Russ Roberts

John Ralston Saul on Reason, Elites, and Voltaire's Bastards

EconTalk Episode with John Ralston Saul
Hosted by Russ Roberts
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John Ralston Saul, author and head of PEN International, speaks with EconTalk host Russ Roberts about his book, Voltaire's Bastards, and the role of reason in the modern world. Saul argues that the illegitimate offspring of the champions of reason have led to serious problems in the modern world. Reason, while powerful and useful, says Saul, should not be put on a pedestal above other values including morality and common-sense. Saul argues that the worship of reason has corrupted public policy and education while empowering technocrats and the elites in dangerous and unhealthy ways.

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0:33Intro. [Recording date: October 15, 2013.] Russ: Our topic for today is your book with the rather startling title, Voltaire's Bastards, a reference to the central theme of your book, which is the illegitimate offspring and consequences of Voltaire's ideas, and those of his time, in defense of reason. The book was published in 1992 but it has just been reissued with a new introduction. I want to ask you to start with a brief sketch of Voltaire and his influence. Reason seems like a good thing. What went wrong? Guest: I think if you actually go back and look at what they were saying in the context of the late 18th century--mid-18th century, late 18th century--of course they were pushing reason because it was sort of a counterweight to superstition and stupidity and the ignorance of the aristocracy, and so on. But it was pushed in a much larger context. You see the enemy, you fight the enemy; but I don't think they imagined that having since defeated the enemy, in the short term, that the next stage would be to rip reason out of context, out of a broader context. Which is what I wrote about--because this book is the beginning of four volumes, which ends with one called On Equilibrium where I talk about multiple, sort of six human qualities of equal value, of which one is reason. And others are things like ethics and intuition and common sense and imagination. So, I don't think that Voltaire or any of the others would have imagined reason being put in a Platonic way on the throne and that everything else would be demoted beneath it. And the problem lies there. The problem lies in that kind of triangular view of, there must be a truth, and the truth in this case was reason. And certainly Voltaire didn't believe that. Flawed, though--we know about his flaws. But he didn't think that way. Reason was one of the tools. Russ: And you blame that triumphant aspect of reason for a lot of our modern ills. Reason just, by itself, okay, so we've over-elevated it. We've over-emphasized it. Why is that so dangerous? Why has that gone so wrong? Guest: Well, you know, it's ideology, basically. Ideology versus humanism, I supposed you could say. It's certainty versus doubt. Once you sort of say, look, here's the solution to our problems; this will get us out of everything, let's go down this road--well, then you basically very quickly deform the thing itself. Reason--we're always offered this choice between what if we abandon reason, we'll become irrational. That kind of Manichean choice is artificial. There are lots of other counterweights out there apart from reason. You can be non-rational, you know, which is completely different from your rational. You can use ethics. You can use intuition. You can use imagination. But if you become obsessed by rationalism or reason then you start to construct everything around it and you are dragging everything through what you think is a rational methodology. Well, of course, imagination is not rational. Ethics is not rational. Intuition is not rational. So you are now deforming human intelligence, the ability for humans to act in a sensible way when faced by a crisis or an opportunity. So you could actually look at things like our inability to respond to an environmental crisis over the last half century, which most people agree is there--but our inability to deal with it coming from this very linear, an in the end utilitarian approach, where we are not able to act in a sensible manner. And that comes from a couple hundred years, several hundred years, of being obsessed by rational methodology. Which gradually--what's the right way of putting it? The narrower you make it, the ideology, the more you end up going down the pole to less and less complicated ways of doing things. So the original rational idea gradually declines into utilitarianism and logic and so on, and misses the original complexity of the idea of the 18th century. I say the 18th century, but of course in the book I trace its origins obviously to [?] 12th century--I mean its modern origins, its modern form. Russ: Those insights resonate with me because I have--as an economist, economists tend to think of themselves as a branch of applied mathematics--many economists do. Guest: Right. Russ: I've started to push--for a while I started to think, no, no, it's more like biology. But now I'm actually thinking--which, it has a strong biological component, evolutionary, emergent phenomena. But I find myself thinking what it's really like is history, which is inevitably messy. We don't pretend to say we know the cause of the Civil War. We understand there are many causes of the Civil War. We don't pretend we can weight them--oh, this was 37%. And in the last financial crisis, people would press me and say, Well, what percent of the crisis was caused by x? And I'm thinking, it's just not a legitimate question. It's not the same question as what percentage of, say, the children in the classroom are women? Which is a measurable percentage you can actually calculate. Guest: Yeah.
6:42Russ: So, I'm just going to read a quote, and I'll let you--a lot of this book is highly entertaining as a rather extended rant. I have to describe it as that in parts. It's full of actual information and ideas. It's bristling with ideas. I've bent down way too many pages in it for things I was fascinated by or disagreed with or just loved, stylistically. But I'm going to read a quote here that you say here about the humanities, and I want you to expand on that if you feel like it. Or you can just say thank you. But here's the quote:
Not only have the humanities been singled out as the enemy of reason, but there has been a serious attempt to co-opt them by transforming each sector into a science. Thus architecture has become a quantitative, technological formation in which the details add up to the building. Even art history has been converted from a study of beauty and craft into a mathematical view of creativity. The new art historians are interested not so much in art or in history as in technical evolution. The social sciences, new creations of the mathematical obsession, are of course the principal example of the humanities deformed. The reduction of politics, economics, social problems and the arts to mathematical visions and obscure, hermetically sealed vocabularies may well be looked upon by those who come after us as one of the greatest follies of our civilization.
Strong words. You want to expand on that a little bit? Guest: Yeah. The one word I regret in there, hearing it read back to me, is the word 'mathematics.' Because of course it's also a deformation of mathematics, which is a very imaginative area, if thought of really as mathematics as opposed to, you know, mathematics in a much, well, I'll use the word 'law'[?] in a more sort of linear way. And let me just, as a way into it: You rightly say in a sense there is a rant side to the book. But on the other hand, what it isn't, is, it's not that 20th century thing of: here are some facts and here are some examples of the facts. Right? Which is a fairly classic way. It is not that. So that a lot of people said to me you've written the book backwards, because you start out with your theory and then you work your way into the arguments. Russ: You fill it in. Guest: And then the stories become illustrations of the argument, as opposed--they are not proofs. So this is the exact opposite of how you get a Ph.D. Said I, Ph.D., to you, Ph.D. I mean, this would not get you a Ph.D. because it's not fact-based leading to conclusion. It's actually argument with illustrations. So, in a way it belongs to an approach with is pre-19th century. It's much more--the approach I've taken is much more out of an era where there is no difference between fact and fiction. Or fiction and non-fiction. Fiction is really about truth, right? Fiction is about finding out what is truth should be. Whereas facts, there are lots of facts out there and you can choose a few to prove your point. Russ: This is true. Guest: Exactly. So the book is almost like a novel. And I think this is what slightly disturbs some people, that it's not written the way most big books of analysis, of where we are and where we are going, are written. It is almost like a book out of the 18th century. And I think that's very relevant to what I am saying about the universities. Since then, I would say I've gone further. It now seems to me--and both of us have spent time in universities; you still do, right? Russ: Correct. Guest: And I've just been named a distinguished professor of whatever at a university, Ryerson. I actually think the universities are becoming a bigger and bigger part of the problem. It's not because the kids aren't smart. It's not because the professors aren't smart. It's because the structures which we've accepted, which again are extracted and are becoming narrower and narrower pieces of things, are getting in the way of our talking about what's going on and being able to think in an interesting cross-collateral way. And the attempts at interdisciplinary work aren't--you may know some exceptions--but I don't know many. Russ: They are awful. Most of them are awful. Guest: Yeah. Because they are basically putting two bits of math or two bits of facts and saying, Let's talk about these. Russ: We have a romance about interdisciplinary work and cross-cultural work that doesn't work very well when people are specialists. Guest: That's right. So we have to rethink, completely, the way we are doing our universities, because they are just getting in the way. I can give you an example. If I look at tenure, in my mind tenure was created largely to give professors the ability to be public voices, because they couldn't be fired. In other words, they were people they knew and they were meant to be in the public debate. And it's ended up being often the exact opposite, that it becomes an excuse to be a hermit. And it's sort of as if we've given you tenure so that you can pay your mortgage, or something. It's supposed to be an allowance to do dangerous things, intellectually. Publicly. And we need that. Those out there who are working for corporations or government and are prevented from doing it. Russ: I think the flaw there is the idea that says, Okay, we're going to create a structure of employment that takes all the risk out of life--the work side of life--as long as you get through this hurdle in the first, say, 7 years. Without realizing that that's not going to attract risk-takers. Guest: I agree. It backfired, in a way. Russ: Yeah. Guest: And we haven't found a way around that backfire. And of course those who are in place don't want it to. Russ: They kind of like it. Guest: But there's no question that there is a big problem. I'm a Canadian and I can say--I'll give you one, tiny Canadian example. Here's a country with two official languages, French and English. And the whole country has to work on the basis of how these two cultures and languages function together. And yet, because of the linearity of the, you know, European, North American tradition, if you want to study English-Canadian literature, Alice Munro, you do it through an English department which is in a line from England. And if you want to do French, you could do a line from French. But never the two--I don't know, not just a funny example of what our problems are with economics, with the environment, with philosophy. The Americans and Canadians haven't had an original thought in 400 years because philosophy is based on Europe, right? And if we can't base it out of Immanuel Kant, then we are not going anywhere. And you could see people like Richard Rorty in the States struggling with the fact that they were secondary products of something that belonged elsewhere. That's a problem. Russ: There is a strain in American philosophy, going through the pragmatists of Charles Peirce and others, that's very similar to your complaint. Guest: Yeah. But they've never been able to dominate because it keeps going back to this very narrow, linear approach. And sorry--and then I'll stop--you mentioned economic history, and economics as history. And here you may disagree with me. But I think one of the most interesting problems of the last 40 years, let's say from the 1970s on, has been in many places the gradual removal of the economic historian. Now, you are going to be able to tell me something I don't know. Russ: No, no; you are right. When I was in graduate school, economic history was a requirement. I think that's gone at the U. of Chicago. It's certainly not in place in most places; I think we were one of the last ones. But I was really speaking more methodologically, just in the way we approach history. But certainly economic history in particular is an application of the point.
15:20Russ: Now, I don't know many authors who compare Cardinal Richelieu and Robert McNamara. But you do. What do they have in common and why were they bad? Guest: Why were they bad? Russ: Yes. Guest: Yeah, well, it's about methodology. And what I was trying to show--and that was just a couple, just two of the examples that I was using--but that we came into the 1960s and 1970s really believing--and other people have written about that, believing that a kind of tight rational methodology, efficiency, deliverability, structures, and so on, would lead to growth and all the rest of it. Russ: Management. Guest: And we thought this was brand new and it was coming out of managerial methodologies, born[?] 1870s, 1880s in France and in the United States, Harvard and so on. And nobody was sort of saying, wait a minute, let's have another look at this methodology. Because when you look at it a little more closely, you suddenly realize that the fathers of this approach--and there are a number of them--that one of the key ones was Cardinal Richelieu, who really invents the modern nation-state, the Westphalian nation-state, what I call--I don't think I do yet in this book but later I started to, the monolithic concept of the nation-state and how it would be structured. And really the guy who gets his act together to do that is Richelieu. And interestingly enough he creates something like the first modern approaches toward secret services and secrecy as methods of power and control--very relevant today. Listening to people, gathering information on people. He's the guy who takes the little bits and pieces of the Inquisition, which are quite narrow, and people don't understand what they really mean. The Inquisition takes this rational approach towards the gathering of information and control. And he turns it into a nation-state structure. And so, I trace it through, and you suddenly see a guy like Robert McNamara, and I give examples of others in other countries, and they are really just 20th century versions of 17th-century, 16th-century creation of France. Russ: You give McNamara the benefit of the doubt, which is what makes it interesting to me. You say he may have meant well; but he managed in many of these activities to achieve exactly the opposite of what he may have intended. Guest: Yeah. He's a fascinating case, and of course once the book came out, he went on to become more and more interesting, right up to the bitter end, when he never actually apologized for his errors but tried to skate very cleverly in a rational argument around the fact that he held a responsibility. He never actually took responsibility, because he thought of himself as a humanist, but actually did not act in any way as a humanist. And I think that contradiction makes him one of the most interesting figures of the 20th century, really. Russ: It's very difficult. Guest: Henry Kissinger is not nearly as interesting, because Kissinger is a much more predictable figure. I mean, there are lots of examples just like him throughout history: the guy he wrote so much about, the Austrian Chancellor, Metternich. There's lots of them. Whereas McNamara is really an outcome of the failure of rationality.
