Landsburg's imbecility is envy-free.

Steve Landsburg has a remarkable record of consistency when it comes to saying the stupidest thing possible about any given economic concept.
Yet, he is a happy camper. He shows no envy of less imbecilic Professors. How has he attained this blissful felicity?

But first, why not sample the nitwit's sublime silliness for yourself?

Suppose you’ve got 1000 students to assign to two schools, each with 500 slots available. Everyone prefers the Good School to the Bad School. Which of the following is a fair way to decide who goes where?

Method A: Give each student a coin to flip and count on the Law of Large Numbers to insure that just about exactly 500 will flip heads. Those students go to the Good School.

Method B: Randomly assign each student to one of two groups. Then flip a single coin to determine which group goes to the Good School.

Method C: After taking note of the fact that, coincidentally, exactly half the students are white and half are black, flip a single coin to determine which race goes to the Good School.

Method D: Assign all the white students to the Good School.

....Economists often interpret fairness to mean that the mechanism should be envy-free, meaning that at some stage in the process, no student wishes he could trade positions with another. Certainly that’s true of Method A, where everyone gets a fair coin and there’s no reason to prefer your neighbor’s coin to your own. And certainly it’s true of Method B, where we’re assigned to our random groups and all await the outcome of the same coin flip. And certainly it’s true of Method C, where the groups are race-based but once again, we’re all awaiting the outcome of the same coin flip. On the other hand, it seems to be quite untrue of Method D, where all of the black students believe (correctly) that they’d be treated better if they were white.

Do economists really believe that I won't envy you for getting a Maserati while I get mugged just because a coin-toss determined that outcome? Does a gambler who loses not feel jealous of the one who wins?

No. Of course not. That would be silly. Wikipedia says 'An envy-free division is a division of a resource among several partners such that every partner feels that his allocated share is at least as good as any other share.'

As I say in my comment on his blog-‘the mechanism should be envy-free, meaning that at some stage in the process, no student wishes he could trade positions with another’
That’s not what envy-free means. The stages don’t matter. Only the final allocation. Thus so long as one School is better than the other, no allocation is envy-free. Resources need to be concentrated on equalizing the Schools for envy-freedom to obtain. Alternatively, the cost- whether monetary or in terms of acquiring relevant entry qualifications or in terms of staying the course- has to be differentiated.
Landsburg, assuming I'm illiterate and can't look up Wikipedia immediately replies-
Steve Landsburg

July 31, 2015 at 8:38 am

@Vivek (#39): I think you’ll find that if you look at the paper I linked to, and related literature, the phrase “envy-free” is used as I described

My mild rejoinder, of course, will never be approved on his blog, so I quote it here- 'I found mention of ‘justified envy’ being traded off with efficiency in the context of TCC, in the paper you referred to.
Wikipedia defines envy free in the traditional cake cutting context or Baumol ‘super fairness’ literature I am familiar with.
Perhaps you are referring to a specialist literature that has arisen recently in which envy freedom is a function of a stage rather than the final outcome of an allocation process.
Such a literature would be ab ovo absurd. I play poker with you. You take all my money. I am envious of you even though the game was fair.
Envy freedom or Superfairness can only arise in the context of heterogenous outcomes if there is an underlying preference diversity or information asymmetry of a certain type.
In this case, it is irrelevant how you were chosen for a particular School. All that matters is whether no agent wants to change outcomes with anyone else after completing School.
Why not speak of ‘resentment’ rather than use the term ‘envy free’ (which in fact is not used in the paper you link to)?
I appreciate this is an emotive subject and one full of re-switching type paradoxes as Thomas Sowell discovered, still for the sake of students of Economics reading this it might be as well to stick to conventional usage.'

(That last sentence in my first comment re. Regret Minimization and Envy Freedom needs to be qualified and I will do so in my next post.)

Landsburg thinks tossing a coin is enough to make any outcome whatsoever proof against envy. But if you accept his notion of envy freedom there is no need for any coin toss.

