Thoughts on economics and liberty

Tag: Human nature

How good people become bad: a visual demonstration

A few weeks ago I wrote about economic design (here). The key point was that if systems are bad, if incentives are bad, then even good people WILL become bad.

The Golden Balls TV show in UK demonstrates this in front of your eyes.

This is how the last round is played:

The two players secretly choose a split or steal ball. If both of the players choose the SPLIT BALL, they share the money accumulated in the end game between them. If one player chooses a SPLIT BALL and one chooses a STEAL BALL, the player who steals takes away absolutely everything. If BOTH players opt for the STEAL BALL, they’ll both walk away from the show with absolutely nothing. [Source]

Now watch what happens. Just three minutes.

(The largest jackpot so far was featured in the second series on 14 March 2008. The accumulated jackpot was £100,150 and the entire jackpot was stolen by contestant Sarah, making her the biggest winner on the show to date. [Source])

Note that Sarah had been similarly "stabbed" in the past. People learn to become bad.

Cheating is the ONLY stable point (Nash equilibrium) in such games.

Corruption is the ONLY sustainable equilibrium in India's context today. 

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Four of my domains hacked! A steep learning curve.

Some of you might have noticed that my blog and (indeed) a few other websites, including Freedom Team (which I fund and host on behalf of the Team), have been behaving very erratically over the last 4-5 days. That's because four of my domains were hacked.

The first major round of attacks took place in early February this year, disabling my blog and forcing a re-install of most things.

But then recently all kinds of problems started happening. Blog passwords got stolen, "phishing" stuff was planted in various directories on my domains, and thousands of emails went out purporting to be from Paypal or Wells Fargo or some such thing. Over 20,000 emails have flooded my domain's inbox in the past week, which is only a small part of the fake emails sent out from my domains (many of these are emails bouncing back). A total racket, these hackers, have caused. I've been made into a spammer.

Google itself got involved and sent in many messages about the attacks, even universities sent in messages, and Paypal sent in messages. The support team at my web hosting company did their best, but for a mere $4 per month one can't expect them to solve the entire thing themselves.

Fortunately I had the valiant support of Anubhava Srivastava, an FTI member, who worked doubly hard in his spare time to identify and eliminate problems. As a result of all this the attacks have (I think) finally been conquered. Now comes the task of fully re-establishing these domains once again and ensuring that security is beefed up.

In this process I've learnt FAR more about WordPress than I ever wanted to. A very steep learning curve. I also got my hands dirty by re-entering the UNIX shell  – something I had not done for over 7 years  (and indeed, not seriously for over 13 years) – hence very rusty!

Vague terms like backup systems, mysql databases, .htaccess files, security plugins, etc., that I thought I'd not need to know about with WordPress systems, came back to haunt me. WordPress is not foolproof. You need to be very cautious about running these blogs. Security loopholes are far more common and far more dangerous than one imagines. It appears that if I am to operate WordPress blogs I have no choice but learn about such things. Had this blog continued on blogspot (where it happily resided till July last year), Google would have managed the security. With my own domains and blog installations, I am directly responsible. A great challenge.

This blog is still limping. I'm unable to recover the 'widgets' I had on the right hand column. All the "nice" things are gone, I'll have to recreate them over the next few weeks. 

Overall I've already spent well over 20 hours in the past 4-5 days fighting these attacks. I wrote some time ago about the massive loss of productive time caused to humanity by hackers and virus generators, estimating that they have eaten up at least 4 years of my life so far. It is unimaginable how much they harm the world's GDP each year. Without such EVIL people we would have needed lesser security and therefore could have done more productive things.

These leeches/ crooks/ scoundrels/ rascals (I can't find a word strong enough for them) have demonstrated again the essentially VILE nature of man. Hidden from sight, these scoundrels destroy other people's time.

It is for dealing with such EVIL people that we need governments.

I don't have the time to lodge a complaint with the police, but hope that someone somewhere is busy trying to track these crooks down and bring them to book.

Let me now try to get back to work (I'm on leave this week) and retrieve at least some of the MASSIVE amount of time I've lost.


30 March 2011. Still struggling. Found this extensive, useful blog post on WP security. Very daunting!

Here's another one.

Here's very useful information.

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Reconnecting with Nature: The deep morality of the hunter

I was reading an article about duck hunters in The Age today. Some of the comments there are truly worth noting. 

Our disconnection from Nature

Consider how badly most of us are disconnected from Nature: 

The message he gives politicians is simply a passing-on of what his grandfather, Albert, used to say: a society disconnected from the land would go insane.

''And that's what we're seeing. The urban society has sort of disconnected from the reality that something has to die so it can eat meat,'' Wood says.

The cost, he says, is a distortion of moral perspective. ''Because animals are farmed and slaughtered on a mass basis, somehow this makes it more moral in people's eyes. In my view, it's less moral. If you have the wherewithal, the ability and the moral fortitude to go out and take your own animal, good luck to you.

''But there is an awful lot of people who say they can't hunt but they're eating a steak or a chicken and not thinking about where it comes from.'' The other central argument here is that farmed animals are marked for slaughter from the moment they are born, whereas animals in the wild are rarely easy to track and kill, and at least have a chance to dodge the hunter. Guns may not make it a level playing field, but the outcome is never assured.

I would agree fully with this view. It is crucial that we never see ourselves as being distinct from Nature and its laws. That means that anyone who is non-vegetarian MUST have the mental capacity to kill the animal he or she eats, ELSE PLEASE DON'T EAT ANIMALS. 

