On inequality

Inequality is inevitable (because we’re all different), and it isn’t necessarily wrong (if we value the freedom to make meaningful choices) and doesn’t necessarily have to be corrected (because we value diversity).

Once we’re clear on this, we’re forced to be specific. We can ask which kinds of inequality we’re not prepared to tolerate, making sure that we’re clear about where they come from and why they’re damaging (“because I believe in equality” isn’t an answer) and start talking about what we can do to make things better.

Then we can be the ones to go first and start to do those things.

Resource: Tim Harford on 50 Things that Made the Modern Economy

If you haven’t thought much about economics, this series from the BBC is a first-rate introduction to a lot of key ideas about how markets work.

Each episode is about ten minutes long and features at least one interesting, often entertaining and sometimes surprising ‘thing’ to illustrate fundamental principles of economics.

There are lessons galore about how technologies take off and spread, change culture, transform the environment (human and physical) for both good and ill, and the unpredictable nature of emergent order and complex adaptive systems.

Seasons one and two are here at the BBC, and downloadable free wherever you get your podcasts.

There’s also a book (amazon).

Tim Harford is great – The Undercover Economist and More or Less (also on the BBC) are well worth checking out too.

Econtalk: Mauricio Miller on Poverty, Social Work, and the Alternative

This is a really interesting episode of Econtalk, and worth a listen.

Highlight 1: Accurate description of poor communities

A couple of things here really resonated with my experience of living and working in low-income communities in Jakarta:

  • Miller’s descriptions of the resourcefulness of people in poor communities – that many people in poor communities are hard working and resourceful and demonstrating impressive amounts of willpower and – in his word – ‘talent’ just to get by on low incomes.
  • The dynamism of poor communities, particularly in terms of people moving in and out of poverty – apparently backed up by statistics. According to Miller, although 15% of the U.S. population are ‘poor’ at any given time, the majority of those will move above the poverty line, to be replaced by other (temporarily) poor people – i.e. people who lost their job a month before the census and have no income, but will soon return to work. Miller says that only about 3% of the population are ‘long-term, generationally poor.’

Highlight 2: What happens when users pay for services

This section also really reflected my experience at the charity I work for, where a switch to a ‘user pays’ model of service (rather than a purely donation-based, ‘charitable’ model) made us more responsive to the needs of our users, and drove up the quality of what we do. Here’s Miller:

Mauricio Miller: …I wouldn’t bring my own family through [my own social services]; now I had money–

Russ Roberts: Why not?

Mauricio Miller: Because they were paternalistic. My mother hated that. She said, ‘The social workers are really nice, but they take away my pride.’ And certainly the racists would take away her pride, too. You know. And sexual harassers would take away her pride. But even the people who were trying to be really nice would take her pride away. And so, that was one of the issues. The other issue is that the programs that I had were sold–and the structures were to sell to get funding. Funders don’t really understand circumstances on the ground. But, they get certain interests. And so you have to shape your program based on what they kind of want in order to get the money. And that, then you are held accountable to those kind of standards. Where, I actually had started two businesses within my own non-profit, that, when you are running a business, you have to meet the customer demand. Not the investor demand. You have to really meet the customer demand. And so, somehow or other, when I wanted to adjust my programs, they were not responsive to my customers. And so, for me, my social service programs were too structured, too paternalistic. They did not recognize or meet that market demand. And now that I was middle income and had money, I would instead, when I had to help my nephew and nieces who struggled with drugs and all kinds of things, I would go to private sector services, because they would say, ‘Do you want us to send the advisor on the weekend, or the evenings?’ Or, ‘What’s convenient for you?’ and ‘Would you like this program?’ I was given choices. Because I had money. But people who were poor didn’t have those kind of choices. And so, why would I want to take my own family, that had struggled with everything that everybody else was struggling with what was out there in some of these neighborhoods: Why would I take them into a system that was so structured and was not responsive when I had money? So, money made a difference. And I realized that: No, I wouldn’t bring my own family.

Russ Roberts and Mauricio Miller – Econtalk

In the end, I wasn’t completely convinced with Miller’s model – or didn’t feel completely clear about what he was offering – but these bits were excellent – and true.

Peter Drucker on social responsibility

A business that does not show a profit at least equal to its cost of capital is irresponsible; it wastes society’s resources. Economic profit performance is the base without which business cannot discharge any other responsibilities, cannot be a good employer, a good citizen, a good neighbor.

But economic performance is not the only responsibility of a business any more than education is the only responsibility of a school or health care the only responsibility of a hospital.