Define Good School as that which has alumni who suffer a sense of shame when they say stupid things and who envy those of their peers who say sensible things. Define Bad School as that which has alumni who are happy imbeciles. Landsburg belongs to the latter school. Far from envying his sensible colleagues he happily hurls his feces at them in the belief that he is scoring a great intellectual victory. Yet, no one tossed a coin to send Landsburg to the Bad School. If final outcomes don't matter, envy is meaningless.

The Economic Theory of killing Eric Garner.

Eric Garner was a 44 year old African American man suspected of selling untaxed cigarettes. He was unlawfully killed by a member or members of the New York Police.

Prof. Steven Landsburg, impelled no doubt by the spirit of Hanukkah, has a marvelous Christmas present for Eric Garner's family. He says that Econ theory proves that Garner couldn't have been hurt more than a tiny bit by Police harassment.

'Suppose you are a typical street vendor of an illegal product, such as, oh, say, untaxed cigarettes.

Suppose the police make a habit of harassing such vendors, by confiscating their products, smacking them around, hauling them off to jail, and perhaps occasionally killing a few.

I have good news: The police can’t hurt you.

Here’s why: Street vending can never be substantially more rewarding than, say, carwashing. If it were, car washers would become street vendors, driving down profits until the rewards are equalized. If car washers were happier than street vendors, we’d see the same process in reverse. (The key observation here is that it’s very easy to move back and forth between street vending and other occupations that require little in the way of special training or special skills.)

Because police harassment of street vendors has no effect on the happiness of car washers, and because street vendors are always just as happy as car washers, it follows that police harassment has no effect on the happiness of street vendors.
…

So if you’re a street vendor, the police can’t hurt you. On the other hand, when the police go around putting people in deadly chokeholds, they’re clearly hurting someone. So the question is: Who?

Answer: Not the vendors, but their customers. Fewer vendors means higher prices. That hurts consumers, and the sum total of that harm adds up to the harm that we see in the viral videos.

Landsburg himself has corrected himself in a subsequent post. He now says- 'I  stand by the claim that individual workers are hurt insignificantly by harassment. But I’m backing off the claim that the total harm to all workers is insignificant. Consumers in the harassed industry do bear a large burden — and perhaps even more than the entire social burden, because their losses are partly offset by gains to consumers elsewhere. But my simple accounting of yesterday (“the burden on the workers is effectively zero, so the social burden falls entirely on consumers”) was far too simple.'

Does Economic Theory endorse Landsburg's claims?

No. Harassment and Unlawful Killing, like Rape, may appear to give rise to Utility for some agent but have such a large negative external effect (by definition, this is received outside the market) that such Utility becomes Socially repugnant and worthy of punishment. Where pleasure is seen to derive from a crime, that pleasure is denounced as vicious. When the State unlawfully takes life, even if it is so as to protect its own Revenue, it loses legitimacy. Its actions become repugnant. Resources are not wasted in combating a repugnancy market. Indeed, it is compliance with the Excise Man which now carries a dead weight loss for Society. 

Steve Landsburg destroys Technological Capitalism

The theory of Externalities tells us that the Market either produces too much or too little of something which gives rise to a benefit or a cost received outside the market- i.e. the Market isn't using some relevant information and thus is making the wrong decision.
However, if a competitor takes away your business, though you incur a loss, there is no Externality because it is part of your business, since you are in that market, to have taken account of that possibility.
Let's say I'm running in the park holding a ball and you come and tackle me and throw me down on the ground and run away with the ball. Has a crime occurred? Not if we're playing rugby because the whole point about being a rugby player is that you are meant to be taking evasive action so as not to get tackled. If you go crying to Mommy saying 'that rude girl tackled me and took away my nice ball', Mom will smack you and send you to bed without your crack whore.
Similarly, a businessman who loses out because his competitor is better than him is not subject to any 'External cost' because the whole point about being a businessman is that you need to be constantly thinking about how to be competitive.
Sure, things like 'Asymmetry of information' can give rise to market failure but that's a different kettle of fish and has nothing to do with Social Costs and Benefits and the Theory of Externality.