The primal emotion of killing an animal for food

Also following is a good description of the range of emotions a hunter may feel:

But ask these men about the emotions tied to shooting and killing, and the response is nuanced. Hodder, the shooter with the masters in creative writing, says: ''At first there is a feeling of elation that you have done what you set out to do. And then when you go and pick the animal up, it's inevitably very beautiful and there is a feeling of awe and sadness. It's still warm, even cute. And they just look like they're asleep and I think all the feelings of life and death wash over you … Very primal feelings, hard to articulate. The last stage is you feel really satisfied and looking forward to taking the kill home. Something wonderful to eat, something to share. Even six months later you feel wonderful.''

Let's NEVER forget that for over a hundred thousand years we were hunters-gatherers. By settling down to agriculture, many of us disconnected from our animal roots. Today, with packaged meat in the supermarkets, we seem to have also become hypocritical.

Let me repeat the key message: If  you don't have it in you to kill an animal, then DON'T eat meat, for you are essentially disrespecting the animal that feeds you. Learn to connect with Nature; learn to kill an animal for food; feel the emotions involved. THEN eat. 

Life is a gift but life is also a cycle of Nature. We will survive only if we understand our animal roots and remain true to our nature. Should we reject our roots and pretend we are gods, we will inevitably lose our reason.

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My unequivocal advocacy of capitalism

An extract from the draft manuscript, The Discovery of Freedom:


Let me assert (at this stage without the necessary proof) that capitalism is marvellous and socialism appalling. This book thus continues my unequivocal, unambiguous and proud advocacy of capitalism, an advocacy I had started in BFN, although not necessarily of the sort that many people have in mind, but capitalism in which our freedoms are bounded both by self-restraint and accountability. I therefore talk only about accountable freedom, a concept I introduced in BFN. I definitely do not talk about unbridled freedom. And because there is no unbridled freedom there is no unbridled capitalism.[1] Capitalism cannot, by virtue of this definition, be exploitative, for every action is voluntarily undertaken, and no harm is caused. Anyway, that is the type of capitalism I advocate. (I sometimes wish that a less emotive name had been given to the system of freedom, perhaps freedomism. But that name doesn't sound good. So we are stuck with capitalism for better or worse. Just harder work, trying to distinguish between what it is in some places and what it should be.)

Note that capitalism doesn’t ask or expect anyone to be perfect. It does not preach. But by establishing and enforcing the right incentives (rewards and punishments) it nudges the society towards ethical outcomes. In addition, it defends our equal freedoms through constitutional democratic frameworks. As Paul Starr notes, ‘By opening up courts, legislatures, and political debate to the public at large and insisting on public justification of decisions, constitutional liberalism [i.e. capitalism] has made power more transparent and subjected it to scrutiny and disagreement. Power in the liberal state has …been questioned, criticized, resisted, and constrained – and, as a result, made more legitimate.’[2]

I advocate capitalism for two reasons: because it is a moral system built on accountability and therefore desirable in itself (the deontological reason[3]), but also because its application is beneficial, for instance it eliminates systemic and structural poverty (this is the consequentialist, or instrumentalist reason). While the deontological reason stands alone, moral benefits alone don’t seem to be sufficient. People say: show us the benefits. And that freedom has in abundance, by making entire societies richer. In addition, it punishes criminals and the corrupt. Even more importantly, it allows divergent views to flourish: Capitalism is a pluralistic democratic garden of human thought and expression. What more can one ask for in life?

My glowing praise for capitalism is quite possibly at severe odds with many commonly held views in India (and even, surprisingly, in the Western academia). This word ‘capitalism’ conjures negative images of (an imagined) free-for-all market economy where the rich exploit the poor. Of course, that too does happen in mafia-driven mercantilist anarchies of the sort found in Russia (and to some extent in Italy and Greece, and now India). In such cases the government is effectively controlled by the rich and corrupt.

But that is not capitalism! Instead, it is the travesty of capitalism. Where freedom becomes license, capitalism doesn’t exist. The genuinely free society has clear lines of accountability leading from government (as agent) to the citizens (principal), and from each citizen to the others. Capitalism gives us only liberty to do good. There is no liberty to harm. The defence of liberty can’t be applied to undertake evil, corrupt enterprises. Note, however, that even the best-governed free society can only minimise deviant behaviour. It cannot eliminate it altogether, such being human nature. Therefore some exploitation and unscrupulous behaviour could well occur even in the best managed form of capitalism. However, and this is it the key, when it is properly established, capitalism nips such things in the bud. Cheats are quickly identified and punished.

Thus, the capitalism I refer to cannot be extrapolated from corrupt mercantilist societies. Also, bad eggs in semi-capitalist Western societies do not represent capitalism, but point to flaws in governance, flaws that need to be fixed. In the vast majority of cases (as I will show in chapter 14 in the context of the financial crisis of 2008), it is socialist, welfare-statist, and Kenyesian ideas that have created the governance flaws we often hear about. These flaws are not created by accountable freedom but because of its absence. And at times libertarian anarchists claim to advocate liberty but they merely ask for license, not liberty. Their ill-thought out schemes, allegedly of freedom, are unworkable. They, too, do not represent capitalism in the classical liberal sense that I talk about.

The capitalism I talk about is based on a deep, empirically sound theory.

[1]See my article, ‘Unbridled Capitalism’, published in Freedom First in October 2009.
[2] Starr, Paul, Freedom’s Power, New York: Basic Books, 2007, p.31.
[3]There are debates in the philosophical literature whether these distinctions are sensible. I think they are.
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