Tuesday, December 16, 2014

Why is terrorism so frightening?

Brendan Markey-Towler

Yes, it is the bullets, the bombs, the blood. Yes, it is that it could happen any time and to anyone. But these things are somewhat held in common with gangland violence. Yes, it is that the terrorist is indiscriminate, human life is incidental to their cause, and is sacrificed to the end of terrorising a population for a political purpose. But nuclear weapons have similar properties. It is my contention that terrorists are so frightening, in part, because they are madmen.

Madmen are frightening not because they are irrational, quite the opposite. It is the hallmark of madness that the most insane acts are defended and supported by the most rock-solid logic. This logic is based on a most distorted – to “us” the terrorised – interpretation of the facts, but it follows the rules of logic nonetheless. Their argument therefore cannot be fully defeated by reason.

I suggest that the terrorist is so frightening because of this; that at least in part they frighten us because we can’t reason with them. The terrorist shows us that reason has limits, that those limits mean reason can become, to slightly misuse David Hume’s immortal phrase “the slave of the passions”, and that reason can justify the most insane acts. We feel frustrated by the terrorist in much the same way we feel frustrated because we struggle to find an answer to Isaiah Berlin’s question “is the idiot who thinks he is an egg to be condemned solely because he is in the minority?”

The individual who brought terror to our nation recently may have been mad, but he would not have been irrational (in the old-fashioned sense of being “without reason”), and that is why he is so frightening. If the negotiators asked – as I suppose they must have – “why are you doing this?” he would have likely given them many reasons for his actions which could easily have been honed into a logically solid argument. It is possible that no amount of counter-argument, presenting another logically solid argument arrived at by a different interpretation of the facts, could have persuaded him to abandon the reasons for his actions.

We all know what they might have been. While he may not have been claimed as one of their own by the group to whom he pledged his allegiance, the individual deliberately made his act a political one, justified by what he saw as the oppression of Muslims in this country. He would have pointed to the innocents who have been killed by bombs dropped and bullets fired by Australian soldiers in the Middle East, to the recent anti-terrorism laws passed within Australia, the minority status of the Muslim community in Australia as evidence of oppression of Muslims by our government. Since he could not achieve his aims of freeing those he claimed as his brethren by the establishment of an Islamic caliphate via the ballot box and since Australia and its allies have overwhelming military might in a conventional battlefield, to further his aims he had to resort to engaging in what we call terrorism.

Logic on its own cannot defeat his argument, because what differentiates this madness from sanity is not reason, but a different perception of the facts of the world, about which reasoning is all but impossible. We cannot reason with individuals such as these because no logical argument will persuade them to see the world in the way in which we see it.

We could not force him to see by logical argument to see that, yes, Australian bullets and bombs may kill innocent civilians, but the Australian military tries to avoid this where possible, and ultimately it must act because as a nation with the ability to act Australia has the responsibility to act to stop more innocent civilians and children from being killed by extremists’ bullets and bombs, let alone prevent them from growing up in a society where their freedom is severely constrained in the name of God. We could not force him to see that anti-terrorism laws are necessary to prevent harm being brought to civilians within our country, and that there is in fact a great deal of debate even within parliament about the extent to which we as a society can trade off security against our ideals with respect to these laws.

We could not force him to see that our elites understand the glories of the Muslim civilisation without which St Thomas Aquinas would likely never have discovered Plato and Aristotle (burned and buried by early Christians), or European mathematicians the Hindu-Arabic number system which we use to this day, or the stunning design from which our architects draw. We could not force him to see the kindness and inherent decency - which one only really appreciates in comparison with the rest of the world - with which the bulk of the Australian population treat each other irrespective of colour or creed. We could not force him to see that while Muslims suffer as a minority in Australia at the hands of some of our zealots, our nation as a whole, painfully aware of the more shameful aspects of its history of racism and bigotry, is doing credit to the better parts of its history by trying to combat these forces in modern society.

