Why “Market Solutions”? Because “acting in accord with the independent judgments of a majority of competent persons” isn’t quite as snappy.

With respect to many of society’s problems, challenges and disagreements, I am a great believer in market solutions and, at the same time, I hate the expression, “market solutions.” I hate the expression because it is a very misleading description of the underlying mechanism at work and often obscures what an effective “market solution” actually involves.

For example, there really is no such thing as “a” or “the” market to solve any particular social problem or challenge. There is no special and separate domain of life which in itself has some kind of special and exclusive power to identify the best solutions to specific problems. Furthermore, there is no specific group of persons, buying and selling some particular good and service, who have a special and unquestioned power to order their own affairs or the affairs of society (sorry, Wall Street, not even you.).

Rather, talk of “market solutions” arises because of an accident of history. It just so happens that the specific social spaces where persons gathered to buy and sell goods and services also seemed to be the very locations where the greatest number of persons were able to exercise their independent judgments and also affect the outcome of their activities for the betterment of all. When one talks of a “market” solution, one is really referring only to this phenomenon, which is the result of the independent exercise of competent judgement, and its historical association with a feature of life we happen to call markets.

Fundamentally, the notion of a “market solution” begins with the assumption that most persons are sufficiently competent to make effective judgments. This means, more often than not, when presented with a choice, a person can be expected to identify the best option of those available. Once this is accepted, the next aspect of a market solution is a simple consequence of mathematics: assuming each person judges independently, the option identified by a simple majority of persons is most likely to be the best option of those available. Furthermore, the option identified by the independent judgments of a simple majority of all sufficiently competent persons is even more likely to identify the best option of those available.

Now, of course, there is more than one way to identify the majority of independent judgments of some group of sufficiently competent persons with respect to some issue and the method most associated with the expression “market solutions” is the price system. In this system, persons make independent judgments about the price at which they will exchange their goods and services and, over time, as people’s judgments evolve to reflect the different judgments communicated through the various prices at which different people are prepared to exchange goods and resources, those prices should come to reflect the majority opinion of most if not all competent persons and, for this reason, the best allocation of goods and services should arise over time as persons exchange them at the different prices. The greater the number of people involved in the price-setting, the greater the chance the best allocation of resources will be identified. On my view, all the evidence suggests, for the vast majority of day-to-day choices about the allocation of goods and services, this is the best system so far devised, however, this is not to say that the best version of this system has actually yet been implemented anywhere in the world, nor is it to say it is the best system for all choices about the allocation of all goods and services.

Using the price system to communicate information about the judgments of different persons is useful because it can create powerful incentives for persons to make effective judgements (e.g. competition and profit). Unfortunately, it can also, in some cases, create powerful incentives for persons to make ineffective judgments (e.g. competition and profit). It is important to emphasize that this is not a problem unique to the price system, although the specific kinds of incentives it creates may be unique. Any system employed to identify the majority of independent judgements will create different kinds of incentives for persons to make better or worse judgments. Moreover, it is a fact of human reasoning that there are many circumstances — whatever system is employed — in which persons for a variety of reasons will make ineffective judgments even if, on the whole, they are normally capable of making effective judgements (for example, when they are in a state of panic). There are even specific circumstances where most persons can be predicted always to make ineffective judgments (certain optical illusions, for example). In other words, no specific system for identifying the majority of independent competent judgments is perfect or can ever guarantee to identify the best result in every instance and this must be taken into consideration in the assessment of all outcomes as they arise.

On my view, the biggest obstacle to the identification of the best options is a tendency among humans to employ coercion to resolve disagreements and a tendency amongst many humans to renounce willingly their independent judgements in favor of the judgments of some minority. Coercion is a problem because there is no necessary connection between the ability to coerce and the ability to identify the best choices. The willingness of persons to renounce their own independent judgment and act in accord with some other person or group’s judgment is a problem because they will often do so for reasons which are unrelated to that person or group’s ability to identify the best outcomes and which also obscure the fact that even the most competent person or group is not always right. Needless to say both obstacles are inter-related and often work in tandem. 