Every organisation must assume responsibility for its impact on employees, the environment, customers, and whoever and whatever it touches.

That is social responsibility. But we also know that society will increasingly look to major organizations, for-profit and non-profit alike, to tackle major social ills. And there we had better be watchful, because good intentions are not always socially responsible. It is irresponsible for an organisation to accept – let alone to pursue – responsibilities that would impede its capacity to perform its main task and mission, or to act where it has no competence.

Peter Drucker – Managing in a time of Great Change

Externalities

We’re familiar with the externalities of industrial production and consumption. They’re fairly predictable, and often visible. Even air pollution, the silent killer, is usually visible when it happens, before the poison spreads. It’s a perfect example of a negative externality – something put into the world that everyonepays for, not just the producer or the consumer.

What are the externalities of your project, program or product? What invisible outputs do you have?

  • What does your way of working with users, customers or clients say that your words leave out? How do they see you seeing them? Do they leave feeling smaller, more pressured, less competent – or with a greater belief in their ability to get better and to make a difference? (As you teach that vital knowledge and share those crucial skills, what else are you teaching?)

  • As you manage your team, how do they feel when they leave the office? What do they take home with them? What are your externalities for their families, friends and neighbourhoods?

    • What about your suppliers – the people who serve you as you serve others. What externalities do you have for the people in the photocopy shop, the electrician who comes to the office, or for your cleaners?

  • What about your suppliers – the people who serve you as you serve others. What externalities do you have for the people in the photocopy shop, the electrician who comes to the office, or for your cleaners?

Not polluting – ‘do no evil’ – isn’t nearly enough.

Debt to society

If you want to talk about our debt to society – the question of what we owe the other people who share our culture, and share the planet with us – it’s helpful to start with this: without other people, you’d be dead. Even if you’d somehow managed to be born on your own, without other people you’d never have made it.

But ‘debt to society’ is the wrong way to frame it. It helps to think less about giving-up-what-is-rightfully-ours because of what we owe (though we do), or because we feel guilty or obliged (though perhaps we should), or because we’re afraid of what will happen if we don’t (though there might be good reason for this).

What do we want?

Let’s talk instead about contributing towards what we want, and the benefits we might expect to enjoy if we lived in a kinder, more generous society. A society – just for example – in which as many people as possible get a leg-up when they’re just starting out (by being born, or starting school, or starting their careers), and the hand-up that makes all the difference when they’re down. We know that these things don’t just make it better for other people’s kids, but for our kids.* A better society is better for all of us: no-one wants unhealthy, poorly educated, tormented neighbours. (And no-one wants selfish neighbours either).

We all do want human flourishing, and most of us want it for everyone. We don’t even disagree that much about what it looks like, just about how to achieve it** and sustain it. And most people want to contribute towards achieving it.

Better

If we focus on “better”, if we say the words and describe it, it becomes much easier for people who usually disagree with us to say, “Actually, I want that too – but I think we’ll get it by doing this...” And it becomes easier for us to agree to try one way, then the other – or to find a different, better way.

And focusing on contribution towards building something better is a great story. We can feel good about what we’re giving, a part of what we’re building, and hopeful about what we’re moving towards.

*And at the end of the day, they’re all our kids.
**Perhaps particularly about whether a
flourishing life is something that can be given.

Tim Harford: slow-motion multitasking

I love Tim Harford‘s stuff, and I’m surprised he hasn’t featured here before.

50 Things that Made the Modern Economy is a delightful romp through economic history from cuneiform to mobile money transfers by way of clocks and the Haber-Bosch process. For a more detailed review try this one by a chap called Ian Mann, who finishes off by describing it as ‘an intellectual smorgasbord’. He’s right… and it’s free on the podcasting app of your choice.

It’s a long time since I read The Undercover Economist, and I mainly remember the discussion of the positioning of coffee shops in the great opening chapter, and a story about a library with a leaky roof towards the end (?) where it tailed off…

I was going to recommend Messy, but it turns out that the book I was thinking was actually Adapt, which was, as I recall, quite good. One of these books contains a good riff on how a large pile of papers on your desk is actually quite a good filing system – as long as you put the last piece of paper you touched on top.

Intellectual CrossFit

T.H. is rather prolific, but I came here to recommend a recent TED talk, A Powerful Way to Unleash your Natural Creativity, in which he casts multitasking not as the villain but as the unlikely hero of creativity, intellectual enrichment, and general greatness… as long as it’s multitasking of the slow-motion variety, which he describes as intellectual CrossFit. I can only assume he’s read Hinterland and my posts on networks and hybrids.