18:53Russ: Let's talk about our heroes. Who are they and who should they be? Guest: Well, as you know, there's a chapter in the book where I dump on the idea of the hero. And this is very unpopular these days, because we've been taught again and again that we need heroic leaders, that what we are lacking are leaders. Part of that comes from the fact that we are shoving hundreds of thousands of kids out of management schools who have confused concepts of management with concepts of leadership, when they are, in a way, almost the opposite. That's one of the big problems in the economic worlds, in the business world; it's also one of the big problems in managing banks--Federal banks, international banks, and so on. I think that the humanist school is a minority school, and it will always be a minority school. And we are kept sane by the fact that periodically the humanists get enough influence to set the direction, to reset the clock, to get us back on track. And then we fall back into the hands of the non-humanists. And I guess we are in one of those periods where we are desperate for a reset. So, sure, there are a few examples here and there. There really aren't very many of them. And I think I give an example in history of the combination of Henry IV and his Minister of Finance, Sully, who would have handled the last financial crisis very, very differently. Now this is where you are going to discover something about me, which is I'm a left-handed dyslexic who can never remember names. Russ: Well, you got Metternich there; you pulled it out of the hat just in time. Guest: I'm starting to think of all the names I can't think of, which is, for example, the man who really reset the clock for Athens, um, by ripping up the debt, it wasn't in paper at the time. Russ: Okay. I can't remember that either. Guest: It was the great poet of the day and was given power for a year and got rid of the Draconian code and brought in the beginnings of modern justice and basically just ripped up the debt. And that's what relaunched Athens as the Athens that we admire today. Michel l'Hopital, who was a very, very interesting French chancellor, did an extremely good job over a short period of time which still stands as an example for people. Now I've given several French examples and you are wondering why I am giving so many. Russ: It had some fine people. You are a big fan of Thomas Jefferson. Guest: Yeah, and of course, you know, Jefferson is flawed, but then I think I am, too, probably, and probably you are too. Russ: You bet. Guest: There is no question that Jefferson had a way of talking about things. People get obsessed by how clever he was, out-maneuvering people. But what's interesting was that underlying that there was a broader way of coming at things. For example, the enormous pride he took in keeping the United States out of war. And how he saw that in a larger picture. How he saw violence and nonviolence working together. That shows that at some level he belonged to the humanist tradition. There's this thing of when you have power, your most important responsibility is not to do damage to the thing you are in charge of. I think he understood that profoundly. So that is a non-solution-oriented approach. Russ: You bet. Guest: And that's interesting. It's a doubt approach. That a lot of it is just getting out of things, avoiding things. Russ: Humility. Guest: And lots of people come into your office and tell you what the truth is. And that's when you get in trouble, is when you believe them. Russ: Yeah. I interview them every week. I do. And some of them could be right, of course. But that's why it's interesting: I think we have such a longing for the magic formula, and the magic formula is going to be given to us by the Wizard of Oz, who is going to get us back to Kansas or whatever is going to solve the problem of world poverty or whatever the problem is. I couldn't help thinking about your book this week: we have a newly nominated Chair of the Federal Reserve, and the enthusiasm for Janet Yellen--God bless her, she's a fine scholar--but the idea that she can somehow steer the American economy better than her two predecessors--because she hasn't done it yet. We desperately hope that she'll do better. I don't know what you call that. It is a corruption of reason, right? It is the idea-- Guest: It is a corruption of reason. And you see, what you get out of the corruption of reason is this admiration for heroes. And that's why, you'll notice in the book, that when I use the word 'hero' I capitalize it. I'll use another French example, which was Jean Moulin, who was one of the heroes of the resistance, and is a sort of ethical hero; but I wouldn't capitalize it because it's the Napoleonic idea of the hero that we're struggling with today. And that's the last thing that we need. Incidentally, it's Solon; Solon just came back to me. Russ: Sure. Guest: First, there is, page 402: "Solon's first act on taking power was to redeem all the forfeited land and to free all the enslaved citizens." Because of course debt was a criminal offense, as in was in many places up till, in North America in the 19th century. And it's so interesting, the role that poetry plays, because he was the greatest poet. And it's worth quoting the poem because it's so relevant today. He says
Public evil enters the house of each man, the gates of his courtyard cannot keep it out, it leaps over the high wall, let him flee to a corner of his bed chamber, it will certainly find him out.
And I think that idea that somehow a society and an educational system which says and believes it's dependent on rational methodology has produced one of the most corrupt--and I mean that in every sense of the word--heroes[?], gosh, since when? We'd have fun comparing. And how did that happen? Because the rational methodology corrupted becomes amoral. Not immoral--amoral. And I've gradually come to believe that, you know, immorality is at least something you can work with. Amorality is impossible.
25:45Russ: Let me pile on there. A lot of people apologize for the banks, in the last crisis, with their excessive leverage and not-so-healthy bets, by saying: Well, that's their incentive; we gave them this incentive through bad public policy; so why are you surprised that they took advantage of it? Because their job is to maximize profits. And I certainly have no problem with the idea that, as a human being and in a situation that I had enormous temptation, I might give in to it. But we shouldn't excuse it. We shouldn't say: Well, that was rational so what could you expect? We should hope, as you point out, that there are other values besides rationality and efficiency and what's best for the bank; that they should have thought, this isn't the right thing to do. I understand that it was their incentive to do it. But it's not the right thing. Guest: And there were, in fact, bankers who said this is the wrong thing. Russ: Correct. Guest: And there's not many. And it's also our [?] to punish, because again, in a way, if you just sit back very simply and you say, You know, what with criminal fraud incorporations in 1950--this is a generality; and then you sort of look at--I don't think anybody has done a Ph.D. on this--the movement of bylaws, where gradually, certainly from the 1970s on, things that were illegal were made legal inside corporations through changes in bylaws and then changes in laws. So that for example employees running joint stock companies could pretend they were capitalists and could pay themselves enormous benefits, whether they were doing well or not. And you actually compare how those bylaws worked and said, would that actually have been legal 30 years before? And the answer is in most cases, No, it would have been illegal. It would have been fraud. They are actually stealing money from the company. But part of this utilitarianism, this sort of rationality declined because isolated from other human qualities, has led to us saying: Well, that's just what you do. That's just what happens. Russ: That's the way it's done. Guest: So you lose this capacity to act in a humanistic way. And of course you then open the door to populism and government by fear. Which is, say, you open the door to the idea that people can seek power because they are against government, because government is not in fact doing its job; it has written itself out of acting as the ethical anchor, the rational ethical humanist responsible anchor of the public good.
28:47Russ: Well, let's take the worst two events, or worst two movements of the 20th century, which I would say are Nazism and Fascism. And by Fascism, I'm including Stalin; you can lump Communism in with that, the way it was practiced. So, how do you see that--because I think you do--as a natural outgrowth of the worship of reason? And I'm going to bring it back to the hero: Why is it that a Hitler or a Stalin or a Mao is able to mobilize public opinion? And even in a democracy where we don't have the mass violence of those evil societies, there is a certain abnegation of the citizen's interest in the outcome, and saying, You guys take care of it. How are those related? And how do they relate to this worship of reason? Guest: Well, there's no question that the application of Marxism--not Marxism but the application of Marxism-- Russ: I meant to say Nazism and Communism. I just added Fascism in there to mix it in there. Guest: Yeah, but no, no, it's actually really important. Because for me, the third book in this series, with [?], The Doubter's Companion, which is a sort of ironic, philosophical [?], the third volume is called The Unconscious Civilization, which was based on the Massey lectures. And basically the argument in that is that Mussolini won the second World War. And what does that mean? Well, it means that Mussolini, sort of unlike Hitler--Mussolini, he was a complete nutbar, I mean, you know, violent, whatever. But his movement of Fascism was based on arguments made by a large percentage of Italian philosophers, who rejected democracy based on individualism. And by that I mean responsible individualism, not the crazy, particularly U.S., version of individualism that means I can turn my back on society. Responsible individualism. That they rejected the concept of the individual citizen in favor of the corporatist view, which has nothing to do with companies--the corporatist view that people primarily belong to groups, and groups are interest groups. And they may be unions, they may be companies, they may be football teams. But that our principle loyalty is to the group; we are judged through the group; we act through the group; and it's the interest-based negotiations between the groups that decides the direction in which society will go. And of course when you look at the power of lobbying and the power of interest groups today in Western democracies, you realize the extent to which Mussolini's fascism won, and the concept of the responsible individual lost. Now, it hasn't disappeared. But it's not dominant. Some politician can rally the citizens for an election. But they don't stay engaged as citizens. They retreat within their specialism, speciality. You know, I operate on hearts, so I won't comment on nuclear fission. Russ: But isn't that in a sense the ideal? Don't we want to live in a world where I don't have to--because I don't want the government in my backyard, in that poem, the Solon poem; I don't want the public sector in my bedroom or my driveway or my kitchen--isn't the ideal that I have more important things to do than to talk about what's going on-- Guest: No, that's not what Solon is saying. Russ: No, I know that's not what Solon is saying. But it seems to be what you're saying. Guest: No. What I'm talking about is balance. Russ: Go ahead. Guest: What I'm talking about is that the more you are engaged as an individual in the public good, empathy, you know, the idea of imagining the other and what it is like to be the other--the more you are engaged in that way, then the more individualistic you will be, and be able to be. Because there will be this balance between your good and the public good. And there will be room to be selfish there. But it will not be the dominant element. The dominant element is empathy. And you know, we know that's what humanism says. We know that that's how societies function best, is when we have a sense of the other and how we all function together. It isn't about love. That's one of the dangers--well, you'll notice, I'm very, very careful to stay away from concepts of love. Because, you know, how can you say you 'love' your fellow American? You don't even know him. Russ: It's a meaningless statement. Guest: You don't even know the people three houses down from you. Russ: Well, that's my question for you. You are talking about-- Guest: But you don't have to love them. You don't have to like them. You can actively dislike your fellow citizens. That's fine. It isn't about love. It's about empathy. It's about the public good. It's about being able to imagine or feel--and 'feel' is a dangerous word--imagine and feel, together, what it's like to be the other. And then, on that basis, you put in place both public programs and public protections which make for a fair society. And that balance is the tough one. And it's never perfect, it's never right. You have to work at it every day. You have to wake up every morning and work at it. But if somebody wakes up every morning and says, Listen, I'm a citizen; that means I don't have to do this and I don't have to do that, and I paid my taxes, or I don't even want to pay my taxes--I mean, the very fact that you could have had--sorry to do this--but you could have had a candidate for President who could publicly be proud of the fact that he'd minimized his taxes by sending his money abroad. You know. And that was a statement of copping out as a citizen. Right? [?] society, whether you are on the left or the right. That that could happen without people saying, Well, that's over, he's out, he can't exist--that shows the trouble we're in. Russ: He did have a little trouble. Guest: A little trouble. But not a lot. Not absolutely. Russ: Fair enough. Guest: It should have been catastrophic for a citizen to say that and want public office.