So, when I say I favor market solutions, I mean that I favor empowering as many persons as possible to exercise their independent judgment and then acting on whatever way forward is identified by the majority of independent judgments, assuming the way forward can always be reevaluated as new information comes to light. A properly functioning price-system, on my view, can effectively facilitate this process with respect to the best allocation of most but not all of society’s goods and services. Determining which goods and services are not well-served by this system is a simple matter of trial and error. Of course, if we are to arrive at the best answers to this question, we must first ensure as many persons as possible can become sufficiently competent to exercise their judgments effectively and ensure all persons can exercise their judgments independently.

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Happy April Fool’s Day: The Real Joke Happens The Rest Of The Year

So, this is April Fool’s Day. And what have you done? Another year over. A new one just begun. 

As far as I can tell, there is no genuine consensus on the origin of April’s annual day of pranks. Even so, there is a dominant theme that runs through many of the educated guesses I’ve come across. More often than not, the original April Fool seems to be a person who does not act in accord with some massive top-down shift in the world order — like a substantial shift in the calendar — and continues to act in accord with the previous world order as she or he understands it. They are fools because they have failed to — or refuse to– act in accord with the new world order.

So, on this reading, the holiday is essentially about about humiliating and ostracizing a person who is not “in-the-know” and who is not even necessarily gullible. It is, in other words, a kind of celebration of group-think and one can even imagine the day being invented by some community leaders to hasten the adoption of the new calendar / new world order. From this perspective, however, one could easily argue, it is those who are “in-the-know” who are the truly gullible because it is they who have accepted a wholesale re-ordering of the world as they know it simply because the Pope (and the parish priest) said so. The fool, from this perspective, is no fool at all because he is not changing his judgments, his beliefs, his practices for the sole reason that some community leader has said so. 

In modern times, it seems the most notable and often talked about April Fool’s pranks involve media outlets, media personalities, and other opinion leaders in the community who leverage their de facto authority to dupe the very people whose trust they normally inculcate. For me, this seems to me to be a bit like “bully-day”– that is, a day when bullies really get to beat the snot out of the weak and they are meant to take it like good sports. The rest of the year these opinion leaders demand trust and even resent critical responses to their stories and, yet, on this day, people are fools because they accept the stories they are told. I suppose it is possible this represents an effort on the part of opinion leaders to remind us that they can’t always be trusted but it seems to me that it is more about people with de facto authority spitting in the eye of the people who trust them and publicly mocking them for it as well. The real April Fool’s joke is that people mostly accept what they are told by their opinion leaders all the other days of the year.

So, with these thoughts in mind, I can’t help but reflect on the G20 summit in London, the protests, and the recent efforts by our opinion leaders to address the world financial crisis. Over the past few months, a story has emerged about the best way to deal with the financial crisis (bail-outs, stimulus / deficit spending) and it has been more or less crafted by a fairly small group of officially recognized opinion leaders who stand to benefit the most from these efforts. In response, a counter-story has evolved which is as influenced by opinion leaders as the first. One of these accounts may be the best or neither may be the best. The only question that really matters : how do we figure out the best solution to this problem.

The real lesson to be drawn from April Fool’s day, I think, is that a person should not blindly accept the opinions of our leaders (whether they wear pin strips or not) and that each of us must exercise our own judgment independently. In some instances, a person may end up playing the fool because those “in-the-know” are wrong and sometimes a person may end up playing the fool because he or she is in fact wrong. There are no guarantees. Even so, the best hope that we have for arriving at the best solutions to our challenges and problems is if each of exercise our judgments independently, aim for the best answer, and allow for a convergence of judgment rather than letting opinion leaders of whatever stripe manufacture our consent. 