What we see in the terrorist is the most severe and devastating manifestation of an increasingly common phenomenon across our world – the submission of reason to passion, and the resulting construction of logically solid cases for insane views and acts which categorically contradict our humanity. The terrorist perceives the world in a manner consistent with their passionate adherence to an ideology, and uses reason to construct a disturbingly logical interpretation of the world which justifies murder in the name of something supposedly higher than human life.

The terrorist is a more extreme version of the Marxist who takes a refutation of their ideology to in fact be a support thereof - “the soviet economy could not provide bread for its people because western imperialist powers sabotaged the plans of the central planners”. The terrorist is a more extreme version of the creationist or the radical evangelical who argues “dinosaur fossils were put there by god to test our faith”. The terrorist is a far, far, more extreme version of the right wing extremist who sees an Aboriginal community in poverty and feels only that “this community deserves their poverty because they are unwilling to work”. The terrorist is a far, far, far, more extreme version of the most extremist climate change denier – “of course we see evidence of global warming, because climate scientists are paid to find that evidence”. None of these arguments can be refuted on logical grounds alone, because they follow logically from a particular interpretation of the facts of the world, which isn’t completely without foundation, and about which it is extremely difficult to argue. For the terrorist, as with any political fanatic, logic becomes the servant of an ideology, reason is placed categorically above humanity, and only a different perception of the world reveals the madness of the logical system constructed by the extremist.

The problem presented by logic needing to be based on subjectively perceived facts is well known to philosophers, as it presents significant problems for science. The great philosopher of science Imre Lakatos characterised the advance of science by the interaction of “research programs”, systems of logic such as general relativity, quantum mechanics and Newtonian physics, connecting together bits of information in a logical fashion but which, ultimately, are the outcome of assumptions about the world which cannot be tested, and which cannot be reasoned about. A good example of such assumptions is the Leibnitzean principle of sufficient reason – that everything must have a cause. Another is raw materialism - the assumption that all which exists must be something we can see or touch. Science progresses only because (and if) scientists recognise the limits of reason and distance themselves from their identification with a particular research program, in a sense not taking it too seriously, and allowing their ideas to grow or fade according with how well they explain the world. Those who do take the reasoning contained within a particular research program too seriously, and who explain refutations solely on the basis of a particular interpretation of the facts are no longer scientists.

The scientists get around the problem that one can find reason for any view if one interprets the facts in a certain way by standing somewhat aloof to and recognising the bounds of reason, and recognising that it can only be based on assumptions which cannot ultimately be reasoned about. What is true of science, is true of reason in general. The terrorist, as the fanatics and the madmen do, places their perception of the world and the reasoning based upon it above everything else.

The difference between the terrorist who kills to further the cause of setting up a utopian society, and the “Western” government which kills in the name of their citizens lies in the perception they have of the facts of the world and their willingness to hear alternative points of view. We can reason with the “Western” government, we cannot reason with the terrorist, we can only isolate them from the rest of humanity. This, I think, is a special property of the terrorist which makes them so frightening, they kill on the basis of reasoned argument like our governments do, but while we can see their argument is mad and justifies insane acts which are devoid of humanity, we cannot ultimately articulate why other than “we see the world differently to them”.

I think, however, that this realisation offers us a means of fighting the terrorist and thwarting their aims. In cases such as these where no logical argument will persuade an individual to see the world in the way in which we do, we must withdraw from logical arguments and instead affirm the place of humanity above reason fed by ideology in our speech and our deeds.

The difference between the terrorist, or indeed any fanatic, or any madman who believes god or some Fuhrer calls them to some greater purpose, and the sane individual is that the latter admits the limits to reason and places humanity above a reasoned, logical, argument which goes against it. The difference between our nation and the terrorist is that our government does terrible things in our name, but our nation - or at least parts of it - attempts to conduct a reasoned debate about whether these terrible things prevent a total descent into savagery and are the path of lesser evil.

