A Wonderful Thought Experiment

Hat tip to Arnold Kling who cites a great thought experiment from unqualified reservations . This experiment is right up my alley because it forms part of the bedrock of my perspective on society, progress and governance. I've touched on this general area of thinking in the past in various conversations and in many forms. One that comes to mind is the conversation about how unbelievabley POOR America was in the 1800's...and even as late as the early 1900s....compared to the more modern era. This general matter normally comes up when we talk about how things "were" at one time compared to today. The debate then normally centers around discussion about what truly, really changed between now and then to improve so many horrendous realities that were once a normal part of life. IOW, what happened between that cruel past and today to stop things like premature death. child labor, unsafe working conditions, a meager quality of life and general lack of many of the realities we take for granted. My consistent contention in these matters is a simple one:

We were dirt poor as a people and lacked the resources to do better and no amount of coulda, woulda, shoulda in the form of hindsight, grand ideas and social theorizing based on a modern sensibility and knowledge would have ever changed that. This whole way of thinking was truly clarified and cemented into my brain once and for all and forever more during a podcast at EconTalk with host Russ Roberts and guest Bryan Caplan about his recent book, "The Myth of the Rational Voter". At about a quarter of the way through when talking about make-work bias, while talking about advances in the human condition in the last 100 years, Bryan talks about Africa or the 18th century US economy and the fact that our modern system of massive redistribution superimposed on Africa or our own former condition would change absolutely nothing in terms of standard of living...if not making it even worse. It's truly a moment that gives the listener pause. I've also read at times how seemingly well functioning quasi-socialist societies of the modern era were running into problems now because the veneer of success of their system was wearing thin and that that veneer was based on favorable circumstances and accumulated socio-economic "capital" in the post-war world that were masking the short-comings or impotence of the very aspects of their system that were getting all the credit.

I think of this idea when people criticize coaches who take over winning or championship teams and are not judged with as great favorability as the coach he took over from because he inherited favorable circumstances. Then, should the coach's results start to decline in the following years, we can say for sure that he was simply using the "accumulated captial" and wearing it down to the point where now he is exposed as having simply been lucky and not a very good coach. Another simplistic, more generic analogy is to consider a man who starts a business. In the following years, he seems to be doing well. He takes numerous vacations, has nice cars and a lovely McMasion home whose mortgage he seems to have no trouble making every month. We all assume business is good. LIttle do we know, he had about $200,000 in the bank when he opened and now we learn that the account has only $15,000. His business practices apparently weren't that good and he accumulated capital was masking his ture condition.

Anyway,

Says Caplan on 19th century America:

"Suppose...JUST SUPPOSE...that you were to take all the production of economy and divide it equally between all the people in the economy...and suppose just make this a real gimme that...suppose that there's no effect on production....everyone can be paid equal amounts and it doesn't cause anyone to stop working....the people in that economy would be very poor by modern standards....because there just wasnt enough stuff produced to give the average person a decent standard of living. (snip) The easiest way to see this today: Go to a poor country in Africa...if you equally divided the output in a typical country in Africa, the typical person in that country would still be incredibly poor....even ignoring all effects on incentives"

The thought experiment from Unqualified Reservations:

Imagine that there had been no scientific or technical progress at all during the 20th century. That the government of 2008 had to function with the technical base of 1908. Surely, if the quality of government has increased or even just remained constant, its performance with the same tools should be just as good. And with better technology, it should do even better....

When we think of progress we tend to think of two curves summed. X, the change in our understanding and control of nature, slopes upward except in the most dire circumstances - the fall of Rome, for example. But X is a confounding variable. Y, the change in our quality of government, is the matter at hand. Extracting Y from X+Y is not a trivial exercise.

But broad thought-experiments - like imagining what would become of 1908 America, if said continent magically popped up in the mid-Atlantic in 2008, and had to modernize and compete in the global economy - tell a different story. I am very confident that Old America would be the world's leading industrial power within the decade, and I suspect it would attract a lot of immigration from New America. The seeds of decay were there, certainly, but they had hardly begun to sprout. At least by today's standards.

Surely a healthy, stable society should be able to thrive in a steady state without any technical improvements at all. But if we imagine the 20th century without technical progress, we see an almost pure century of disaster. Even when we restrict our imagination to the second half of the twentieth century, to imagine the America of 2008 reduced to the technology of 1950 is a bleak, bleak thought. If you are still taking the blue pills, to what force do you ascribe this anomalous decay?

Whereas the red pill gives us an easy explanation: a decaying system of government has been camouflaged and ameliorated by the advance of technology. Of course, X may overcome Y and lead us to the Singularity, in which misgovernment is no more troublesome than acne. Or Y may overcome X, and produce the Antisingularity - a new fall of Rome.

Hmmmm. That's something to get you scratching your chin over with a distant, ponderous stare.

Kling's summary and answer at EconLog:

if you had to choose between 21st-century technology alongside 19th-century government institutions vs. 21st-century government institutions alongside 19th-century technology, you would choose the former, no? If nothing else, the delta in technology is more strongly positive than the delta in government institutions, even if you disagree with Moldbug that the delta for the latter is negative.

I love thought experiments. ;)

Exercise for the mind.

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