One of the
biggest obstacles to clear thinking in the social sciences is the failure to
adhere to methodological individualism. Rather than taking individuals as the
basic unit of analysis, many fuzzy thinkers arbitrarily assign people to
collectives and assume that the collective has separate interests and
characteristics, different from the individuals that make it up. Such thinkers
will often use the term ‘we’ to denote the most common collective: the territorial
political unit to which the reader and the thinker belong.
This kind of
thinking, and its perniciousness, is illustrated by the saying that:
“government debt doesn’t matter, because we owe it to ourselves”. To the
methodological individualist, several questions immediately pop up. Who are the
individuals that are the creditors in this arrangement and who are the
individuals that are the debtors? Pursuit of this line of thinking will lead to
the conclusion that the creditors are the holders of government bonds, while
the debtors are the future taxpayers. For the government does not create
resources, it takes and redistributes resources. And the people it is taking
from must necessarily be future taxpayers or inflation victims, if the
government is not to renege on its debt. The absurdity of the quoted statement
can easily by shown because it implies that defaulting on the government debt
would be equally as irrelevant as piling it on! If ‘we’ owe it to ‘ourselves’,
then if ‘we’ stop owing it to ‘ourselves’, then there has been no change. But
this is absurd: everyone who held government bonds would be significantly
affected if they were totally repudiated. That this might actually be the most
tolerable and ethical solution to the public debt problem is not the issue at
the moment, the point is that the paying of government debt is a redistribution
from future taxpayers to government bondholders.
(Note: This example and discussion was inspired by the
following Murray Rothbard article: http://mises.org/daily/1423)
Another
common use of the obfuscatory ‘we’: “we (Canada) won three gold medals at the
Olympics”. This might seem like a relatively benign use of the term, after all,
everyone residing in the territorial borders of the political unit called
Canada can properly be called Canadian. But, the methodological individualist
would inquire, did ‘we’ really win any gold medals? Athletes, who were on team
Canada, through their excellence in a particular sporting event, won some gold
medals. What did the random Canadian insurance broker do to contribute to this
success? One could argue that he paid taxes that went towards covering part of
the expenses of the athlete, but this just means that the government of Canada
forcibly took some of the insurance broker’s resources and gave it over to this
particular athlete. But this operation is not enough to fuse the athlete and
the insurance broker into a ‘we’ that is winning anything! What if the athlete
doesn’t want ‘us’ to win the medal, he/she wants himself/herself to win the
medal alone? What if someone in the ‘we’ does not want to be part of the
Canadian ‘we’? Is there a way to get out of the Canadian ‘we’, or are you in
the Canadian ‘we’ forever, like it or not, no matter what this ‘we’ is said to
have done? What if, instead of something benign like showing excellence in
athletics, the ‘we’ in question is off killing foreign civilians in the Middle East,
or wantonly robbing and imprisoning its own people? Is there still no way out
of this all-encompassing ‘we’?
The examples
abound, sometimes even including all of humanity: ‘we’ are destroying the
planet, ‘we’ are going to blow ourselves up with nuclear weapons, ‘we’ need to
help the poor, or the Africans, or cure cancer. But all this means nothing. The
methodological individualist will ask: ‘who’ is destroying the planet? ‘Who’ is
going to blow people up with nuclear weapons? ‘Who’ would be materially
responsible for doing these charitable things mentioned? Only once we know specifically ‘who’ is
doing something negative can be explain why they are or why they are being
allowed to, and hopefully think of a solution. Only once we know specifically
‘who’ will be responsible for providing the resources for some project or
another can we decide whether funding the project in this way will be effective
and moral, and what its effects on the incentive structure of society will be.
Using ‘we’ is a way for sloppy
thinkers to advocate programs without presenting the full analysis of their
effects by obfuscating all the important social aspects through excessive
aggregation. For instance, Keynesian and Monetarist economists always go on
about a ‘price level’ that goes up or down depending on what ‘monetary policy’
(ie. speed of governmental money printing) is adopted. It is implied that when
money is injected into the ‘economy’ (another obfuscatory collective), all the
prices in the economy will move up or down at the same time, and it just falls
to the monetary planner to make this level correspond to the point of ‘full
employment’. But, the pesky methodological individualist will object, how would
all the prices in the economy move up or down at the same time when they are
set by millions of individual market interactions? In fact, the newly injected
money must start in the possession of one individual, and only through the
purchasing of this individual, and the purchasing of those businesses that the
individual patronizes, and so on, will the money flow through the economy,
eventually raising all prices in an uneven and choppy fashion. Obviously, the
earlier receivers of the new money will benefit because their money income is
higher due to the injection before all the prices in the market society have
adjusted to the new amount of money in circulation. The same applies in reverse
to the later receivers of the new money, who will lose.
Thus, we see that when we drop the
obfuscatory collectives and mechanistic analogies and look at real life
individuals, we see that government money printing is a redistribution of
resources. The biggest beneficiary is the money creator, ie. the government
(officially the central bank, but they remit their profits to the government
and buy government bonds with the new money), and then those bankers connected
to the central bank, then their favoured clients, etc… Moreover, this uneven
effect disrupts the economy in other ways besides this redistribution, as it
temporarily, artificially lowers the interest rate and misleads entrepreneurs
into investing in riskier and longer-term projects, when the requisite savings
to make this profitable have not in fact been accumulated. This error will
be revealed in a painful bust when the money printing slows (which it must eventually,
unless it ends with a catastrophic hyperinflation).
These are
some notable examples of obfuscatory collective terms being used in the service
of sloppy social science analysis. To keep your thinking on this subject sharp,
rigorous and accurate, be sure to always adhere to methodological
individualism, and be wary of ‘we’.
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