35:29Russ: But I want to come back to this issue of balance and you might call it engagement. It's not realistic, I don't think, in human nature--I like the idea. I'm a big fan of empathy, by the way, and I certainly agree with you that empathy is what makes us human. Adam Smith felt that way. Adam Smith was a big believer that we should act responsibly toward others. And he argued that we act responsibly toward others because we are worried about our reputation and our self-image. So we obviously have some respect for that idea that we are not just selfish. The question though is: how do we get to that nice phrase, that we should support public activity that leads to fairness? How do you get there from here, when it is going to require power to be concentrated, and that's going to get corrupted, either through the deception of the masses, as you write about in the book, the way we are fooled by the great hero who is going to solve all our problems when in fact he is taking all our money or abducting our family members to do things we don't want them to do, they don't want to do? How do we square that circle? I want to live in a world where my empathy is voluntary, so that that corruption isn't possible. To state it more strongly: Has there ever been a society that got that balance correct and it was attractive? Guest: Well, I think there are several parts to it. First of all, we are never going to accomplish it. And as I said a few minutes ago, you maintain it on a daily basis. And there are two sides to this idea of being a citizen. One of them is: I'm an engaged citizen. And of course not everybody is going to do it; not everybody is going to do it well. But the more people who are engaged, the better. And the more they are what we call 'volunteering,' now, which is in fact a form of engaged citizenship, the better. And some people will do it with their local school, public school. Some of them will do it because of the arts. Some of them will do it because of the street system. It doesn't really matter what you are doing it in. You just get the citizenry engaged. And that is your counterweight. That engagement is in effect your counterweight, in a democracy. Now, in order to actually deliver things--and some of them will have to do with public safety, some of them will have to do with health care, some of them will have to do with public education--you put in place these public structures. Some of them will be local, some of them will be, you know, state, some of them will be national, some of them will be free-standing public sector--I think in one of the chapters I talk about water. And you know, the corruption of privately-held water. It's one of the most corrupt areas in the world because it's an easy one[?] when the money comes in you protection is to buy people off. You can have public institutions which are arm's length from administration and politics, and you can have systems for rotating the leadership of those organizations. So what you want to have is a wide variety of structures and organizations. But the idea that you can do it without them is simply not realistic, because if you don't have them then basically you are handing it over to the private sector, and the private sector, when asked to look after the public good, is immediately and deeply corrupt. Russ: Whoa, whoa, whoa, whoa. Why? Guest: Oh. Well because the profit sector rightly is based on profit. Russ: And what's the public sector going to be based on? Guest: It's not based on profit. It's based on the public good. Russ: But the people involved are human beings, who you've told me are flawed. Guest: Absolutely they are flawed. We're all flawed. We've already agreed on that. Russ: So what's the difference between the public sector saying it's public, saying it's well-motivated, and the actual behavior of the people involved, who tend to look out for themselves? Isn't the lesson of the Founders, and Thomas Jefferson, who you like, that we need restraints on human nature? And we need a system that limits the power of those above us to exploit us? Guest: But the restraints--we need restraints on everything. We need restraints on the private sector. We need restraints on the public sector. We need restraints in every single direction on ourselves. That's why the term is 'responsible' individualism. Not 'wildcard' individualism, turning your back. It is extremely boring and tiring to be the citizen of a democracy. It is far, far easier to be middle class in a semi-benign dictatorship. Life under Louis Philippe or life under George II is a lot easier than life in a democracy. Because actually, if you are in the middle, upper middle class, you know, as long as you are not much below that, not much is asked of you and you get to have quite a nice life. But once you move into democracy, it is very hard work. Because all of us are flawed and all of us need to be both engaged and restrained at the same time. See, this is why it's much more complicated than the rational methodology. So, you know, we know that the free market can work very, very well with high taxes, in the 1950s, right? We know that lowering taxes may or may not produce growth; as we've seen in the last 30 years, it really hasn't produced growth. Because the problem lay somewhere else. So you have to watch the kind of simple ideas of, let's just release people to do what they want. Okay? Then we are not in a democracy. Because we don't have functioning citizens. We don't have restraints on everybody. And we are also confusing things by saying that what drives the public sector is the same thing as what drives the private sector. That's a bad argument for both. I mean, you can argue that one of them--great victories. And I did this in, if you like, the 5th book in the series, called The Collapse of Globalism, that the great victory out of the 1970s was that we started to try to look at the public good through theories of economics, or a theory of economics. And suddenly we are talking about people who, children at schools as clients. You know what I mean. Russ: Yeah. That's a bad idea. Guest: It's a terrible idea. They are not clients. Russ: Well, they are children. Or whatever. Although, I would argue that the public school system does a bad job of treating them as anything. Customers, clients--that's a bad idea. Up to a point. But to treat them as pawns is worse. Guest: Of course. But they shouldn't be either. And that's where you come back to this idea of the engaged citizen, of the idea of what is schooling. It's very interesting when you go back into the 19th century and you look at the rise of public schools, in the United States, in Canada. Britain's a little bit different because you have more of a class system than France and Germany. Germany, very interesting there; Switzerland. And the principle concept of the public education system is: We need citizens. And citizens will be able to do their job better, as engaged citizens, if they are educated. In other words, there's a misreading that's been going on in the last 30, 40 years, that the purpose of education is to train people to do jobs. A utilitarian interpretation. And I think it's fascinating to go back and see poverty-stricken, illiterate farmers saying, I want my kids educated so they can be citizens. They just assume that they'll do better financially. But they know that's not the purpose. So this is part of the deformation of the rational system, that it's led us away from that actual belief that we can do better by understanding the concept of the public good. It's a humanist idea. And we're in deep trouble on that front.
43:42Russ: I just want to make the point again I was trying to make earlier, which I think got confused. I want a world where I can focus on my family, my gifts--whatever they may be--and the crafts that I focus them on, on helping the people I care about and spending time with them. And the idea that I need to spend a lot of time worrying about the government is a world where the government is doing too many things. I want a world where the government's reach is smaller, so I can focus on the things I'm good at. I'm not going to ever be good at solving the problems--for the reasons that you talk about. I, combined with a bunch of others, we're going to struggle to solve those problems. I'd rather solve them in a different way, through empathy and voluntary organizations rather than trying to solve things from the top down. Which I think has been an utter failure. Guest: Well, then you see, I think the problem with that is--it's a lovely idea. But there's some romanticism in there. Russ: Of course. Fair enough. Guest: But the difficulty with that is that you have to recognize the different forces at play. So, you've chosen to focus on "big government". But you are not focusing, say, on big business. You are not focusing on--let's just take the historic example, I don't know, of tobacco industry. Or the oil industry. Russ: Or pollution. Pollution would be a good example to beat me up with. Guest: All of these forces--that's why I keep talking about balance--they need to be controlled in various ways. I mean, that's why you have to have independent public structures. That's why you have to have multi-layered public structures. Complexity is a good thing. One of the problems with a hero-driven society is that it hates complexity. And you know, you and I--how old are you? Russ: 59. Guest: So, I'm 66. So we lived through an era where complexity has been increasingly demeaned as a failure of leadership. You know? Russ: You're right. Guest: And in fact it is extremely complicated. And accepting that complexity allows you then to look at complicated things and come up with clear answers. You take the example of the financial collapse that happened a few years ago and the terrible mistakes that were made about saving the banks. And I just keep saying--I was sitting in Spain the other day when Collapse of Globalization came out in a new edition in Spanish, and I suddenly said, So when did it become more important to save banks than to save citizens? How did that happen? Russ: And even more depressing: When did it become acceptable to pretend that by saving the banks, we are saving the citizens? So that-- Guest: Oh, absolutely-- Russ: Ben Bernanke is revered for saving the economy, when in fact he saved the banks. Guest: Well, no argument from me. But you know, they could have just turned around, I'll do a simple thing. This is what you can do at a complexity; you can say, this week, the government is going to write off all mortgages in the United States up to $300,000. They're gone. So if you owe $400,000 on your mortgage, you still owe $100,000. So, I just picked a number out of the air. So, mortgages that will handle the working class, the lower middle class, and a good part of the middle class. This is an Athenian approach. What have you just done? You've stabilized your home-owning class--so you've removed the essence of panic and despair. You've removed unpayable debt. That debt goes into the banks. You've saved the banks that can be saved--by saving the citizens first. And you've put the citizens in a place where they can borrow money again. You may have relaunched your economy. It's not complicated. It's really easy. It doesn't take a lot of work. And the banks that fall will fall, and so be it. Russ: So, I think that's an awful idea. But, however, it's not as bad-- Guest: A lot of people agree with me, interestingly enough-- Russ: Oh, no no, there's-- Guest: Some of the state bankers actually agree with me but weren't allowed to say it. Russ: It's a bad idea, but it's not obviously worse than what we actually did. Guest: Oh, I think it's much less worse than what we did. Because it actually stabilizes-- Russ: Well, you hope it does. There's the law of unintended consequences, the complexity you are talking about makes it not obvious what the full ramifications of that policy are. It might have-- Guest: Well, I guess what I'm saying is, you know, it's like war. Great generals, really great generals, understand in a crisis that there is a strategic opportunity. And the worst thing you can do is pretend that there cannot be an opportunity, and therefore you slip into the dumb rationality of a first World War general sitting in the trenches. Which is what we did. We basically adopted first World War trench tactics. And we're living the consequences of it. Where that's for a very long time. Russ: I'm just making the point that I think under complexity the best solution is not obvious. All solutions are flawed. In fact--I've quoted Thomas Sowell--I forget whether it's Thomas Sowell or George Stigler who said, In economics there are no solutions, only tradeoffs. And I don't know what the consequences--I can't begin to know what the full consequences of that idea that you just put forward are. I have a pretty good idea of what we just did. Which is to stabilize the banks in the name of stabilizing the economy, and thereby rewarding people who made horrible decisions. Guest: Right. Russ: And telling them that they can do it again. Which is just absolutely horrifying. Guest: Total agreement. Total agreement. Russ: But in both of them, they are ex post solutions to an ex ante problem. Which is that the encouraging of debt and leverage across the economic spectrum that got us into the mess to start with. Guest: Well, no, I agree totally about that. And that was in deregulation. See, this is where you get into difficulties with your argument, which is that it's the regulation of the banks and the separation of deposit banking from merchant banking which keeps a kind of stability. Now, let's--you just ask yourself a simple question here: How did the United States get itself into a crisis whereas Canada didn't? Not because we're smarter and not because we are nicer. But because the Canadian banks, who have a lot of difficulties with because they are big medieval sort of things, but they are controlled by rather old-fashioned, conservative regulation. And they came to the government with the then-opposition, which was a neo-conservative opposition--it's now the government--and asked desperately to be deregulated so they could be modern and fancy like the American banks and the British banks. And at the end of the day the Prime Minister, an old-fashioned 'red liberal,' we would call him in Canada, and the Minister of Finance, Paul Martin, who was one of the people who invented the G20 [Group of Twenty]--just they hummed and hawed, which is a good thing in politicians, and then they just said, no. And as a result, when the crisis came, our banks were fine. And they were fine because they were properly, heavily publicly regulated and there was a separation to a great extent between the deposit function and the merchant function. And that's what was lost. Russ: That was too old-fashioned for us. So we combined-- Guest: That's what saved us. Russ: We combined the innovation of merging the deposit with the investment side. And, the bailout, which we did in advance of these bailouts, to encourage people to keep lending money to people who made risky bets. So I don't blame it just on deregulation. I don't think that's fair. You have to blame it on deregulation plus lots of subsidies to banks so that they didn't have to face the downside. So you said, the upside's yours; congratulations. We live in a modern free market era. But the downside, the taxpayers can have. And it's the worst of all possible worlds.
52:05Guest: Yeah, I agree. But that was in a way a form of deregulation, because it was losing a concept of the difference between a public good and private interests. You know. And it's interesting: when this book was being prepared for--because it was always in print with Vintage and then their license ran out, and Simon and Schuster said, we're going to reissue this with all the others and we're going to do a little forward, where have we gone in the last 20 years. And I thought, okay, I'm going to read the book through--and God knows it's long--and I thought surely I'm going to rewrite the financial chapter which sort of joke around the loaves and the fishes, inflation obviously. And it was focused to a great extent on the African debt crisis of the 1990s, and how it was mishandled by the rational elites, who, curiously enough, because they became narrower and narrower and started to apply technical and moral attitudes. In other words, the debt becomes a moral issue, which it is not. It's a technical issue, and you deal with it appropriately, appropriate rules, and so on. And they basically crucified Africa on the basis of rational methodology. And you know, they destroyed what democracy there was; they encouraged civil wars, they broke the economies down--all in the name of the need to repay the African debts. And in the end, what was it, in 2003 or something like that, they finally wrote off a good part of the debt and Africa began to recover. Slowly. And what these guys have done in this last crisis is they haven't learned a thing. They are applying exactly what they applied to Africa and they are applying it to us. Russ: Well, I don't know if that's right or wrong but I will agree with you that when you have a hammer you keep hitting the nails even if you hit your thumb and it doesn't matter, you just keep hitting, trying to look for nails. Guest: I just left the chapter exactly as it was, because I think most people when they read it will say, gosh, this sounds familiar. They'll realize that we are doing to ourselves what we did to Africa. Russ: Well, your critique of the military adventurism and the increase in the number of wars is even more relevant today than it was then. Guest: And the little chapter on secrecy. Here I have great admiration for the U.S. government, because it's a combination; and you do have these sections of the government which are in the business of keeping track of other sections of the government. So you do actually announce once a year exactly how many secrets you've created in what category. Russ: Sort of. Guest: And the chapter on secrets, at that time--I don't remember; I'd have to look it up--I think the United States was creating about 5 million new secrets a year. Or 6. And I made a great joke out of what could that possibly be; couldn't be that many secrets a year. Now you are up to something like 54 million new secrets a year. The world is more complicated.
