East End Games

One of the things I love about Shoreditch is that the rules are not clear around here. What's this? Do you like it?

Cost Benefit and the Government Machine

I have just been reading an interesting post on Marginal Revolution on the benefits or otherwise of Regulation. Tyler Cowen (why does anyone called Tyler always remind me immediately of Tyler Durden?) says in part:

1. Government regulations have a very large aggregate net benefit relative to their costs; rules for clean gas, taken alone, might be more valuable than all the other regulatory costs we bear. If you don't believe me, try visiting Mexico City in November.

2. Many government regulations are simply unnecessary.

3. No one has come up with a good algorithm for weeding out the bad regulations from the good ones. Nonetheless cost-benefit analysis, for all its philosophic flaws, can serve this function.

Which is fair enough. But what do we mean by cost benefit analysis? Consider a very unlikely event with quite a severe impact: say cost $1B and probability 1 in a million. Cost benefit analysis would suggest it is worth spending no more than $10 to prevent this happening, but if you owned a $1B building, you would probably pay more than $10 to insure it against a one in a million earthquake. I certainly would. (And of course the whole insurance industry is based on paying more for protection than it is 'worth' in a pure cost-benefit sense.)

Really then we should perform cost benefit analysis relative to a utility function, and part of the reason we might disagree about regulation is a simple disagreement about what this function should be.

Rudyard Kipling on Multiculturalism

The Mother-Lodge

There was Rundle, Station Master,
An' Beazeley of the Rail,
An' 'Ackman, Commissariat,
An' Donkin' o' the Jail;
An' Blake, Conductor-Sargent,
Our Master twice was 'e,
With 'im that kept the Europe-shop,
Old Framjee Eduljee.

Outside -- "Sergeant! Sir! Salute! Salaam!"
Inside -- "Brother", an' it doesn't do no 'arm.
We met upon the Level an' we parted on the Square,
An' I was Junior Deacon in my Mother-Lodge out there!

We'd Bola Nath, Accountant,
An' Saul the Aden Jew,
An' Din Mohammed, draughtsman
Of the Survey Office too;
There was Babu Chuckerbutty,
An' Amir Singh the Sikh,
An' Castro from the fittin'-sheds,
The Roman Catholick!

We 'adn't good regalia,
An' our Lodge was old an' bare,
But we knew the Ancient Landmarks,
An' we kep' 'em to a hair;
An' lookin' on it backwards
It often strikes me thus,
There ain't such things as infidels,
Excep', per'aps, it's us.

For monthly, after Labour,
We'd all sit down and smoke
(We dursn't give no banquits,
Lest a Brother's caste were broke),
An' man on man got talkin'
Religion an' the rest,
An' every man comparin'
Of the God 'e knew the best.

So man on man got talkin',
An' not a Brother stirred
Till mornin' waked the parrots
An' that dam' brain-fever-bird;
We'd say 'twas 'ighly curious,
An' we'd all ride 'ome to bed,
With Mo'ammed, God, an' Shiva
Changin' pickets in our 'ead.

Full oft on Guv'ment service
This rovin' foot 'ath pressed,
An' bore fraternal greetin's
To the Lodges east an' west,
Accordin' as commanded
From Kohat to Singapore,
But I wish that I might see them
In my Mother-Lodge once more!

I wish that I might see them,
My Brethren black an' brown,
With the trichies smellin' pleasant
An' the hog-darn passin' down;
An' the old khansamah snorin'
On the bottle-khana floor,
Like a Master in good standing
With my Mother-Lodge once more!

Outside -- "Sergeant! Sir! Salute! Salaam!"
Inside -- "Brother", an' it doesn't do no 'arm.
We met upon the Level an' we parted on the Square,
An' I was Junior Deacon in my Mother-Lodge out there!

Being clear over a quarter of a century

Yesterday's post on how uphelpful various political characterisations of the islamic terrorism problem are reminded me on another situation where thinking about the rules of the game rather than abstract political principles was vital: the problem with the Unions in the 1970s.

Now, I would never suggest that there is anything comparable in these situations excepting only that in both cases a small, unrepresentative group of people were bent on their own selfish ends. In the current case they are acting illegally, immorally, and with flagrant disregard for society: the 1970s Union leaders were behaving legally, and quite possibly in what they saw as the best interests of society.

But there is a parallel in the kind of solution needed to a problem that was damaging society. In the 70s, that problem was the ability and willingness of a small number of Union officials to cripple whole industries. The solutions involved changes the rules of industrial action. Both Barbara Castle's In Place of Strife, which prefigured many of the better features of Thatcher's Union legislation, and the milk snatcher's own laws avoided the twin errors of demonising all Union member and of uncritically accepting the status quo. So the right to strike was retained but the right to secondary picketing wasn't. It is from this kind of nuanced, ideologically untainted, thinking that effective solutions to the terrorism problem will come.

So to end, here's something that looks old but isn't.

Talking sense on the threat within

There is a remarkably sensible (considering) article in today's Guardian by Maleiha Malik on the Islamic terrorism problem. What I really like about it is not the analogy it draws (between Islam today and anti-semiticism a hundred years ago) but rather the way it focuses on outcomes rather than ideology. She points out that the issue is how best to deal with this threat to civil society, and that the process of doing this is hindered, not helped, by the dialogues of 'multiculturism' and 'the war on terror', and so on. Being clear about how you will measure outcomes really does help here.

Games lawyers play

Oh dear. First (it appears) Tony tells his Attorney General Lord Goldsmith to spare long time pet BAE from prosecution over possible corruption in a Saudi arms deal -- and it turns out they are going to get their day in court anyway thanks to a different affair, this time in Tanzania. Then the cash for honours story rolls back into town with a vengeance raising questions yet again about Goldsmith's role in deciding on possible prosecutions for Tony and his friends in this matter. Finally even the constitutional affairs minster, the usually supine Harriet Harman, calls for the Attorney General's advice to the government be published as a matter of course. Let's just accept, shall we, that 500 years of precedent does not naturally produce the optimal structure in all cases. Just possibly having a single individual who is both a member of the government sitting in cabinet and advising on legal matters and chief law officer with ultimate responsibility for deciding on prosecutions might conceivably be a conflict of interest... As usual in these matters, you can't do much until the organisational structure is serviceable.