The first post in this series outlined the purpose of Jeffrey Friedman’s final book, Power Without Knowledge: A Critique of Technocracy. In this post, I’ll be overviewing a key problem facing an effective technocracy, in Friedman’s view: the problem of naïve realism.
Recall the four types of knowledge necessary for a successful technocracy – knowledge about the existence and severity of social problems, knowledge of the underlying causes of those problems, knowledge about how to alleviate those causes effectively, and knowledge that the costs (including all unintended and unanticipated costs) of such alleviation will not exceed the benefits. Friedman defines social problems as “epistemically complex” when they “lack self-evident solutions.” For problems that are both epistemically complex and society-wide, possessing all four types of knowledge accurately and simultaneously seems at best staggering, and at worst insurmountable. To the naïve realist, however, “common sense” is all that’s needed to establish all four types of knowledge. Naïve realism is often denied as an overall worldview, while still being asserted about specific issues:
For example, someone might say “For outcome X, there is a gap of Y magnitude between Group A and Group B. This difference is obviously the result of the history of prejudice against Group B. In order to combat this, we need to implement these policies to help boost the status of Group B, which will close the gap and right the wrongs of history.” This is naïve realism in action.
A sign that the truth isn’t obvious is widespread disagreement about what the allegedly “obvious” truth is:
However, the naive realist often fails to grasp this:
We might attempt to bolster our interpretations with research supporting them, but this implicitly forfeits the idea that our views are self-evident:
The necessity for such research also undercuts those who claim their knowledge is rooted in their “lived experience.” As Friedman notes:
Additionally, just like what might seem obvious to people is frequently contradicted by what others claim is obvious, the lessons supposedly inferred from “lived experience” also frequently contradict each other:
Because the naive realist thinks all four types of knowledge are intuitively obvious, they are blind to the possibility that some or all the necessary knowledge may be counterintuitive. Naive realism is particularly ill-equipped to deal with counterintuitive policy outcomes, or the possibility that policies might backfire in unexpected ways:
How might a naive technocratic realist respond to such claims? She might assert that they are inherently implausible – regardless of whether the posited mechanisms are plausible – because self-evident truths cannot possibly be counterintuitive…Such a claim is inconsistent with human fallibility, and is therefore – I take it – unreasonable in principle.
It seems to me, then, that technocratic disagreement is always reasonable, even discounting the difficulty in obtaining the first three types of technocratic knowledge. Even if one considers knowledge of the significance of social problems, of their causes, and of the efficacy of the proposed solutions to be self-evident, one cannot deny the very possibility of Type 4 knowledge failures without making unreasonable claims about the reach and accuracy of human knowledge. Thus, contrary to what the naive technocratic realist believes, technocratic policies that seem self-evidently necessary might do more harm than good.
Naive realism is plagued by these and many other problems. But setting aside the problems of naive realism, what are its consequences? How does the adherence to this view play out in the world? That will be the topic of the next post.
Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.
READER COMMENTS
Anders Jönsson
Jan 16 2023 at 1:52pm
I would say policy makers act as naive realists not, or not only because, they do not know better, but because they have strong incentives to do so. Thinking of institutions as flexible and responsive with appropriate incentives, as some imagine the promise of new and improved industrial policy, is too abstract for anything you could explain to a voter. So is thinking in the long term: if we invest in innovation rather than subsidies, there is no reason to think we would come up with a range of ways to harness energy and replace fossil fuels in a few decades – but policy makers, probably fully aware of such a basic point, cannot sell a message like that – he or she needs something tangible to see through in the next stint in office.
That explains all the plans that Democrats wave around. But looking towards the Republicans, perhaps the problem is the LACK of any such plans. A free-market, innovation focused approach to replace fossil fuels should be a non-brainer. And rather than lambasting regulation wholesale and boasting about cutting them, explain that you are not just cutting, but ensuring to cut the ones that do more harm than good and that are based on assumptions long longer valid. Would you trust Trump in his zeal to ensure the EPA cuts were the right ones, rather than the ones that lacked resistance or enjoyed support from lobbyists and constituents?
And on health care, why not point out that what we have now is pretty much the worst of socialism and crony capitalism and almost no of the benefits from free markets. Socialised health care systems have better outcomes at about half per capita and a third of the expenditure in real terms in northern Europe. Why not do something as simple as replacing all government subsidies with a simple guarantee to cover expenditure exceeding a fifth of income (less for the poor)? That would address the possibility that people have to choose between health and penury AND open up something like an actual market for the 80% of expenditure below the threshold. People would have enormous incentives to reject the 20 k list price at the Mayo clinic for gall bladder surgery, while perky upstarts would crop up providing the service for a tenth of the cost. We would still need insurance for the people that prefer not to risk a fifth of their income, but it would be much simpler and with time competitive.
So far, I see no such well considered solutions from the US right, which appears hamstrung by its insidious relationship to a populist representing pretty much anything except conservatism, and a curious obsession to cherry picking the most cringeworthy moments from the left – a particularly doddering Biden, perhaps, or a rambling and patently insincere and opportunist moment from his vice president – and lampoon it using media where the line between commentary, comedy, and news have by now disappeared completely. Particularly illustrating are earnest claims that Trump, of all, would have done an excellent job of pulling out of Afghanistan – a situation that was impossible not to bungle in a major way.