A very merry April Fool’s Day.  And a Happy New Year. Let’s hope it’s a good one without any fear.

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Multiculturalism, The Redux (Kenney’s Director’s Cut): It Isn’t Broken, Time To Fix It

Jason Kenney, our present Minister of Immigration and Multiculturalism, wants to reinvent Canadian multiculturalism. For some fawning National Post coverage, click here. This should comes as no surprise really, since both Mr. Harper and Mr. Kenney began their political careers in the Reform Party of Canada which had as one of its founding principles the goal of abolishing Canada’s Official Multiculturalism Policy. The writing, as they say, has long been on the wall for anyone who wanted to read it.

Not surprisingly, as is so often the case, there are plenty of political commentators who are more than happy to jump onside: Lawrence Martin, for example. Martin is by no means an isolated case. When I surveyed the media’s coverage of multiculturalism and multiculturalism-related issues from Jan. 2005 – Oct. 2008, the coverage was almost always negative.

With so much consensus amongst political and media elites, surely, there must be something deeply wrong with Canadian society and our Official Multiculturalism Policy. Here’s what Mr. Kenney has to say on the matter (from The National Post): 

“We want to avoid the kind of ethnic enclaves or parallel communities that exist in some European countries. So far, we’ve been pretty successful at that, but I think it’s going to require greater effort in the future to make sure that we have an approach to pluralism and immigration that leads to social cohesion rather than fracturing [my emphasis].”

Curious that he should fail to mention the United States and its long history of ethnic enclaves and the occasional race riot, despite it’s world renown melting-pot policy for integration — the approach most often touted as the best alternative to Multiculturalism. Curious also that he should admit Canada is doing quite well — as all the evidence suggests — at avoiding the kind of internal ethnic isolation which seems to plague other countries. So, if things are working fine and better than everywhere else, why does our Multiculturalism policy need to be reinvented?

Here a possibility! Perhaps, we are doing much better than many other countries in terms of toleration, mutual understanding, and civic participation only out of blind luck. Perhaps, despite our success, the Multiculturalism Program — that is, the program through which the Federal government meets some of its obligations outlined in the official policy — is inefficient and horribly broken. Perhaps, some kind of systematic review or audit has revealed a program in desperate need of revamping. That must be it!

Quite to the contrary. According to a 2006 Corporate Review Branch evaluation of the Multiculturalism Program’s performance between 1999 and 2004, the Multiculturalism Program is effective, unique, and addresses a genuine need within government and Canadian society (The report used to be on-line but now must be requested from here). Although the report highlights areas for improvement, they are primarily administrative in focus (i.e. such as a simplified application process) and does not call into question the aims and purposes of the program itself. Moreover, the report also unequivocally indicates that the program’s level of resources are insufficient to meet the program’s objectives and the demands of Canada’s increasing diversity. In other words, the Multiculturalism Program not only works, but it will work even better if it gets more resources. 

Oh, and by the way, what are the program’s goals: 1) to combat racism in all its forms;  2) to promote inter-cultural understanding; and 3) to encourage participation in community and civic life for all Canadians. So, again, I am confused. What needs to be remade? Clearly, this program pursues admirable and legitimate goals for government policy and clearly the program is effective at pursuing and achieving them. So what’s the problem, other than a genuine and legitimate need for more resources?

Ok, maybe, Canadians just don’t like Multiculturalism. Maybe, they don’t think it represents Canadian values or Canadian identity. Maybe, it is an ideal Canadians simply don’t care about anymore and, for this reason, it is rightly discarded. After all, we are a democracy, right? Our federal policies should reflect the ideals and values of the Canadian people. Maybe, Mr. Kenney and the media are simply expressing a widely held assessment of Multiculturalism Policy that the federal government should honor and respect. 