Steve Landsburg, surely the stupidest Econ Prof of all time, disagrees. The following is his argument, which if accepted by Policy Makers, would destroy Technological Capitalism by shifting the focus to 'sunk costs' of existing firms. By saying X loses 10,000 when what has actually happened is X failed to make a profit of 10,000- you create sympathy for X. Public policy gets distorted. Govts. feel they have to take action to defend inefficient monopolies because they are pictured as poor and vulnerable widows and orphans losing their only source of income. Thus, Govt. gets a chance to intervene- perhaps offsetting its protection of the Corporate fat-cat by feather-bedding the Trade Union Luddite.
BTW, Landsburg is not a Commie nutjob nor a Keynesian bleeding-heart but, ludicrously, advertises himself as quite the reverse.
 This is  his example from the IT industry, 'where it’s clear that profit-maximization can easily lead to too much innovation. I’ll do the accounting both ways to make it clear that both ways are right.

First, the assumptions:

Alice has developed a word processor, which she sells online. It costs her $5000 a year to maintain a server, where you can download a copy for $1000. She sells 100 copies a year, and therefore collects $100,000 in revenue. Most of the consuemrs who buy those copies value them at more than their price. In fact, the total value of those 100 copies to the consumers is $200,000.

Bob has an idea for a word processor that’s a little better than Alice’s, so that each consumer would be willing to pay $10 more for Bob’s than for Alice’s.

If Bob develops his word processor, how much can Alice charge for hers? Because her word processor is inferior to Bob’s, she’s got to undercut his price by $10 in order to maintain any customers at all. So if Bob charges $600, Alice charges $590. But then Bob can steal all of Alice’s customers by lowering his price to $599.99, whereupon Alice must lower her price to $589.99, whereupon Bob steals all her customers by lowering his price another penny….and the race to the bottom is on. But Alice’s price cannot fall below $50, because then she wouldn’t earn enough to cover her server costs. So Alice, who is smart enough to foresee all this, gives up and cedes the market to Bob.

Once Bob has the market to himself, he doesn’t have to worry about re-entry by Alice, because they both know perfectly well that the instant she renews her server contract, the race to the bottom will be back on and she’ll have spent $5000 for nothing.

Now if Bob sells his word processor for $1000, it’s he instead of Alice who earns $100,000 a year in revenue and therefore (after subtracting the server cost) $95,000 in profit. He weighs this against the $80,000 cost of developing his word processor and takes the plunge.

I claim that Bob’s decision is privately wise (i.e. wise from Bob’s point of view) and socially foolish (i.e. it reduces social welfare, defined as the total dollar value of all the gains to consumers and producers). We can calculate the costs and benefits of Bob’s decision in either of two equally legitimate ways. Because they are equally legitimate, they lead to the same bottom line: Bob’s private benefit exceeds his private cost by $15,000 (which is why he plunges ahead), while the social cost exceeds the social benefit by $79,000 (which is why we wish he wouldn’t).

Method I:

Private Cost: $80,000 (Bob’s cost of developing the software)
Social Cost: The same $80,000.
Private Benefit: $95,000 (Bob’s profit from developing the software)
Social Benefit: $1000 [The gain to 100 consumers, each of whom now has a word processor worth $10 more]

Method II:

Private Cost: $80,000 (Bob’s cost of developing the software)
Social Cost: $175,000 (Bob’s development cost plus Alice’s loss of $95,000 in profit)
Private Benefit: $95,000 (Bob’s profit)
Social Benefit: $96,000 (Bob’s profit plus the $1000 gain to consumers)

Bottom Line:

By either accounting method, the external cost (i.e. social cost minus private cost) exceeds the external benefit (i.e. the social benefit minus the private benefit) by $94,000. Therefore Bob makes the socially wasteful decision to develop his software.

Either way, Alice’s loss of $95,000 in profit is offset by Bob’s gain of $95,000 in profit. In Method I, we ignore this transfer since it washes out anyway. In Method II, we count it in the social caclulations, both as a loss to Alice and a gain to Bob. Again, both ways are correct.