55:11Russ: Let me ask you about something you couldn't have written about in 1992. But you wrote about a version of it, which is: television. You have some negative things to say about television, and this is an advance of the Internet, which has made television look primitive. Talk about how information and statistics and data interact with our viewing habits, deluge us, and what your cultural observations are on that. Guest: It's hard to say something original in this area. But it's obvious that we are somewhere in the middle of something, or we may be in the early stages of it. It's just moving so fast, things are created--I was sort of reading a few months ago as President of PEN International (Poets, Essayists and Novelists) where 150 experts on ebooks and they are talking about how we have to retool the whole publishing industry for e-books. You know, as a writer, I really don't care because whatever the method, our books will come out through that method. Providing we get paid. Something. But who is to say ebooks exist in 5 years, at the rate we are going. I wouldn't exactly bank myself on long-term. Russ: They are not going to look like what they look like now. I don't know what they're going to be, but they are going to be something different. Guest: Exactly. But you just saw all these people, they were like Voltaire's bastards--they just had to have, they had to have an answer and it had to be going down this line and the head of one of the national archives got up and said: We're going down the digital route; this is the future. And of course in the end he said: We don't know how to hold onto it. So we're going to have to print out a percentage of it. They don't even understand what they are saying. So, I think we're at a very interesting and confusing point, where people are starting to understand that facts do not produce truth. That there are billions of facts, and that you choose which facts you want in order to come up with an argument. So we're maybe at the beginning of either a disastrous space[?], which could lead easily back to Fascism. Very, very easily. There are lots of signs of the return of the element[?]. The return of populism at such a strong level in all countries, including the United States--those are the precursors of Fascism. Just look at the history of the last time it starts, with the rise of populism. Which is government through fear, manipulation of the citizen, not by government so much as by forces who are attempting to take power. So we are in a very dangerous period. But it's also an interesting opportunity, because people are starting to understand that it isn't a couple of facts that prove something; you have to have some understanding of what's going on. And it isn't only--it includes facts, but it isn't only fact-based. So that leads you back towards humanism. That leads you back towards empathy, and the idea of the public good. And it leads you maybe a little bit away from the old right-wing/left-wing conundrum, if you like, which people were struggling with, which I think Adam Smith was struggling with--and then is totally misrepresented, as you, I'm sure will agree by our departments of economics. Russ: Well, they don't really pay attention to him. So it doesn't really matter. He's just a figurehead. Guest: You know, I go into halls where there are all these economists, and I say, How many of you have actually read Wealth of Nations all the way through? And you get like 10. Russ: It's a small number. Guest: And I say, How many of you have read The Theory of Moral Sentiments? You get two. Russ: Even a chapter. Guest: What they've read is the extracts they were given. They are completely misrepresenting what Smith was saying, who was a humanist, who believed in the public good, who believed in citizenship. He also believed in the market and how to use the market. So, let me say one thing--I can't remember if I said it in Voltaire's Bastards. But I think--people say we are at the end of the Gutenberg era, the end of the printing press era. Okay, fine. But what's interesting about that is that the Gutenberg era is essentially an era of written culture, written civilization. And you could sort of say, and I sort of say, that gradually, as we went further and further into written culture, we became more and more the victims of the details of it. So we ended up, in the second half of the 20th century, sort of where we were in the middle of the 18th century, which is with monks scribbling in the margins of texts. So that's the modern Ph.D.; it's technocrats, it's the management schools pretending they are leading us somewhere when they are leading us absolutely nowhere. They have no idea where they are going, in fact. Probably the single most dangerous organization in the world today, in the western world today, is the management schools. Because they are just creating confusing. And they replaced, kind of, the lawyers, and the priests and the soldiers, as the big force of organized mediocrity. But in a curious way, the lawyers were more interesting, certainly. Now, the law is more interesting than management, I think, by far. Anyway, what I'm saying is that we've come in a curious way to the dangerous end of a written-obsessed society. And this new technology is leading us back to towards the aural[?]. Did I say that in the book? I don't remember. Russ: I don't think so. Guest: I think we're moving--these things go in waves. These waves may last 400 years, 500 years. I think that there are worries about moving back into the aural--for example, populism does well out of that. But there are also enormous advantages, because it can free up the imagination. It can free up intuition. It can free up empathy. And there are great strengths in aural. There are a lot of theories of understanding which are easier to get at through the aural. For example, you'd look at this environmental crisis and to a great extent our inability to move on it has come through an obsession with technical, linear arguing over tiny percentage points. Whichever side you are on. Where our failure has been, our inability to get out of the Platonist into the sort of more inclusive view, where humans are not on top, where we are part of the whole, where we are actually see[?] our own actions as having consequences that are related to the consequences inside, you know, where we live, the water, the atmosphere. That we don't have a privilege, that we actually can't get away with doing anything we want just because we are humans and we are rational. And that's sort of interesting. And it's not romantic. It's actually very tough. And it actually could lead to a very interesting new--not new but healthy--a healthier approach to economics, which is a more inclusive approach to how we do economics, how we do numbers. I mean, you know, we've been saying: How does a company make a profit, and what does profit look like? But we are not including half the costs. Those costs are shuffled off to municipal government, who is going to clean up the river? Russ: We regulate environmental activity now, and we're not living in a free market world. We don't account for them, in a formal accounting of profit; but they don't get to merely push those costs onto others. But I take your point. Guest: Well, I think they do to a great extent. I really do think they do. I mean, I think that we're not really looking at--just the way, for example, the private sector moved away from training; in the 18th and 19th century, and first half of the 20th century one of the big responsibilities of the private sector was to train kids to do jobs. And they gradually pushed that off into the schooling system. And then that's one of the things that caused the schooling system to think that its job was training, not educating citizens. Russ: Well, I don't think 'they' did anything. I think a whole set of social forces emerged that did that. It wasn't an intention. Guest: Well, let's put it this way: it is one of the outcomes of this rise in specialization and this narrowing rational movement. Russ: Fair enough. Guest: So I apologize for the word 'they.' Russ: It's all right. Guest: It justifies the idea of Voltaire's Bastards, that they really lost track. That someone in charge had lost track of what they were doing and why.
1:04:13Russ: Even someone as subtly skilled [?], nuanced, and balanced can sometimes maybe look for good guys and bad guys. And I think one of the challenges that we all face is--you call it an urge to have an ideology, an urge to have a hero: I think one of the most corrupting aspects of the current political debate is that my guys are honest and truth-seekers and your guys are evil and dangerous. And I think that's what we need to avoid if we are going to live as human beings in a thoughtful society. Let's close with the following-- Guest: Can I just say one line? Russ: Sure. Guest: Which is that I agree with you; that comes back to transparency; it comes back to balance. And it comes back to encouraging people to understand things are complicated and people who are in charge have doubts. And they talk about their doubts in public. And then they say things like, you know, we're going to try this. It may not work, and if it doesn't work, throw me out. But I think this might be a way to go. That's sort of--curiously enough, public good risk. Not just an end[?] private sector risk. They are different. But that sort of idea that a leader is somebody who knows how to talk about direction and knows how to talk about uncertainty, and knows how to talk about the public good, as opposed to interest, always interest-based. We are capable of more than self-interest. Russ: I'm going to close on a different note. I was going to ask something else. But your comment reminds me of the following. Your thesis is that great intellectual trends have gone in directions, dug out currents, that they didn't expect to go into. And the result has not been so happy. I want to try a different explanation and get your reaction to it. Which is that: This is just the way we are. It's not a result of intellectual history. I've got a quote here from Adam Smith in The Theory of Moral Sentiments when he is talking about kings and leaders. We would call them authoritarians, tyrants, dictators. He says,
Even when the order of society seems to require that we should oppose them, we can hardly bring ourselves to do it. That kings are the servants of the people, to be obeyed, resisted, deposed, or punished, as the public conveniency may require, is the doctrine of reason and philosophy; but it is not the doctrine of Nature. Nature would teach us to submit to them for their own sake, to tremble and bow down before their exalted station, to regard their smile as a reward sufficient to compensate any services, and to dread their displeasure, though no other evil were to follow from it, as the severest of all mortifications. [http://www.econlib.org/library/Smith/smMS1.html#I.III.18 ]
So, what Smith is saying there is we have an urge to submit. And I would argue, which is I think true--I think it comes from being a child. It comes from the idea of looking for a parent. And we have an urge for solutions. And maybe it doesn't come from Voltaire. Maybe it's deep within us. And that leader who says, Eh, I'm not sure this is going to work; that chair of the Fed who says that, who is honest, who doesn't pretend he knows all the answers--he's dead in the water. There are very few leaders historically who have been able to have a doubt and honesty and humility that you and I find so attractive. Maybe the reason for that is our nature and not the intellectual trends that you've identified. What do you think of that? Guest: I think that is in our nature. I think it's an element of our nature. And it's certainly an element that power structures want to encourage and play. I think there are other elements in our nature which we have to work harder. You might say the one you've talked about is the easier one for us to fall back on. I talked a bit earlier--it's almost a lazy element, where it's a comfort-level element. Democracy or citizenship or balance or doubt is much less comfortable and requires a lot more work. There's no question about it. On the other hand you feel a lot better about yourself. And I do think that Smith--you are trying to make an argument in your time, and of course he was faced with an overwhelming sense that that's what people thought. So he was trying to make an argument to help people get beyond it. I just read recently Vasily Grossman's Life and Fate. I'm trying to see if you read it [?]. And he wrote it in the 1950s. I don't think it came out till 1989. And in it--it's about the Soviet Union and the Nazis and the Jew and the Holocaust within that. And in that there are about 3 chapters on the building of Auschwitz, Eichmann, and the guy who sort of was under Eichmann. And these three chapters, which were not made public till 1989, but were written in the 1950s, long before we had the stuff about the banality of evil [?], there is this astonishing description of the pure rationality of Eichmann and the people under Eichmann, in the building of the structures of the Holocaust. And you look at this and you read this, and you know in what isolation he wrote that. He instinctively somehow understood what had gone wrong and how it had gone wrong. And those methodologies which produced the murder of millions of people are the same methodologies that can produce, you know, good road systems. Or trains running on time. Methodology. Methodology with a sort of denial of ethics, denial of human purpose, denial of responsibility. It was one of the most disturbing things to read because it was written in almost total isolation, since it was written inside Stalin's Soviet Union. Russ: My favorite line from your book, which I can't find, but I will blog on--I've quoted a few that I've enjoyed, but my favorite line is where you say technology has advanced tremendously but we are the same. And we created Auschwitz, and we've done horrific and evil things--and many great things. But this idea that somehow we are new men and women who are going to never do those kind of destructive things again is incredibly naive. Guest: Yeah. Technology is dumb machinery, and we think at approximately the same speed we've always thought. I actually think we might be thinking a little slower, as a weight counteracting the speed of the technology. Thank you. Russ: My guest today has been John Ralston Saul; his book is Voltaire's Bastards. It will, if you are a regular listener of EconTalk you will find many, many passages and parts of it that will enthrall and educate you, and others that will make you mad. It's a fascinating book.