The most disturbing thing about any ideology is that it asserts the primacy of reasoning from a particular ideology over this common humanity. It goes against what Adam Smith called “sympathy”, (more accurately “empathy”) which human beings feel for each other, an ability to understand and feel another’s suffering which drives us to care for each other and minimise the suffering we cause. Smith’s contention was that this feeling of common humanity was the basis of civilisation. We can find evolutionary reasons why this is the case, game theoretical notions of reciprocity, but many individuals in the world feel empathy for one another “just because”. There is no reason, it is simply human.

We can easily find reasons why we should separate ourselves from the Muslims in our community, and to hate them for the fear we feel of them because of what madmen do in their name. The terrorist succeeds when their acts drive us into division, cause us to act against our humanity, so that the terrorist can point and say “look, I told you so, they hate us” and add another stone to their logical fortress. In holding to and affirming our humanity, in treating each other with decency, understanding and kindness and allowing ourselves to let go of ideologies and rationality in favour of empathy and fraternity where the former goes against the latter, we show the insanity of the terrorist for what it is. We show that reason easily becomes the slave of passions and that the idiot who thinks God or some Fuhrer has given him a divine mission to bring about a better world by acts of indiscriminate destruction has such a warped view of the current one that they have left humanity behind. Isolating these individuals from humanity and removing them from a position in which they can do harm comes at a cost, but we show we are different from the terrorist if we fully acknowledge and feel this cost, even if it prevents a descent into barbarity.

What does this mean in practice? It means that in the immediate aftermath of the recent events, the way in which we show as a nation that the individual who perpetrated it was a madman is not by reason. It is by standing up to the individual who understandably launches into an Islamophobic rant and say quite simply, “no, Muslims are welcome here, this was a madman”. We show this individual was a madman by individuals across the nation offering to walk with our fellow citizens who are Muslim and defend them against attacks by frightened individuals in our society who in their terror lash out against anyone who holds to the creed the terrorist claims to hold to. We show the madness of the terrorist by our politicians and our elite standing up and saying “this individual was to Islam what a Provisional IRA bomber is to Christianity and what a Nazi is to German patriotism”. After the immediate hurt and shock has passed, we show our humanity and the madness of the ideological rationalist by those of us who aren’t Muslim treating our Muslim compatriots as we would any other Australian who does not have our colour or creed.

Napoleon paid the British nation its greatest compliment when he called it “a nation of shopkeepers”. That nation, respectful of reason (being the home of Isaac Newton, Charles Darwin, Cambridge and Oxford) but sceptical of its supremacy and committed to a “small” life defeated Napoleonic France with all its heritage of science and rationality. Australia, typically, was paid its greatest compliment when Sam Kekovich said “who cares where they come from, as long as they can handle a pair of barbeque tongs”, and a majority of Australians across the country felt exactly the same way. It may seem simple, perhaps simplistic to say that we can defeat the terrorist by simply being nice to each other. George Orwell felt this way about Charles Dickens’ writings, but realised at the end of his famous essay on the great writer that Dickens deserved his plot in Westminster abbey for his moral leadership. Dickens realised that the best way to show the madness of the miser was to contrast in A Christmas Carol and Hard Times the kindness and simple reasoning of ordinary people against the cold inhuman rationality of Ebenezer Scrooge and Thomas Gradgrind which destroys the people around them.

We can never force the terrorist to acknowledge the value of our way of life, we can never persuade them that their view of reality is warped, all their reasoning is therefore worthless, and their acts disgusting and criminal but we can through affirming our common humanity and rejecting fear and hate – no matter how reasonable it may seem - draw our nation together and isolate the madmen on the fringes who would divide and destroy it.

Monday, December 15, 2014

National hindsight bias day

For balance I follow a few people on Twitter at the opposite end of the political spectrum. I consciously try to avoid confirmation bias, and regularly find there is much agreement across what are often imaginary political divides.