Important Addition:

In this example, Bob faces a yes/no choice about whether to develop his software. In many examples, Bob makes a continuous choice about how much of an activity to engage in. In those cases, we expect that Bob engages in the activity until at the margin his private benefit is equal to his private cost. That considerably simplifies the calculation, by allowing us to ignore the private costs and benefits completely and focus entirely on the external costs and benefits (where “external” means “social minus private”).

One More Thing:

Bob’s innovation might well have social benefits we haven’t accounted for, primarily the inspiration it gives to other innovators who might face different numbers and whose innovations might be socially valuable. Those benefits aren’t accounted for here. Therefore, in IT, there might either be too much innovation or too little — but it would require an extraordinary coincidence for there to be just the right amount.'

Why is this fucked?

Well, Landsburg tells us that consumers currently receive 20000 dollars of benefit for Alice's product.  100,ooo of that is 'consumer surplus', 95,000 is Alice's producer surplus (profit) and 5000 is factor income for the guys running the Server. 

Bob's idea for a program is better. If he develops it and everyone switches to Bob's product, then the new Total Social Benefit is 201,ooo. But, it will cost Bob 80,000 to develop his system. Landsburg thinks he shouldn't- it would be a waste of resources from the Social point of view because the rate of return is too low. That's an empirical matter.

Suppose Bob is a good businessman. As such, he will know that Alice can reduce her price to 50 dollars without incurring a loss. So the maximum he can charge is 60. There are only 100 customers. He gets 6000 revenue. If he too has to hire a server at the same price as Alice, then his profit is 10oo per year. It will take him 80 years to recover his investment. So he doesn't invest. The Market guided him correctly. No extraordinary coincidence was required for investment in innovation to be 'just the right amount'. On the contrary, it is absolutely routine and of the essence of a non-failing Market to ensure that this is what happens at the aggregate level.

Suppose Bob is a megalomaniac, not a businessman. Then he just goes ahead regardless. Social Benefit is still has a lower bound of 201,ooo. However, 'consumer surplus' has increased by 195,000 while 'profits'- i.e. producer surplus- has decreased by the same amount. That may be a good thing allocatively or it may be a bad thing dynamically. However, what it isn't is a case of market failure by reason of Externality. It's just a story about a guy who chose to spend 80,000 to gratify his ego. He could just as easily have bought a sports car or paid for a penis enlargement. Positive Economics has nothing to say about this.  We don't know in advance if it is a good or bad thing  that Alice's erstwhile profits have now turned into Consumer Surplus. Maybe Alice was a poor widow and the purchasers of her product were Evil Corporations. Maybe the reverse is true. Still, all the relevant information was available to the Market and so no Externality arose. Okay, there was Market failure because Bob acted irrationally and also you had a Monopoly, but those are  separate kettles of fish.

There is one instance where Bob makes a sound decision by investing his 80,ooo. Suppose our economic future is bleak. A hundred years from now the only product that still commands a market is Bob's product. In that case, what we have here is 'rent contestation'. But, once again, that's a different kettle of fish for Econ theory- it has nothing to do with with the Theory of Externalities, under which rubric  Social Costs and Benefits are subsumed.

Landsburg has previously made utterly fallacious arguments which have the effect of destroying the Economic argument for freedom to consume and invest. Now he disables Capitalism's engine for what Schumpeter called 'Creative Destruction'- i.e. Technological progress.

Why is this man teaching Economics?

Steve Landsburg kills Capitalism once again.

Suppose I think it's going to be really sunny this Bank Holiday Monday. I fill a cooler with orange popsicles and head out to the Park to sell them for a profit.  Unfortunately, it rains cats and dogs. My popsicles melt. I just lost my investment.
Does the story above pose any huge problem for conventional Economics?
No.
Investment is about making a guess about what the future will look like and then taking a punt.  Some investments don't pay out. Some entrepreneurs go bust. But some investments do pay out and so some people experience Asset appreciation. Capitalism is about winners and losers- those who took bets which paid out vs. those who got screwed.
There is no problem for Social accounting in the above story. Okay, if you get a guy who consistently makes bad decisions we might say he isn't 'investing' but 'consuming'- i.e. this aint a business, it's a hobby.
Landsburg disagrees. He reckons that the Govt. should force people to buy my popsicles even though it's raining. Why? Coz otherwise those popsicles go to waste.
What if people only have enough money to either buy an umbrella or a popsicle? Because it's raining, people want the umbrella and don't want the popsicle.  However, Landsburg would still insist that people get popsicles rather than umbrellas provided I bought the popsicles before anyone else laid in a stock of umbrellas.
Landsburg is a Maths guy who teaches Econ. He's not a Communist. Indeed, he's supposed to be Right Wing. Why does he want the Govt. to force us to eat popsicles rather than buy umbrellas when it's bucketing down?
The answer is that he thinks umbrellas and popsicles are 'gross substitutes' because everything is (at least in Math Econ 101 world). But, an umbrella could save me from pneumonia while, under the same circumstances, having to suck on a ice popsicle could have the opposite effect.