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COMMENTS (56 to date)
lloydfour writes:

Some social sciences need more math. Consider the difference between the psychology of today as compared to the futuristic sci-fi psycho-history concepts as told by Isaac Asimov in his Foundation series.

I think that the The New School in New York was the last university in the USA to offer a PhD in Economic Philosophy. I am not sure that they do anymore. The market forces may have forced them to fall in line with all the other Universities.


Michael Barry writes:

I don't think I've ever heard a more spectacular or extended demonstration of an academic's inability to apply to himself and his own ideas the insights and critique he rigorously applies to others. It seems (to me) that this comes from the ur-mistake of privileging empathy (is there anything more romantic and question begging than empathy?) over self reflection (which is very un-romantic and usually leads to disappointment).

Mike Spooner writes:

Can you really make a rational argument against rationality? Is that not a contradiction?

It seems to me that Saul's argument is one against faulty rationality and hubris, not against rationality itself.

"Ethics is not rational". Really??? That's an extremely scary and dangerous line of thinking, since it implies that people have no reason to be ethical. Why should I be ethical if there's no rational basis for ethics?

There may be cases in which using intuition is better than rationality because our information is limited and our ability to rationalize is flawed, but that is an argument against hubris and faulty reasoning--not rationality!

Ralph writes:

I don't think the public education system is at all designed to produce students that can do jobs. Rather, it seems designed to produce government apparatchiks and dependents that will vote a certain way.

There was a recent study that determined that the average Ivy League school graduate is no more prepared for civic life than the average guy on the street; but the Ivy League grad is MUCH more likely to be a "progressive" on issues and vote that way: for example, what environmental crisis?

It is precisely that shift in education that requires the existence of a 'Hero.' During the elections, listen to the parties, especially one in particular, describe their candidate as brilliant, as if their career as a student determines their ability to be president. Al Gore actually advertised his IQ. People who have been taught that they need a Hero seek one during elections.

I agree that relying on perceived 'rationality' is a fallacy; especially so, given the state of the politicized 'science' being used to justify much of current public policy.

I would love to hear a podcast with John D. Mueller on his Redeeming Economics: Rediscovering the Missing Element. It would be a good follow-up to this conversation.

Thanks for another great podcast Russ.

Keith Vertrees writes:

I don't understand how someone who believes that scientism is a problem can think that central planning (e.g. the welfare state) is a good idea.

He keeps emphasizing that our problems are complex, which is of course correct. But the solutions to complex problems cannot be obtained with a top down methodology.

Martin Brock writes:

Proposing to forgive the first $300,000 of everyone's mortgage (or to require established creditors to do so) seems Heroic to me, so I wonder how Saul distinguishes this proposal from the Heroic Leadership that he laments?

Eric Falkenstein writes:

He dismisses competition as a means for regulating behavior, all we need to do is reconceptualize the public good.

If only there were some books that addressed the feasibility of this approach...

rhhardin writes:

As far as public choice goes, the only narrative that survives is the one that attracts day in and day out news listeners, which is empathy news.

Reason would drive those listeners away, and won't happen. Those listeners now edit every public debate.

Some market response encouraging more reason, not less, in public debate, would be nice.

lloydfour writes:

A TED TALK by political philosopher Michael Sandel on the transformation from a market economy to a market society.

http://www.ted.com/talks/michael_sandel_why_we_shouldn_t_trust_markets_with_our_civic_life.html

Nicholas Conrad writes:

Saul's responsible individual seems to be nothing more than a restatement of Marx' transformed man. I don't think any idea in history has been more deadly than that we can reshape society with a 'better kind' of person.

Dan Hanson writes:

That was an interesting interview. I found myself listening to the first half and agreeing with much of what JRS had to say, but when he shifted to what he saw as the logical consequences of his philosophy it seemed completely contradictory. Bizarre.

He states that we should avoid simple solutions to complex problems, then claims that there was an obvious and simple solution to the financial crisis - just forgive the first $300,000 of everyone's mortgage. Problem solved. Does he not see the contradiction between this and what he claims to believe in the abstract?

He also said that the mere fact that Mitt Romney structured his finances to minimize his taxes should have been an immediate disqualification for public office. Does he not realize that the tax structure Romney took advantage of was put in place presumably to encourage such behavior for the common good?

Of course, we could argue that the tax structure is more likely the way it is because rent-seekers used lobbying power to bend the tax code to their benefit, but how is an individual citizen to know? All I can do is follow the law. I can't see the machinations behind the wall of government and know the true motivations of legislators. All tax changes are advertised as being a benefit to the country by the politicians who propose them, even if very few are.

And in any event, if the argument is that these tax loopholes are a symbol of corruption, that is more damning of the public model of social control than it is of Mitt Romney.

Saul also does not seem to be a fan of representative democracy, since he believes we should all be politically active on every issue regardless of how technical or complex it is. I'm very glad my mother is not influencing nuclear power debates, as she knows absolutely nothing about nuclear power. Why should it be a good thing for her to be involved in that discussion? She can if she wants, but we're not losing anything as a society if she chooses to stay quiet on an issue she doesn't understand.

