Saturday, September 6, 2014

Cost-Benefit Analysis: A Case Study of Cultural Economic Incompetence

When for example an Anglo-Saxon hobbit is taught about cost-benefit analysis, they subconsciously think it shows they should do something that would alienate their friends, and blame the analysis rather than their shallow understanding of it.

Their brain instantly throws ups some stupid ritual they're ambivalent about, and they'll realize the cost-benefit is cost-heavy. Another, different part of their brain will then instantly throw up flashing red flags, because the ritual is a signalling surface antigen. They make no effort to reconcile these parts, but rationally think their relationships are more important than understanding econ, and therefore reject economics.

I use the hobbit as an example, underclass such as chavs and helots make similar errors, and bourgeoisie usually have to aggressively compartmentalize the knowledge.

Two issues in particular here.
Hobbits do not naturally think recursively.
The ritual is pointlessly inefficient. Whatever is being signalled can probably be signalled by something a fifth of the cost, if only other hobbits were rational enough to notice and agree, or lucky enough to have picked it in the first place.
The latter means the asocial econ part of the hobbit's brain has successfully understood. However, the former prevents them from adding the cost of losing friends to the overall cost of changing, and it never occurs to them to tot up the social phase-transition cost from expensive rituals to efficient ones.

The failure to grok the principle usually prevents hobbits from using it at all, as their only choices are repelling their friends or rejecting the principle. Bourgeoisie have more sophistication, but usually have to put it behind overbuild walls.

The 'libertarianism can't work' crowd seems averse to explaining exactly why not. I hypothesize the above conflict, generalized, is the reason. The problem would seem to be failure to teach logic, rather than a failure of the philosophy. Econ can even be taught praxeologically; children will do the asocial thing, by accident, if nothing else. The teacher doesn't need to explain the principle clearly and the children don't need logic; simply saying, "That's not what I mean," at the right times will do. Bourgeoisie learn it praxeologically as Conquest's first law kicks in. Prussian schools obviously and deliberately teach the opposite and actively antagonize efficient signalling.

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