What's my economic identity?

Some label me a communist or a socialist. Others call me a conservative or a libertarian. It turns out, you don't have to pick an economic or political identity at all.

Most people can’t pick my politics.

This means that people follow my writing from across the political spectrum.

It is common for me to be labelled a socialist, communist, libertarian, free-market economist, and everything in between. Some think I’m “just a contrarian” — yet the most popular review of my book on political favouritism, written with Paul Frijters, is that we have merely “confirmed prevailing opinion”. Ouch. No contrarian status points there.

The reason for this is that I don’t care about politics. I don’t care which party pushes a policy. I don’t care who said what. I don’t care to follow political bargaining and horse-race political commentary.

I care about what works.

Unfortunately, many people like to play identity games instead.

“That’s socialist.”

“That’s neoliberalism.”

That’s <insert your -ism or identity badge here/>.

Rather than interrogating ideas, systems, and economic incentives before deciding on the political approach to achieving effective solutions, most people decide on their politics and group identity before deciding what works.

I think this is extremely unhelpful and unproductive. It narrows your thinking rather than elevating and expanding it.

This is why when you subscribe to this newsletter, the welcome email says the following.

Most people can’t pin my politics. Many on the “left” (whatever that is) think I’m a crazy libertarian or sometimes a conservative. Many on the “right” think I’m a socialist greenie.

You will find that I simply don’t care about tribal games. I like ideas, systems, and policies, that work. I don’t care whose ideas they are, whether they are loved by the left, the right, or by no one in particular.

Please leave your -isms at the door.

There are no real -isms. It’s all a signalling game.

I recall a Twitter reply recently that said we “need to consider whether we want to live in a socialist or capitalist country.”

It didn’t make any sense to me.

Yet it is a totally normal thing for people to say.

My thinking is so far removed from tribal signalling games that the whole idea that a country can be a single -ism made no sense. Societies are always a mix of socialist, capitalist, communist, and everything-in-between-ist institutions. There is no one true -ism that a country or person can be.

Countries we think of as having capitalist free markets also have many communist households within them, who earn from each according to their ability and allocate to each according to their needs.

Every place has centrally controlled hierarchies and bureaucracies within firms.

And many parts of reality don’t fit any category.

Public investment funds own parts of private companies, and public agencies regularly undertake joint venture arrangements. These often enormous organisations don’t fit any simple category.

My favourite example of the confused the -ism labelling game is when Singapore gets ranked as the number one country on the Index of Economic Freedom by the libertarian Heritage Foundation, which explains its values of “free enterprise, limited government, and individual freedom”.

Yet the government in Singapore builds over 80% of the housing, constrains individual freedoms with racial quotas in housing projects and has strict rules on things as simple as chewing gum. It runs a massive education, health and retirement social program funded by compulsory contributions of more than 30% of personal income in addition to its tax program.

Just like countries don’t need to choose an -ism, people don’t need to either.

Because I haven’t chosen an -ism identity, I feel nothin when get called communist, socialist, libertarian, or conservative. Why would I? These words are just empty vacuums that people fill with tribal signalling games.

There is a heated YIMBY versus NIMBY debate about housing supply and regulation that is closely related to my research. I don’t care. I don’t take offence. I haven’t picked one of them to be my identity.

Unlike many others, when I see attacks on mainstream or “neoliberal” economics, I don’t care. I feel nothing. Sure, by professional training being an economist is my -ism. But it’s not my worldview or identity. It’s a skillset.

Elevate your thinking

It is human instinct to pick a favourite football team, just as it is human instinct to pick an economic or political identity.

Just as a passionate supporter of a football team cannot impartially referee their team’s game, a passionate political identity holder cannot impartially evaluate public policy.

What if there were ways to elevate ones thinking to avoid the pitfall of “reasoning by identity”?

I think there are.

The trick, I think, is to spend more time defining problems and articulating desired outcomes before jumping ahead to policies that suit your tribe’s -ism.

Doing this achieves a few things.

1. It makes you think about problems as distinct issues, not failures of -isms.
   Because each -ism involves high-level ideas, it is possible to blame every problem on a non-specific “wrong -ism” choice. This is unhelpful. If each problem is defined in its own terms then we can think about how to solve it.

2. It makes you think about addressing each problem as directly as possible.
   Many -isms argue that their one neat trick will flow through the economy in a Rube Goldberg-style way and solve every problem (e.g. land tax would fix that, competition or free markets would fix that, and so on). With a clear problem definition and desired outcome, such grand claims are less relevant.

3. It makes you appreciate simplicity and not try and solve every unrelated problem.
   In my view, simplicity has its own value. More complex systems create more margins for gaming. When you have a clear objective for each district problem, you can avoid trying to do too much with any one policy and start trying to solve unrelated problems (e.g. we can solve the ills of capitalism with better regulation of monopolies, or solve inequality with better education, etc).

4. It makes you realise that piloting and experimenting with a policy is needed.
   Because you have a clear idea of the outcome you want, you won’t just trust that because an idea fits with a preferred -ism that it will work as hoped.

In most areas of economic life, I don’t think we’ve spent enough time defining problems and articulating desired outcomes before arguing about solutions and playing tribal signalling games.

For example, I remember being at a housing event a number of years back and saying that if we collectively want people to have cheaper housing, governments can buy and build homes any time they want and simply rent or sell them cheaply. It’s the most direct way to get the outcome without adding a huge amount of complexity to the tax or planning system in order to get private property owners to provide outcomes that conflict with their incentives.

I was told by the politician who attended the event that this was socialism. They preferred some complex combination of tax and regulatory changes that fitted their tribe’s identity.

I said something like: “You keep saying you want this exact outcome but when I propose the simplest and most direct way to get it you revert back to these -isms. Do you actually want people to have cheap homes or not?”

The lack of a straight answer after this question suggested to me that they did not. They had spent their lifetime playing tribal identity games and could no longer think about a problem independently of these games. They could no longer define a problem and articulate a desirable outcome.

Personally, the “best way to get an outcome game” is one I would prefer to play. I want to define problems clearly, and then discuss, debate, and articulate desired outcomes. I want to learn from policies elsewhere and focus on simplicity, experimentation, and evaluation.

The price of doing this comes is being called all manner of -isms, but the trick is to understand that the -ism game is not real, which makes it a price worth paying.