Okay, umbrellas and popsicles aren't really like each other.
What about 2 capital goods (i.e. stuff I only buy for a business purpose) that are almost exactly alike? Surely, they are 'gross substitutes'?
Let's suppose I'm a stock broker. I need to be signed up to the fastest optical cable network. Being signed up to the second fastest isn't a gross substitute- it's a fucking recipe for bankruptcy.
Still, suppose the existing system is a monopoly and a new system comes along which is faster. Surely, by banning the new system, the Govt. can save the investors in the old network? Nobody gets hurt, right? Not right. Business moves offshore, or goes underground, to where brokers have access to the fastest network or else you have a disintermediation event.
What if the Govt. can prevent the whole Globalized finance sector from accessing the fastest network? Surely that would work? Yes, and the Govt can also build a huge dome over the City and invest in huge artificial Sun lamps so that I don't lose money on my popsicles. However, everyone is now much worse off. As for Capitalism- Landsburg just killed it- again.

Steve Landsburg's stupidest post?

This has to be a joke, even Landsburg can't be this stupid, but not all his followers seem to be in on it.

Briefly, in Economics, a situation where someone receives a benefit or a cost, other than through the operation of the market, is called an externality and when this happens we know the market fails to produce the best possible outcome.
Landsburg argument is that when I hire x instead of y, then y loses out. Similarly, if I urinate copiously on y, then y loses out. Why is it that I will be fined or jailed for urinating on y whereas I get off scot-free for not hiring him?
The answer is that hiring x rather than y is a market decision. Y's loss or gain is mediated by the market. There is no externality. Urinating on a guy, or committing some other nuisance, is not mediated through the market, unless he paid me to do it, or I compensated him for it.

Landsburg says 'the social value created by Gruen ( an author he likes) is determined by the value that you get from reading Gruen as opposed to reading someone else.' 
This is mad. Suppose I chose to hire you to work for ten hours cleaning my house. I could have hired someone else to work for nine and a half hours. Is the social value of your ten hours of labor actually just half an hour of labor because that is the difference between my benefit from hiring you and my benefit from hiring someone else? If so, why stop there? The social value of everything is zero because the alternative to that thing is 99.9999999 recurring percentage of that same thing. Landsburg just destroyed the economy.
But Steve's just getting warmed up.
His post continues 'That social value is, most of the time, far less than your willingness to pay. But the reason markets work so well is that — most of the time — willingness to pay is an accurate gauge of social value. In this case it’s not, so there’s no reason to trust the market.' 
So, according to Landsburg, when people buy a book by Gruen for ten dollars, the social value created by Gruen is less than ten dollars because people could have read Faulkner for free on their Kindle. Suppose Gruen is a believer in Landsburg's nutty Economics. She increases the social value of her product, at least for Landsburg, by offering him the following contract- either buy my book or I cause ten million dollars worth of damage to your body.  Now Landsburg's social value from buying her book is just ten bucks short of ten million. Wow! Landsburg hasn't just destroyed the economy, he's resurrected it as an evil zombie.
But why stop with the Economy when one can also destroy Civilization? That's Landsburg's next step.

Question: How do you justify taxing carbon emissions without also taxing novelists?