Saul decries the 'corporatist' model of people congregating in groups instead of acting individually, but the necessary outcome of a hyper-activist citizenry model is that we would all have to fall into special interest groups and allow them to represent us since we can't hope to stay abreast of every public issue. There is a reason the left is all about organizing for action and dividing people into special interest groups.

Michael writes:

I thought this was a great, great podcast.

Mike Spooner wrote:

"It seems to me that Saul's argument is one against faulty rationality and hubris, not against rationality itself."

I think this is a reasonable way to look at what Saul was getting at.

I suspect that his point, though, was that "faulty rationality and hubris" is actually very common - far more common than we appreciate.

Understanding complex systems (in the N. Taleb sense of "complex") is often beyond our capacity to be rational. Part of being "rational" in the best sense of the term, should be to understand the limits of our knowledge. Indeed, one could argue that to be rational requires understanding those limits, but precious few actually do. The Econtalk podcast with Gary Taubes (first one, in 2011) is a great example of the dangers of a "rational" solution to a complex problem.)

A great H.L. Mencken quote applies here: "For every problem, there is a solution that is simple, neat, and wrong." I think these wrong solutions are part of what Saul was talking about.

We see a lot of intelligent people develop rational, fact-based arguments that seem wholly contradictory. When that happens we often choose our side and accuse the other of being irrational, or stupid, or an ideologue, etc.


Michael writes:

Martin Brock wrote:

"Proposing to forgive the first $300,000 of everyone's mortgage (or to require established creditors to do so) seems Heroic to me, so I wonder how Saul distinguishes this proposal from the Heroic Leadership that he laments?"

I think Russ's response to this was exactly right:

" It's a bad idea, but it's not obviously worse than what we actually did."

CC writes:

Funny that he couldn't go for an hour without getting on a rant about how much he hates Mitt Romney. He even apologized in advance of this!

Michael writes:

Michael Barry wrote:

"It seems (to me) that this comes from the ur-mistake of privileging empathy (is there anything more romantic and question begging than empathy?) over self reflection (which is very un-romantic and usually leads to disappointment)."

Empathy is not sympathy. It's not about feeling sorry for someone.

I think that by "empathy" Saul meant trying to understand someone else's perspective (whether or not you sympathize with it.)

This isn't something we do a whole lot of - indeed we often do exactly the opposite.

The same set of facts can mean vastly different things depending on one's perspective.


A.Grant writes:

I didn't really like this guest, I found him too naive. I really dislike his idea of forgiving mortgages under a certain price point because it would remove the value of hard work and possible distort the housing market even further. I've also notice that people like John Ralston place too much blame on banks and not enough on the people who signed the mortgages.

I'm also happy that math/data is taking a higher prominence in all areas of academia. In the past any wacko could come up with a theory and didn't have to worry about proving it. Today we expect statistical proof that a line of thought has merit. I do understand Russ's point about the limitations of quantification but it is nice to see the evolution in our society where we now value data more than ideals/morals.

lu si writes:

I really did my best to take this guy seriously. But pretty much all I got out of it was:

(1) When JSR dislikes something, then it can be expressed in the form y = a + bx ("is linear").

(2) When JSR likes something, then it is "humanist", which he declines to define. (Maybe he means that it can be expressed in the form y = a + bx + cx^2 ?)

And he made it clear that he doesn't understand economics, which is obviously totally fine in general, except that I thought that this was an economics podcast?

Stéphane Couvreur writes:

The dialectic between structure and change, knowledge and uncertainty, rest and movement, is as old as philosophy. I understood Saul’s attack on rationality as being part of this debate. Disappointingly so, unfortunately.

Maybe it started with Heraclitus’ claim that one never bathes twice in the same water, contra Parmenides who contended that truth never changes. It went on with Occam’s nominalism which considered that only unique instances of things have any existence, and that the stable structures and categories that we build upon them are purely imaginary, constructions of our mind, and not an objective reality as the realist Thomas Aquinas was arguing. Again, the empiricist Hume attacked the notion that we could induce any law or regularity from the occurrence of repeated events, whereas the rationalist Descartes attempted to build such knowledge nonetheless, starting from the absolute certainty of his own existence through the sole use of reason. Around the French revolution, thinkers of the Enlightenment insisted that man was a rational being and not the clueless puppet of higher forces. Burke, De Maistre and later Hayek answered that this rationality did not imply that we could design society at our will. Then, there were continental and analytical philosophers, some going so far as to blame the Holocaust on an excess of science and rationality (sic) and it is not over…

This debate is fascinating and important, but the interesting action takes place at the border between both positions, not at the extremes. We need to know at least something if we are to take any rational action, directed toward a goal, while being confident that we will succeed. Deconstructing this rationality in the manner of Hume, Kant, Wittgenstein and the postmodern French theory, is useful at the margin. But getting rid of any structured thought altogether leaves us with no argument to discuss the merits of an action with people who do not share our views. At both extremes, it is indeed legitimate to hit the other guy on the head: if you are convinced you know the right thing to do, why let him try something else? Conversely, if nobody is right and all is a question of whim, why shouldn’t your whims have more weight than his?

In this conversation, I felt that Saul was going too far in the postmodern, deconstructionist, relativist, skeptical direction. As a result, when asked the ethical question “What should be done?”, his answers were commonplaces such as “the common good” or “everybody knows what is to be done!”. Well, no: I don’t know and I would like to discuss it with you, and throwing away rationality with the bathwater without any alternative but rhetoric is not a solution.

“Naturally, it is always those who wish to defend nonsensical claims who argue that there is no true distinction between what is true and what isn’t.” (Jacques Bouveresse, Prodiges et vertiges de l’analogie)

Michael writes:

A. Grant wrote:

"I didn't really like this guest, I found him too naive. I really dislike his idea of forgiving mortgages under a certain price point because it would remove the value of hard work and possible distort the housing market even further. I've also notice that people like John Ralston place too much blame on banks and not enough on the people who signed the mortgages."

While the borrowers are far from blameless, I think banks absolutely deserved more of the blame.

Why? They knew who they were lending to. A fool and his money are soon parted, and deservedly so. The banks were banking on two things:

1. Home prices would continue to rise, so borrowers failing to pay their loans was no risk to the banks. (There would always be another buyer there to rescue a distressed owner.)

2. The consequences of widespread bank failure would be so catastrophic that it would not be allowed to happen. (Even today, most of the big banks are still here - and bigger than before, hauling in record profits).

The banks were playing a big game of "Heads I win, tails you lose". For all the talk about bad incientives, forced subprime lending, etc., the only reason the banks went along with it is because they saw an opportunity to profit by doing so.

None of that makes borrowers blameless, but really they were pawns in the banks' game. As Russ said, giving every borrower $300,000 wrong, but not necessarily more wrong than giving the big banks millions.

A. Grant wrote:

"I'm also happy that math/data is taking a higher prominence in all areas of academia. In the past any wacko could come up with a theory and didn't have to worry about proving it. Today we expect statistical proof that a line of thought has merit. I do understand Russ's point about the limitations of quantification but it is nice to see the evolution in our society where we now value data more than ideals/morals."

I don't think you fully appreciate the arguments from Russ and others like Taleb. (And people like John Ioannides, who would be another great Econtalk guest). As someone who basically studies the scientific literature for a living, it is pretty obvious that a lot of what passes for "statistical proof" is simply nothing of the sort.

emerich writes:

Good comments above. What struck me most was Ralston's certitude, or less kindly, smugness. He is all against rationality, but he is quite certain about how we've gone wrong (especially you, Russ, with your Romantic notions about markets). Perhaps his intuition never fails.

And how can someone near the top of the intellectual pyramid (President, PEN, author of umpteen books on philosophy and public affairs) know nothing whatever about public choice, and be surprised at the idea that government employees aren't all working for the "public good"?

Roman Lombardi writes:

I wish Russ would have held the Saul's feet to the fire a little bit more about his comment, "And by that I mean responsible individualism, not the crazy, particularly U.S., version of individualism that means I can turn my back on society. Responsible individualism." I think I know a lot of people, myself included, who are fierce individualists. I don't know anyone who believes that turning your back on society is part of their philosophical foundation. It becomes difficult for me to take someone seriously when they say things like that.

He did say something that I thought was interesting when he was talking about the difference between leadership and management. I was taught that leadership is about the power of persuasion, management is all about the power of position. In this context, I think we have far to many managers, and not nearly enough leaders.

Richard writes:

Many excellent comments above. I suspect that like the blind men and the elephant, we are each most interested in describing a different nook of Saul's rather expansive worldview.

Here's mine. Saul appears to propose humanistic empathy as a means of eliminating transaction costs at the heart of Coase's problem of social costs. If we all internalized all external costs in the interest of the public good, there would be no externalities. It's simple. All of us, at once, alter human nature to be "humanistic"; also alter our information set to have perfect insight into what uniquely constitutes the "public good". Problem solved. Monopolists will set simulated competitive prices. Polluters will abstain from imposing social costs greater than social benefits. No need for any other interventions. (We'd probably have to alter a few other laws as well, such as those that impose a fiduciary responsibility on owners of corporations to maximize profits, but that's a mere detail). It's amazing that this solution has evaded economists for so long. What were we thinking?

Michael Barry writes:

Michael writes:
"Empathy is not sympathy. It's not about feeling sorry for someone.

I think that by "empathy" Saul meant trying to understand someone else's perspective (whether or not you sympathize with it.)

This isn't something we do a whole lot of - indeed we often do exactly the opposite.

The same set of facts can mean vastly different things depending on one's perspective."

I'm not trying to start a flame war -- I'm just responding to this because I find this topic interesting.
Of course, empathy is something we should all try to do. Most especially, in trying (sincerely) to understand the life experience and concerns that underlies the viewpoint of someone with whom we disagree.
But we are all trapped inside ourselves. And empathy is all to often a (romantic) pretext for projecting on to others support for out own project for remaking the world (or demonizing their counter viewpoint). Nothing looks so exquisitely selfish as a person avidly pursuing his own self interest while wrapping himself in the cloak of empathy.
Empathy is radically un-transparent. In the end we can't know what it is like to be another person, we can only guess and analogize. And it's that obscurity that leaves room for all the romance in the world.
Self reflection, on the other hand, is something we _can_ do. Because we can know ourselves -- at least more than we can know another. And that process should lead us to humility. For instance, it should lead us to think a little harder about the wisdom of writing off $300,000 of "everyone's" mortgage (as if everyone had a mortgage).
With respect,
MB

Jason Clemens writes:

Another fantastic episode of EconTalk. As a Canadian, I need to correct one major analytical mistake Professor Saul made regarding Canadian banking. Canada deregulated its banking system in the 1980s allowing banks to own investment banks, securities dealers, and merchant banks. The only meaningful separation remaining is that banks cannot sell insurance products through their branch networks although they can sell such products. Put differently, Canada's banking system is much more integrated than the U.S. So, Professor Saul's argument that Canada avoided a banking crisis because our system maintained archaic regulations is simply not correct.

