Book Review III

by zenquaker

The Darwin Economy

by Robert H. Frank

Adam Smith is not the founder of economics, Charles Darwin is. Both studied competition but Darwin saw that something that was a competitive advantage for an individual is sometimes a competitive disadvantage for the species.

I don’t read a lot of non-fiction (besides religious books, which could be classified as fiction or non-fiction depending on your perspective). I want to read non-fiction. I want to a have a better understanding of what is going on in the world so I can make rational in ethical decisions in how I live my life. The problem is that most non-fiction is also non-Scottish. It is so completely and utterly worthless it makes me angry sometimes.

Most of the assertions in the Darwin Economy are not supported [-]. Many of his economic assertions are, with references to the relevant studies. Of course, the catch is that the studies might have been poorly done. On occasion I have to read scholarly articles for my job. Most of them are worthless. They ignore large sources of potential error, they potential confounding factors, and they report effect sizes that are statistically significant but have no practical significance. But to not even try and come up with a study that supports your argument is pathetic.

The perfect example is the case that gives the book it’s cover: elk. The antlers of the elk are an evolutionary advantage for fighting off predators, so female elk start to gravitate toward males with bigger antlers. Then the antlers get bigger and bigger as it become a relative competition among other elk rather than an absolute competition against predators. They get big enough that they get in the way when elk try to evade predators in the forest. But he doesn’t reference any information that this is an actual disadvantage. I looked up elk online, and found that they are a successful and adaptable species. They are considered an invasive species in many areas, and the International Union for Conservation of Nature rates them as one of the 100 worst invaders in the world.

A frequent example of him not backing up his assertions is in cutting programs to deal with the defecit. His argument is that these programs deal with problems that if left unchecked will be more expensive to fix in the future. Sometimes these assertions make sense, sometimes they don’t, and nowhere are they backed up. And he misses the fact that they are only more expensive to fix in the future if we actually fix them in the future.

Other things could be supported without studies, such as his assertion that “the dependence of reward on rank eliminates any presumption of harmony between individual and collective interests.” That doesn’t seem necessarily true to me. It seems to depend on the reward structure. How does a linear relationship of reward and rank compare to an exponential or logarithmic one, and what is the observed relationship in real economic systems? This would seems like a good place for game theory and maybe even computer simulations, but he just dumps this statement on us without support [-].

Neither does he use logic srupulously [-]. He mentions arguments against gas taxes as social engineering, attempting to change our behavior. He claims this is a vacuous argument, since all laws are social engineering. Laws against murder try to change our behavior not to kill each other. But his response is equally vacuous. What about laws against homosexuality and gay marriage? What about old laws against inter-racial marriage or even in favor of slavery? Just because it’s social engineering doesn’t mean it’s a good thing.

He also mentions the invisible hand theory, with the example of a new process driving manufacturing costs down, and that manufacturer cutting prices to gain market share. The other manufacturers adapt and lower costs, driving the price down to “a level just sufficient to cover the new, lower production costs.” But this isn’t necessarily what happens. Consider the shift from LPs to CDs, where production costs went down and prices went up. Clearly more is going on that his simple explanation.

Now admittedly, I didn’t read his whole book. It’s been a long time since I read a whole non-fiction book. Usually the lack of support for assertions and obvious errors of reasoning and logic makes me give up after the first chapter. I tried to read past the first chapter here. I really did. I thought he might have some insights on individual vs. collective interests that would be useful to incorporate into my reasoning tool kit. But he is just so idealogical about it. He is constantly attacking conservative and libertarian viewpoints. I have a lot of problems with conservatives and (especially) libertarians, but you’re not going to score any points with me attacking them on idealogical grounds without being able to back up your assertions with facts and reasoning. Still, I tried to wade through it until I came to this statement: “Over the years I have urged my students to disengage their ideological leanings as completely as possible when thinking about questions of market failure.” Smarmy hypocracy is just too much for me.

Final Rating: 1/10

Best Quote: “To widen the market and narrow the competition, is always in the interest of [those who live by profit] … [Such interest] comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.” -Adam Smith