One thing I’ve noticed today, in the aftermath of the Sydney siege, is that the right-wing - the conservatives and nationalists - seem more likely to be suffering a serious dose of hindsight bias, which is
… the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it, prior to its occurrence
Many on the right are arguing that because the perpetrator had a criminal history it should have been obvious that he was a risk of committing this sort of insanity.

But this is almost never the case. Almost everyone with a criminal history does not do this. The sheer rarity of such an event is what is causing the media fanfare, and the sheer rarity is why such things cannot be easily foreseen in advance, despite our retrospective justification.

The gunman could have been just about anyone and we would have latched on to some feature of his life that in retrospect appears to offer a prediction of future radical behaviour. Any strange hobby, personality quirk, or previous emotional breakdown would appear to be a reliable signal after the fact.

The world is full of nut-jobs.

I’m quite pleased to see religious leaders joining together, and the community coming to support each other. We should all be thankful that such events are so rare.

In any case, given some of the reactions I want to declare today National Hindsight Bias day.

Sunday, December 7, 2014

The case for 7% stamp duty on property

In the spirit of turning ideas on their head, let me put forward the case in favour of stamp duties on housing transactions. To be honest, it is pretty compelling to me. If I had to rank taxes from best to worst in terms of efficiency and equality, land value taxes would be first best, but stamp duties would be not far behind, huddled together with Tobin taxes and capital gains taxes to make up a top four.

There are three mains arguments in favour of stamp duties - improved price stability, no affordability effects, limited mobility effects.

Price stability
The first point is that stamp duties are not a tax on relocating, but a tax on asset market churn. We know that property bubbles have the characteristic of high transaction volumes arising from speculative buying and selling. Eliminating some of this activity because of its increased costliness will have an indirect effect of stabilising prices to some degree. Additionally, fewer transactions means less waste of resources on the real estate sales industry. Essentially it is a Tobin tax for property markets. If reducing resources devoted to the zero-sum game of trading share markets is a good thing, then the same is true for property markets.

From the perspective of macro stability stamp duties are a massive automatic stabiliser - raising plenty of revenue during the boom, and much less during the bust.

No affordability effects
Valuation theory and practice support the view that stamp duties, although paid for by the buyer, actually come off the price of housing. That is, buyers determine their total willingness to pay a the house, and subtract any transaction costs from that total to arrive at a residual that they can pay to the seller. Empirical studies also support this view.

In terms of effects on home prices, the cost of stamp duty is subtracted from prices, leaving the total purchases costs unchanged. If they also deter speculative sales as I suggest in the previous section, then the net effect of stamp duties on property prices is to reduce them. That’s about the best side-effect from a tax you could hope for.

Limited mobility effects
Some people call stamp duty a tax on mobility. It’s not. There is a whole group of people called renters who are quite a mobile part of the population and avoid the tax entirely. While the evidence suggests that fewer relocations are made by owners (perhaps 8% fewer in a year for a 1% increase in the stamp duty rate), disentangling the speculative motive of such sales from the actual labour force relocation motive has never been attempted, though they must be entwined.

Already a house sale has a combined cost to buyers and sellers of probably close to 8-9% of the house price; from removal costs, lawyers, agents, inspections, loan fees etc. Why not make it 10% by raising stamp duty ? After all, the seller gets a lower price and the buyer pays the same total of house price plus stamp duty. It’s a transfer from current home owners.

In all it stamp duties seem like a pretty reasonable tax in terms of economic efficiency. Perhaps rather than promoting land value taxes as a replacement for stamp duty, a better position is to use land tax revenues to replace more distortionary State taxes such as payroll tax.

While I’m at it
Many economists in tune with the role of land rights in economics have criticised Piketty's book for being a bit loose in the way he aggregates capital. They say that because he conflates improvements and property rights, such as land, a tax on all wealth to reduce inequality, as he proposes, will act like a tax on improvements and land value.

But what they forget is that this is about the second best tax. If a tax on property rights of all sorts (minerals rights, patents, land and so forth) is a first best tax, an incremental tax on wealth is second best. Having this argument is completely counterproductive from a policy perspective.