Monday, September 22, 2008

Wilson's Response

I have received the following email message from David Sloan Wilson.

"I enjoyed your recent response to my blog, but I must protest.

"1) My blog presented a general argument and said nothing whatsoever about bailouts, which is a specific course of action. Everything that you attributed to me about bailouts represents you filling in the details, including this passage: 'Wilson says that free markets suffer from a 'lack of regulation' [I did say this] and that the governmental bailout of financial institutions illustrates the need for regulation that will reward cooperation and punish cheaters [this comes from entirely from you]." One reason that the public resents the bailouts is because they reward the cheaters.

"(2) I acknowledged that Smith's views are more nuanced and quickly focused on two less nuanced views; formal rational choice theory and the widespread portrayal of unfettered competition as a moral virtue and regulation as a sin. You miss the point when you return to Smith's nuanced view.

"(3) As you know, Hayek was an early proponent of group selection, which made him an oddball among economists at the time. My own views are also based on group selection, which I review for an economic audience in my essay title 'The New Fable of the Bees.' My work therefore partially supports Hayek's position. According to Hayek, the virtues that work well for small-scale society must be supplemented to remain adaptive in large-scale society, a point that I also make in my blog. Whether Hayek's specific vision regulation appropriate for large-scale society is 'smart' or 'dumb' remains to be seen, but his view does not follow from formal rational choice theory, which is the target of my blog.

"(4) In your blog, you suggest that our current economic crisis is based on too much regulation, not lack of regulation. These seem like perfectly testable hypotheses, and I hope tht you or other experts will flip into scientific mode and appropriately test them, rather than merely countering one possibility with another.

"(5) You ask the following question: 'But how exactly do we get 'smart regulation' in complex, self-organizing systems where no one has perfect knowledge?' Since when was perfect knowledge required to get serviceable answers? That's what science is supposed to do in the face of imperfect knowledge. You leap to the conclusion that solutions must come from the 'regulators who manage our bailouts.' How about folks such as you and me who are trying to function in scientific mode? You leap to the conclusion that solutions require centralization. How about fine-tuning the parameters of a decentralized process?

"(6) In my opinion, we don't want to rely on the raw process of cultural evolution to evolve our solutions. We need to manage the process of cultural evolution so that it leads to benign outcomes at large spatial and long temporal scales. Hopefully, my essay will inform readers that the field of economics has moved beyond rational choice theory and will help move public discourse beyond the mantra that regulation is categorically bad.



I am glad to receive this message from David Sloan Wilson. I read his blog post as endorsing the bailout proposals. If I understand him correctly in this message, he's saying that's a misinterpretation.

He writes: "One reason that the public resents the bailouts is because they seem to reward the cheaters."

"Seem"? Is Wilson agreeing with the public on this, as I would?

But I am still confused. In Wilson's original post, he complained that people don't see the need for regulation such as the proposed bailouts. But now he says that he doesn't think the bailouts are a good idea. Am I missing something?

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