Well, surprise, surprise, despite the almost relentless attacks in the media, the vast majority of Canadians have historically supported some understanding of multiculturalism (although there are dips here and there, as can be expected) and continue to support it. For example, a telephone poll (conducted June 12-14, 2007 and reported in the Ottawa Citizen on June 17) revealed the following: 1) 82% of those polled agree with the statement “Canada’s multicultural makeup is one of the best things about this country;” 2) two-thirds agree that “treating minorities with generosity” is a special part of the Canadian character; 3) two-thirds disagree with the claim that “the fabric of Canadians society is being threatened by the influx of visible-minority immigrants;” and 4) 54% agree (strongly or moderately) that discrimination against minorities is a problem in Canada. In other words, the vast majority of Canadians often report that they support some ideal of multiculturalism and agree there is a need for it (e.g. racism remains a problem).

So what gives? Why the persistent call to remove or revamp Canada’s Multiculturalism Policy and Program. Mr. Kenney strikes me as a bright guy and, unless his staff are totally clueless, both he and they are very much aware of the data I am citing. I can only conclude that Kenney’s motivation is purely political. Not only do the Conservatives need to throw the occasional bone to their Reform-right allies, they need to make in-roads with ethnic communities. How do you please both groups? You tell the folks on the right, hey, check it out, we are axing one of Trudeau’s legacies, and you tell members of established ethnic communities, who have already benefited from our Multiculturalism Policy, “Hey, you are more self-assured, you made it, kid, you don’t need government hand-outs anymore.” Fair enough. The Conservatives are, after all, largely where they are thanks to playing a mean game of policy Jenga (Oh, that and the incompetence of the Liberal Opposition).

Ok, but what’s with the media and the moderate right in general — why are they so against it? My guess is they don’t understand the policy, the program, or its objectives and, in the case of the media, they haven’t done their research. Instead, it is much easier to parrot unsubstantiated talking points which are routinely discredited by empirical research and to characterize multiculturalism in a fashion which simply misrepresents it as an ideal. It makes for good copy, after all. To be fair, I should also acknowledge that there are lot of advocates of “multiculturalism” who characterize it in a poor fashion and this also muddies the waters for all concerned. 

So, let me explain what multiculturalism means in Canada.  First, it should be noted that multiculturalism can refer to an ideal, a policy, and a program.

Multiculturalism, as an ideal, originates in a fundamental respect for a person’s dignity and self-esteem and emerges out of a fundamental respect for persons and their right to live as they see fit, given the necessary constraints of a free, just, and civil society. Multiculturalism is essentially an iteration of the political ideal that all humans are equal in dignity and are sufficiently competent to live a life of their own choosing and should not be illegitimately discriminated against for choosing to live in a fashion which is different from others. Multiculturalism simply articulates this ideal with respect to a person’s ethno-cultural and religious identity, practices, and beliefs. Accordingly, while multiculturalism, diversity, and any particular cultural practice and norm can in itself be good, its promotion should never come at the expense of the rights and dignity of persons. 

Canada’s Official Multiculturalism Policy enshrines this ideal as a federal policy and the Program is intended to enact some of the obligations created by that policy. Yes, some policy-makers have made bad policy choices in the name of multiculturalism, but the ideal itself, the policy, and the program, nevertheless, are legitimate policy-objectives for our government. Moreover, all evidence suggests that the program works and is a benefit to Canadians (assuming the Conservatives haven’t already totally gutted it behind closed doors and under the radar).

Finally, I simply can’t see how any person who identifies with Canada’s historic struggle to be a truly tolerant, mutually respectful, and inclusive society can have a problem with this ideal. Canadians are by no means perfect, but our conception of multiculturalism emerges from a high ideal we have shared historically and which has also shaped our identities. If the present Conservative government substantially changes our Multiculturalism Policy, they will be changing who we are and who we hope to be. From this perspective, the Conservative government’s plans to remake Canadian multiculturalism should come as no surprise. They have made it clear in the past that they want to reform Canada one carefully calculated step at a time. 

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