far better if they worked fewer hours per week -- and in some cases, if they didn't work at all. 

Actually, this is true of the entire welfare state. It is an enormous tax on work, starting with the payroll tax, and then going onto all the other taxes on work, like unemployment and workers compensation taxes. Some people might actually call the welfare state unjust, in that it weighs so heavily on the brow of labor.

Then Sunstein comes to The Righteous Mind, by Jonathan Haight, which I have read.

Do conservatives have moral commitments that progressives may not even recognize? Haidt says yes, and he identifies three: authority, loyalty and sanctity. If, for example, someone has betrayed a trust, or treated a boss or a parent disrespectfully, conservatives are far more likely to be outraged than progressives.

The interesting thing here is that liberals do too believe in "authority, loyalty and sanctity." Liberals are really big on the authority of big government and the moral authority of peaceful protesters. Liberals are crazy loyal to their side in the culture wars, and demonstrate their loyalty by defenestrating any heretics on the spot with their naming and shaming. But they think of themselves as independent thinkers bravely speaking truth to power. And as for sanctity, liberals believe absolutely in the sanctity of the environment and the planet and a woman's right to choose. So liberals are living in a dream world. They don't understand what they believe.

Finally, Sunstein wants his liberal friends to read Order Without Law: How Neighbors Settle Disputes by Robert Ellickson.

Progressives tend to believe that without a strong government, social order just isn’t possible; you would have anarchy. An impressive body of research -- much of it by Nobel Prize winner Elinor Ostrom -- demonstrates that this belief is wrong. Sometimes people can sort things out well enough on their own, benefiting from social norms that have nothing to do with government.

Oh really! "Sometimes" is it? Where I come from the settled science says that if you put a group of Americans into a room to solve a problem they will do so, attempting to resolve it by giving each party to the problem something to take away. That agrees with the notion in Buchanan and Tullock's The Calculus of Consent that the best form of legislating is the rule of unanimous consent. That way the proposers of any government program have to buy the votes of the people that will lose out on the program by compensating them for their losses.

The point is that in order to get people to fight, most of the time, you need a politician. As I say, politics is division.

I don't know what Cass Sunstein really believes. In any case, he lives in the world where he might get a government gig in any Democratic administration, so of course he believes that "Barack Obama has been a terrific president... and that Hillary Clinton would be an excellent successor." Jobs, jobs, jobs.

But I suspect that the subtext of his article is a warning to liberals, as in: You may think that everything is copacetic, dear liberal friends, but you need to know that there is "trouble at t'mill," not just because the rubes are deploring, but because a lot of what we liberals take for granted just isn't so. 

Why Obama Gets It Wrong

Why does Obama get it wrong?  I don't mean at the political level, the level of not saying anything that riles up the opposition with stupid stuff that says that "You didn't do that."

Actually, the president made a bigger error, as Charles Murray pointed out.  Wrote Murray:

There’s a standard way for Americans to celebrate accomplishment. First, we call an individual onto the stage and say what great things that person has done. Then that person gives a thank-you speech that begins “I couldn’t have done this without…” and a list of people who helped along the way. That’s the way we’ve always done it.

That's the way we recognize success.  We tell the successful one: "you are awesome."  And the successful one replies: "Aw shucks; I couldn't have done it without the janitor."

The bigger error comes out in Barney Frank's little nugget, retailed by Ross Douthat.

In [the liberal] worldview, the government is just the natural expression of our national community, and the place where we all join hands to pursue the common good. Or to borrow a line attributed to Representative Barney Frank, “Government is simply the name we give to the things we choose to do together.”

Er, no, Barney.  That is a fundamental misunderstanding of the nature of government.  Let us look at how Alan Page Fiske, author of the Relational Models theory of human sociality puts it.  He says that there are four ways in which humans express themselves as social animals.  There is Communal Sharing.  There is Authority Ranking.  There is Equality Matching.  There is Market Pricing.

If we put it as baldly as possible, we would say that government is Authority Ranking all dolled up as Communal Sharing.  And that is being charitable to government.  Here is what Fiske actually says (PDF) about Authority Ranking.

The Authority Ranking (AR) mod bases sociality on asymmetrical differences... which define how to rank people: by age, gender, caste, seniority, promotion system, achievement on a task or test, contest or combat, passage through a ritual, possession of symbolic paraphernalia, bestowal of fiefdom, position determined by divination or revelation, charismatic performance, religious devotion, election, delegation or appointment by higher authority.

Sounds like the liberal welfare state to me.

Now, of course the United States is a community in the sense of Communal Sharing based "on the perception that a set of persons have something in common--something that makes them socially equivalent in some respect."  Well.  the whole point of the liberal ruling class is that racists, sexists, homophobes, and bitter clingers are not "socially equivalent."  The whole idea is to write them out of polite society.

And we know how Communal Sharing works in practice.  That's because Elinor Ostrom won a Nobel prize for her work on the "commons."  For Communal Sharing to work you have to have a small community with face-to-face relations where people are socially controlled by their need to maintain their reputation in the community as good citizens.  Naming and shaming is the name of the game for defaulters and rewards "You did it!" for the exemplary citizens.

But liberals don't do this with their welfare state.  They divide society into "us" and "them."  "We" are the good guys and "They" are the bad guys.  You are not allowed to name and shame anyone in the liberal ruling class--that is what "civility" is all about.  Nor are you allowed to name and shame anyone that is a liberal client--that is what the race card, class warfare and "blaming the victim" are all about.

The fundamental truth about conservatism is that conservatives have argued since the days of Edmund Burke that a national government cannot be the same as a local council of elders.  You can say that, at its best, your local council of elders can do Communal Sharing and rule by persuasion.  In other words, you can have Communal Sharing in your "little platoon."  But big government is government.  It is not a council but the power base of a ruling class.  It is an armed minority ruling over the people in a defined territory.  Government is force, and force goes beyond humans as social animals to the realm of Newtonian mechanics.  That is what Burke meant by "economists, sophisters, and calculators."

The real problem with presidents who say "You didn't do that" and Barney Franks that say "Government is simply the name we give to the things we choose to do together" is not that they are lying to us about government and community and the individual.

The problem is that they are lying to themselves.