Russ Wood writes:

I didn't like this interview: Prof. Saul's comments consistently had a half-baked feel. It reminded me of discussions in college: lots of posturing and occasionally interesting-sounding assertions that turn out not to have been thought through with any depth or rigor (perhaps because he doesn't like logic).

The first half, in which he summarized his view of intellectual development in the West, was the better portion, though even there I didn't feel that I learned much. And I suspect that he could have spent the entire hour trying to explain what he meant by "Ethics is not rational."

Prof. Saul seems to be a nice enough man, though a bit smug. Certainly, he's far more confident than am I regarding the value of his intuitions. What remains unclear to me is why Prof. Roberts wanted to spend a podcast letting him share those intuitions -- I kept thinking that there has to be more coming.

Michael writes:

Michael Barry wrote:

"And empathy is all to often a (romantic) pretext for projecting on to others support for out own project for remaking the world (or demonizing their counter viewpoint)."

I would say that this is what we tend to do instead of genuine empathy. We are more likely to project our own opinions onto others than make a genuine effort to understand their point of view.

Most of our political discourse is based, not on undisputed facts, but on our own interpretations of those facts, or the interpretations of Fox News or MSNBC (who aren't overly concerned with facts to begin with).

Ultimately I think Saul's ideas make sense as a kind of moral philosophy we can use to guide our actions. Not so much on the "public good" side of things as in understanding the limits of our knowedge. In terms of insitutional changes, Saul's ideas are less compelling. It's a lot easier to identify a problem than a solution.

Andrew' writes:

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Greg G writes:

Professor Saul has has easily avoided here whatever pitfalls might have been caused by an excessive reliance on reason.

Joe Nunes writes:


Jason Clemens writes:

"As a Canadian, I need to correct one major analytical mistake Professor Saul made regarding Canadian banking. Canada deregulated its banking system in the 1980s allowing banks to own investment banks, securities dealers, and merchant banks..."

Jason is correct, but what is not stated is that the regulation of the banks (and insurance companies) in Canada did at the time of the financial crisis required higher reserves than in other countries. The decision by Paul Martin to not respond to the call for relaxed rules to better allow our financial institutions the ability to 'compete globally' was definitely a key factor for survival during the global financial meltdown.

Dan Hanson writes:

"As a Canadian, I need to correct one major analytical mistake Professor Saul made regarding Canadian banking. Canada deregulated its banking system in the 1980s allowing banks to own investment banks, securities dealers, and merchant banks."

Yes. A better understanding of what happened with Canada's banks would start with studying the culture of banking in Canada. Sometimes looking at issues through the lens of regulation/no regulation misses the nuance that matters.

In Canada, bankers are more conservative not because they are regulated, but because Canadian banking has its own evolved culture that rewards prudence and fiduciary care. Banking in Canada is best looked at not as a system of entrepreneurial enterprises, but as an institution with its own cultural norms and traditions that extend back in time.

As an analogy: Churches don't have to be regulated to make them be charitable; they're charitable because it's what they do, and there are strong cultural norms within the church that drive that behaviour.

I would like to see a study in Canadian banking carried out by someone like the late Elinor Ostrom.

Utiz4321 writes:

It seems the guest wants to use rationality and the tools developed by rational thinking when it advances his aims and ignore them when they don't. The environmental issue he referenced several times (assuming it is anthropomorphic global warming) he seems fine with using the models and rational of supporters but then seems to dismiss any sort of cost benefit Analyst as excessively rational and holding up the action he feels is necessary. It didn't really seem like there was anything to justify this other than empathy (not sure how this applies to the environmental issue). Further, he express no concerns about using empathy as a guiding principle. While we as human beings share a great deal in common with other people there are important variations between individuals and it is not clear what the value of putting one self in another's shoes (or even our ability to do so) under the condition of the variation between individuals.

Jim Feehely writes:

Hi Russ,

Thank you very much for making time for John Ralston-Saul. Can I claim some credit for suggesting him as a guest some time ago?

All he is saying is that reason is only reliable where you have sufficient knowledge. An inherent hubris of humanity is the quest for certainty and, even worse, the assumption that much of what we know is certain.

Similarly, Taleb's medicrostan and extremistan traverse the same point.

The narrative fallacy, too, is direct product of our deluded quest for certainty and perfect rationality.

As Votaire himself said, 'Doubt is an unpleasant condition, but certainty is absurd.'

Before you criticise JRS, you must read his book 'On Equilibrium', the culmination of the argument he puts here. He very reasonably theorises that humans possess 6 essential qualities, each of equal significance: Common Sense (how we know without understanding) , Ethics, Imagination, Intuition, Memory and Reason. That is how we navigate a world that is wildly uncertain.

Those who reify reason and rationality, essentially the power of the western world, are ensuring that the destruction of our planet. The certainty of many opinions stated here are but examples of that dominant tendency. The wilful misunderstanding of JRS's humanism is, to me, disappointing, e.g.:

- Mike Spooner: Yes you can make a rational argument against the mis-application of rationality.

- Nicholas Conrad: Marx did not imagine a 'transformed man' and neither does JRS advocate that aim. Engaged citizens are the same citizens but with more freedom and power.

- Michael: You have completely missed JRS' point about synthetic 'Heroes' of our modern world. A hero is not someone that is merely admired by many. A hero is someone who subjects him or herself to peril based on authentic empathy. And what JRS is saying about the 'public good' is that is every citizen's responsibility; i.e. to imagine the other and to adjust one' own position where accommodation of the other is just.

- Richard: Economics cannot address the humanist problems JRS discusses. Economics does not even ascribe 'cost' to the damage systems and transactions cause.


Regards,
Jim Feehely.

Mike Smith writes:

To the extent empathy can help, it does so in a relatively homogenous and simple setting. It is hard enough to be empathetic to those that share a cultural canon.

With little doubt, I expect Dr. Saul is also quite a fan of cultural diversity*. But this creates an insurmountable cognitive load/knowledge burden for the aspiring empath envisioned; one who would need to attain the perspective of any and all. How could we all hope, with any fidelity, to put ourselves in the shoes of all the different races, creeds, political attitudes, and genders we encounter today!

Empathy is more readily attainable when there are common and accepted cultural norms. So it seems entirely unworkable at anything like the political scales Dr. Saul was suggesting... unless perhaps, he is simultaneously suggesting we unwind the degree of diversity in our culture. It's been hard enough to bond the Judeo- to the -Christian in practice.

* That wasn't hard to find a cite for: Strength in Diversity: An Address by His Excellency John Ralston Saul

Russell writes:

I liked most of the discussion.

I disliked where Mr. Saul compared how Canadian banks handled the financial crisis compared to US banks. It just seemed too simplistic to assume that US banks just ran hog wild on their own without, to my mind, some serious prodding and assistance by the government (who if I have this right Mr. Saul would think of as the rational actors).

I also disliked the mortgage cancellation idea, which I guess was just his way of coming up with an example of what could be done, since as Mr. Roberts noted there are unintended consequences to something like that which Mr. Saul seemed to dismiss.

For the most part I did find the discussion interesting.

Jim F writes:

I enjoyed the first half of the interview. It seemed to me that JRS was arguing that rationalism had gone of the rails to the extent that our current society enforces a reductionist utilitarian worldview as a matter of dogma. I am sympathetic to this argument. I recognize that he is not calling for the abandonment of reason. Reason is very good at describing 'what' and 'how', but when it comes to describing 'why' (in both a positive and normative sense) reason is necessary but not sufficient.

However, then JRS went off the rails.

He appears to hold the political beliefs and prejudices of an educated, upper class, center left North American. Where those beliefs come in conflict with his thesis, then logic is tortured or abandoned, thinking is muddy and arguments devolve into a lot of "Welllllllll..........."

Disappointing.

Dean S writes:

Interesting podcast.

I think that rationalism has much more appeal for larger organisations, people are a lot easier to manage. The larger systems do not generally deal well with deviations from plan. I work in a consultancy for the mining industry and the big three are terrible at moving beyond "the plan". The business is very much like a super-tanker in it's ability to respond to opportunities. From my experience, I would even suggest that alternative viewpoints and unorthodox thinking is viewed with great suspicion. It becomes a problem because the person you present such thinking to generally views it as a difficult situation - they have to convince their boss of something new and out of plan, and so on up the chain.

Also as an organisation gets larger it becomes (I think) more difficult to use values to guide behaviour.

An interesting point about management and leaders - that neatly summarises the differences between the way the US and the UK (and commonwealth countries) train submarine commanders. The US is very much about ticking off courses and experience and eventually you get there. The UK version is about gaining enough leadership skills then attempting the Perisher Course. If you pass you will be qualified to skipper a boat. If you fail you will probably never set foot in a submarine again. I have a family friend who failed it and he carried the stigma of having failed "Perisher" for the remainder of his career. The payback is a submarine service who is pretty much out there.

http://www.theaustralian.com.au/news/features/cold-war-exploits-of-australias-secret-submarines/story-e6frg6z6-1226742599268

emerich writes:

If you had to identify the thinker who has done the most damage to the modern world, is Voltaire the clear choice? What about Rousseau, whose idea that we are born pure and become depraved by civilization inspired not only the murderous French revolution but Marx and his diverse followers? If we are born pure and become depraved by civilization, then we need to eradicate what depraves us and start over. Sound familiar?

Matt Barton writes:

I don't understand how a conversation about the abuse of reason doesn't include mention of Hayek... Saul seems to regard it as an abuse of reason when it is used for what he regards as selfish ends, but he then relies on the rationality of the "responsible citizen" to do the "public good"...

He completely misses the point of Hayeks' critique of rationalism - than knowledge is limited, and reason without knowledge is bound to be misapplied... The order that is a consequence of the emergent order we call civil society is itself the "public good", and it does not owe its existence to the rationalism of individuals - only to their submission to the rules that allow for its formation...

William Peddlesden writes:

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Robblatt writes:

Good discussion everyone.

What was JRS getting at when he decried the current state of how people make their arguments and how students write their theses? I wasn't clear on it.


Sri Hari writes:

Russ,
Another great podcast !! We could sense Russ's urge to vehemntly disagree with Saul on matters of what is public good. I am with you on it Russ.
It is impracticable at a large scale to understand if one's action or enterprise will be for public good, only market forces can determine it. Perhaps we can have strict laws for deliberate destruction of public good for personal gain. I am very convinced on how much underwriting laws affect free markets, since I learnt it's devastating effects when it is not enforced, listening to William Black's podcast on Econtalk. Private market discipline will have to be enforced for public good to materialise. Public good will NEVER materialise when crony capitalism and lax underwriting laws prevail.