At least naive realism lends itself to goals and accountability.
Kevin Corcoran
Jan 16 2023 at 5:08pm
Hello Anders!
You are correct that “naive realism lends itself to goals and accountability” – the difficulty, however, is that it might lend itself to goals that are unattainable by technocratic means. Accountability is a useful tool, but there is little to be gained by holding someone accountable for not achieving what cannot be achieved. Of course, if someone claims to be able to achieve the unachievable, they should be held to account for the inevitable failure, for the time and resources they wasted trying to achieve something they should have known was beyond their abilities.
I suspect you’re correct that many politicians merely feign being naive realists, and know that much of what they claim to be able to do is beyond their abilities. What fraction of politicians that is, I have no idea, and lacking mind reading abilities I can only speculate. However, Friedman does suggest that politicians may deliberately shift away issues of complexity in favor of moralizing against the “other side,” thus further motivating their base of support. As he puts it:
Anders
Jan 17 2023 at 1:12pm
I agree, but would like, as Germans say, to add some mustard to your sausage (I swear, that is a common expression).
On the issue of naive realism (a strange oxymoron) leading to unachievable goals: This is definitely the case, but not as much because of naivite as of the incentives politicians face. Angela Merkel, a post-doc researcher in quantum chemistry, knew full well that her Energy Pivot (Energiewende), calling for phasing out fossil fuels AND nuclear and relying exclusively on green, renewable energy sources (a term no one has managed to explain to me with any precision) by 2030. She must have also foreseen that nuclear closure would result in increasing use of fossil fuels, in particular the dirtiest kind, brown coal. Knowing Putin and his intentions, laid out in detail back in 2007, she could also not possibly have assumed Germany could remain highly reliant of Russia for the natural gas that have no replacement as chemical industry input and residential heating.
BUT she could safely assume things would not blow up until after her departure, leaving her, from the German right wing, as the figure that took by far the most resolute step in the direction almost all Germans supported.
She was not naive. She was reacting to incentives, leading to the outcomes you mention and allude to. Most bizarrely, she created a state of affairs when the next government, with Habeck from the Green Party, which of course could not possibly afford NOT to be more radical than the right wing Merkel led, presiding over massive buildup in fossil fuel capacity and reliance, a cringeworthy extension of the few remaining nuclear reactors that his party had, with vehemence far stronger than in the rest of Europe, opposed, and echoing President Carter in calling for restraint and celebrating how great it is to put on an extra sweather and turn your thermostat down to 64 rather than 71 degrees. And Habeck is one of the stars of the party and far from naive.
The obvious solution, as any real or hobby economist would point to, is of course to stop subsidising expensive, intermittent sources that anyway require duplicate capacity using fossil fuels on standby; to tax activities that create emissions to increase and stabilise prices in a predictable way; and to invest heavily in basic research around scores of different ways to harness energy to see what works not only without emissions, but better in most senses, compared to fossil fuels.
My bet is Merkel knew this too. She probably even knew that she would create a situation where such a switch would be even more difficult as it would lay open the uncomfortable fact that we need time to find out what works and is sustainable and affordable and reliable. Yet she championed the switch, including from nuclear – in a country with stringent, costly, overzealous safety standards based on a near accident that happened in a country at constant risk of earth quakes and tsunamis to a power plant right smack on the coast.
My point is that sure, many people are naive. But that does not matter much compared to incentives. Turkmenistan, a resource rich country with a regime close to that of North Korea, pretty much outlaws private sector activity beyond petty commerce, and maintains an artificial exchange rate ten times the black market rate that does little but create enormous rent seeking opportunities and subsidise imports in a country desperate to diversify exports (99% natural gas). Do we really think the president and all the highly educated advisors surrounding him are stuck in a naive, Utopian view that that is the best way to promote prosperity in the country?
But it is not only Turkmenistan. A cato blog post from a frustrated energy economist related story after story where he pleaded convincingly for market pricing for energy and, in California water. The problem was NOT that he failed to convince. In fact many of the congress men and women told him they knew his approach was the best one, but that they would have to vote against it.
And, of course, in the US, Pew research found a majority in favour of federal legislation liberalising abortion in the first trimester and restricting it more and more after that. Same for almost all politicised issues: even the most fervent promoters of Bidens exponential fiscal policy also indicated low confidence in the ability of the federal government to spend the funds on projects likely to yield the highest return. Even a health care proposal rechanneling all federal spending to funding health care costs that exceed a certain percentage of income, leaving 80% of spending in what might actually become a competitive, actual market driving down costs massively, garnered strong support from both parties (the intro indicated the obvious fact that socialising medicine at current costs would require a massive increase in tax receipts from the middle class).
I have spent decades advising developing and emerging countries on economic policy. I have showed them the consequences of, say, severe contractual obligations placed on foreign investment, including mandated levels of employment and production, among many other things. Few disagreed, at least after some discussion. Nothing happened. Kindergarten level public choice analysis accounts for almost all of this, not naivite.
Am I missing something here? I hope so, because naivite – that is something we can fix. In fact, however, you can explain many failures of donor-funded programmes by referring to the assumption that all our beneficiaries need is a better understanding of the economics.
Comments are closed.