David McGrogan writes:

Like others, I really liked Saul's critique of rationalism...before he started getting rational himself.

I would love to have an Econtalk episode discussing the work of Michael Oakeshott. Of all thinkers from the last 100 years he strikes me as the one who had the most interesting critique of rationalism and scientism.

don rudolph writes:

Is it rationalism that is at fault or sloppy rationalism? I think rationalism built on faulty premises or over reaching conclusions is a bad thing. We can't fault mathematics because people often add together the wrong numbers.

Don

Ralph writes:

In political science literature, Hitler is considered a "rational actor;" meaning, given his assumptions and goals, his actions follow logically. Unfortunately, the 'science' doesn't assess the fact that his assumptions and goals were evil.

Marxism too is completely internally logical. Given Marx's assumptions the conclusions can be reached 'rationally.'

Much debate in our world is the butting heads of 'rational' systems. Solutions require judgements about right and wrong. What is the criteria for that: religion including socialism, or history and the experience of generations? And who does the judging? That's what elections are about.

As John Mueller points out, economics is really a branch of ethics or even theology, because ultimately all economic decisions are moral decisions that involve assessing how we value ourselves and others in an environment of scarcity.

James writes:

Saul seems to believe that reason and "linear thinking" is incompatible with empathy, humanity, and humility. If this is true, then why are the the most educated countries in the world also the most civilized?

I found most of his arguments to be fallacious, and at times he sounded like a bit of a conspiracy nut. If reason isn't the path to enlightenment, what is? Universities aren't preparing people for careers, they are mostly focused on general education...that's part of the problem if you ask me. For someone really big on skepticism he sure seemed convinced of his own ideas.

Rich Brents writes:

"The most frequent fallacy by far today, the fallacy that emerges again and again in nearly every conversation that touches on economic affairs, the error of a thousand political speeches, the central sophism of the 'new' economics, is to concentrate on the short-run effects of policies on special groups and to ignore or belittle the long-run effects on the community as a whole." - Henry Hazlitt

Amos DW writes:

Lot of great comments. Thank you, folks.

Richard Dawkins once pointed out that resolving complexity in the universe by saying, "And therefore, God," was no way to actually solve the problem.

Joseph Stiglitz does the same thing with economics; he looks at the imperfections of market systems and says, "And therefore, government."

Saul seems to do much same thing, but all the way into interpersonal behavior: "And therefore, humanism."

There was a comment above that I need to address on logic, though. Inductive reasoning is only one kind. Deductive reasoning is another. I would not necessarily say that Nassim Taleb was interested only in inductive reasoning. Heuristics are also general principles (deductive).

The problem when organizing society isn't whether we are using too much deductive reasoning or too much inductive reasoning. After all, WHICH data should you be using? If your data is "Canada has cheaper drugs," you haven't thought too much about what happens if America goes the same route.

Collectivists insisted that we give Socialism a good, hard swing in the 20th century while its critics deduced the horrors it would inflict. Guess who got that one right.

The problem with organizing society by reasoning isn't the kind of reasoning you're using, it's that you're organizing society.

Kevin Smith writes:

Its hard to best the summary of this discussion given by Greg G.

I will not try, but I will add some different things.

My impression was that Saul is a brilliant, well read, interesting, and thoughtful person that I would love to have as a dinner guest but would not let run a Circle K or the PTA (much like my impression of the president).

Like many intellectuals he gives other intellectuals alot of credit but I have something much more simple: Reason "works". Society has come to deify reason because reason to most is a code word for science, technological advancement, etc. It is obvious that clean running water and iPhones are superior to what we had before while the other areas of humanity are little improved. So why not run with the clear winner, the thing that is lifting humanity from its usual state of poverty. It is easy to see why we as a people prefer the tools that demonstrably benefit us over those that are more ambiguous (of course this is simplistic, intuition and imagination have a huge impact on our scientific progress).

Finally, it continues to amaze me that after the corporate excess of the 20th century and than the multiple orders of magnitude more damage done by governments in the 20th century we still have people who fear corporations and revere government. Be cautious of both, but realize when one goes overboard it destroys civilizations, the other is a mere nuisance.

Finally, as others said, any plan that needs a "new man" or wishes we were the "old men" of times of yore is...a very bad philosophy or idea. We should be more educated and I wish everyone was more "righteous" for lack of a better word, but we live with the humanity we live with, pining for alternative men or much worse trying to create them is a bad idea.

Todd D. Mora writes:

I found the podcast very interesting and I agree with Dr. Roberts that some points I agree with and some points I was very much in disagreement.

The issue of comparing the Canadian and US mortgage situations caused me to actually audibly rebut the premise that somehow US banks were wholly responsible for the crisis. Mr. Saul failed to note that the US government created the moral hazard of federally insured mortgages combined with a "common good" of home ownership that caused banks to lend to people who had no credible reason to borrow money.

My understanding of the Canadian system is that the mortgage industry is a private industry that works on a profit basis (something that Mr. Saul found to be less than desirable). The profit model actually prevented the Canadian market from experiencing the problems the US market did and thus proved to be a very good "regulation."

Overall and excellent podcast with a lot of thought provoking ideas. Thank you.

Michael writes:

Todd Mora wrote:

"Mr. Saul failed to note that the US government created the moral hazard of federally insured mortgages combined with a "common good" of home ownership that caused banks to lend to people who had no credible reason to borrow money."

Well, this is probably how the big banks would justify their actions, but I think you are ignoring the bottom line: ultimately, every penny of bank lending to homowners was made because banks expected it to be profitable. Certainly there were some bad incentives at play, but banks were not forced to anything - they were eager, willing participants. Indeed, the government is unlikely to ever succeed at putting banking incentives in place if the banking industry is opposed to them.

Chris Koresko writes:

This was by far the most frustrating EconTalk podcast I've heard over the last year. Ralston was full of ideas, but few of them seemed very carefully thought out or supported by either facts or arguments.

Maybe that was more a failure of his presentation than his intellect -- or maybe it's just my own unfamiliarity with some of the topics -- it's hard to be sure. He kept making sweeping statements, then saying something to the effect of, "as I'm sure you know," and leaping off to another subject before the interviewer or the listener could begin to think through what he just said. I've been involved in conversations like this, and it hasn't been satisfying. It creates the impression that the speaker is trying to awe and baffle the listener rather than inform or educate him.

I much prefer a discussion which is focused on a few clearly-defined and well-supported ideas to this hodge-podge of words.

EconTalk is one of the highlights of my week, and this one was a rare disappointment.

Trent Whitney writes:

Russ,

I had read most of Saul's book before the podcast, and have listened to the podcast for a second time....and my conclusion is that he's constantly running around in circles. This must have been a very difficult interview for you.

* You asked for background/comments on his strong assertion that social sciences, like economics, were becoming far too mathematical....and he backtracked immediately as it was far too unkind a thing to say about mathematics.

* He decried simplistic thought, especially when it comes to public policy....then he posits what he calls a simple solution to the mortgage crisis that would have solved almost everything.

* He warns against facism and dictatorship, yet he has no qualms against the regulations dictated by bureaucrats. We know there's no such thing as a benevolent dictator....why do so many people (and so many intellectuals) have so much faith in what they believe are benevolent regulators???

* And then after he argues for the need for regulation in so many areas, he talks about how the future of publishing may/may not be in eBooks....that some forum will eventually emerge, and writers will still be okay as long as they are paid for their work. Well, in his world, who decides that regulation is needed in Industry X, but not needed in the Publishing Industry?

I agree with many comments that this was a frustrating/disappointing podcast to listen to...but I also think that you tried very hard to get him to focus & to challenge him on multiple points...and he'd go off on another tangent. The one that still gets me is his idea of how much constant effort he thinks Americans should be putting into our government. Great. That's all our economy needs is for all 300+ million of us to be rent-seeking from our politicians and bureaucrats...talk about a massive deadweight loss. And your point was most poignant - our most valuable natural resource in this life is our time....why should you be foreced to give up any time you want to spend with your family (or anything you want to spend it on) to spend that time on anything having to do with government???

Pat Sweetnam writes:

For me the real wonder of ECONTALK is that, as a Canadian immigrant to the U.S., this is the first time I have made it to the end of anything that involved JR Saul. More a tribute to Russ Roberts I think than JRS.
While I agree with Christie Blatchford that it would be nice if American Republican legislators could be at least as fiscally conservative as Canadian Liberals, Saul's notion that Chretien and Martin saved Canadian banks is just nonsense. However, one universal constant that seems unassailable is the knee-jerk anti-Americanism of the effete Canadian left.

Ron Michaels writes:

[Comment removed for being ad hominem. --Econlib Ed.]

SaveyourSelf writes:

Around 28:47 Saul said, “What I'm talking about is that the more you are engaged as an individual in the public good, empathy, you know, the idea of imagining the other and what it is like to be the other--the more you are engaged in that way, then the more individualistic you will be, and be able to be. Because there will be this balance between your good and the public good. And there will be room to be selfish there. But it will not be the dominant element. The dominant element is empathy. And you know, we know that's what humanism says. We know that that's how societies function best, is when we have a sense of the other and how we all function together.”

  • First, Saul’s use of the word “public good” does not seem to be the traditional definition used in economics. This caused me considerable confusion during the interview.
  • Second, his optimism concerning the utility of empathy is extraordinary. Empathy is cool and all, but it is not the panacea he seems to think. Empathy is primitive. It allows us to share some very basic ideas like fear; pain; dread; joy; happy; sad; depression; or excitement through body-language; touch; tone-of-voice; and smell. Such understanding can be shared rapidly, without words, and without the requirement that everyone experience the original stimulus. Empathy is ancient and useful but the concepts it communicates are simplistic. It is not useful for integrating and managing the enormous amount of data, knowledge, and experience that even a small number of people bring to bear on a community decision. Empathy MIGHT help some decision-makers realize that their actions are harming others after the fact--which is important since Justice [avoiding or mitigating harm] is required for a society to thrive--but empathy is no substitute for language and symbols for communicating large amounts of data on sophisticated concepts to large numbers of people.
  • Third, his idea that there must be a balance between “your good and the public good” seems awfully limiting. It suggests increasing one decreases the other. Isn’t it true in a world where interactions are voluntary-informed-competitive-and Just that the individual good is the same thing as the public good? That is to say, they move together.

  • Forth, what is humanism? Is that a human-centric worldview? Why would that be a good thing, especially if we are concerned—as he is—with negative environmental externalities.

  • Fifth, his comment “we know that that’s how societies function best” is obviously false. If we did, there would be no reason for him to write his book.

Miles writes:

[Comment removed for rudeness.--Econlib Ed. ]

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