Let me head off the obvious (but I think faulty) rejoinder that the carbon emitter is intruding on his neighbors’ property rights while Sara Gruen is not. Here’s why I don’t buy that: When we talk about setting policy, we’re implicitly talking about how property rights should be allocated in the first place. When we tax the polluter, we’re declaring that his neighbors have a property right to carbon-free air. If we tax Sara Gruen, we’re declaring that the Faulkner estate has a property right to the attention of potential readers. Neither of those property rights exists ab initio. Instead, they’re created by policies. So a claim that there’s a relevant property right in one case (but not the other) is not an answer to the question; it’s only a rephrasing of the question, viz: “Why is there so much clamor to create and enforce one property right but not the other?”

Suppose no rights exist ab initio. In that case, talk about setting policy can't implicitly be about rights at all. Either such talk explicitly creates rights or it does not. Nothing that goes on during the process of talking can have an implicit reference to rights because we have already stipulated for their non-existence.

What happens if some rights exist ab initio? Then implicit reference can be made to those rights and, while talking about setting policy, the scope of those rights may indeed be broadened such that new property rights become vested.

Landsburg asks- It is possible, perhaps, to understand why self-interested parties have found it worth their while to fight for carbon taxes but not for authorial taxes. My question is whether there’s a principled reason to tax polluters but not novelists. Anyone?

The answer, of course, is- the principles of Economics give a reason to tax externalities such that Social Costs and Benefits come into line with Private Incentives and penalties. If authors compete in the market, no externality requiring a tax arises though there are winners and losers. Carbon taxes, however, are one proposed solution to the Externalities associated with the use of fossil fuel.

Landsburg vs Dawkins- a self inflicted debacle.

Steve Landsburg, a man who has made a profession of being cleverer at stupidity than anybody else on call for Fox News, is seeking to square his own extreme Mathematical Platonism with the Creationism of the great unwashed.

With typical fatuity he attempts to take down Richard Dawkins with a wholly specious, seemingly mathematical, argument.

'Here is a quote from Dawkins’s book “The God Delusion”:

Time and again, my theologian friends returned to the point that there had to be a reason why there is something rather than nothing. There must have been a first cause of everything, and we might as well give it the name God. Yes, I  said, but it must have been simple and therefore, whatever else we call it, God is not an appropriate name….The first cause that we seek must have been the simple basis for a self-bootstrapping crane which eventually raised the world as we know it into its present existence.

I could provide additional quotes, but this one should suffice. Dawkins believes, unless I have misunderstood him completely, that he has a quite general argument, not tied in any way to biology (because the above quote, for example, has nothing to do with biology) to establish that complex structures must have simple causes. That argument, whatever it might be, cannot be correct because the natural numbers stand as a counterexample.

Obviously, Landsburg has misunderstood Dawkins completely because that's his metier, it's what he does best, and moreover he has worked hard at it- devoting a whole chapter to doing so in one of his worthless books.

Just to be clear, Dawkins views are summarized thus-

1. One of the greatest challenges to the human intellect, over the centuries, has been to explain how the complex, improbable appearance of design in the universe arises.
2. The natural temptation is to attribute the appearance of design to actual design itself. In the case of a man-made artefact such as a watch, the designer really was an intelligent engineer. It is tempting to apply the same logic to an eye or a wing, a spider or a person.
3. The temptation is a false one, because the designer hypothesis immediately raises the larger problem of who designed the designer. The whole problem we started out with was the problem of explaining statistical improbability. It is obviously no solution to postulate something even more improbable. We need a "crane," not a "skyhook;" for only a crane can do the business of working up gradually and plausibly from simplicity to otherwise improbable complexity.
4. The most ingenious and powerful crane so far discovered is Darwinian evolution by natural selection. Darwin and his successors have shown how living creatures, with their spectacular statistical improbability and appearance of design, have evolved by slow, gradual degrees from simple beginnings. We can now safely say that the illusion of design in living creatures is just that—an illusion.
5. We don't yet have an equivalent crane for physics. Some kind of multiverse theory could in principle do for physics the same explanatory work as Darwinism does for biology. This kind of explanation is superficially less satisfying than the biological version of Darwinism, because it makes heavier demands on luck. But the anthropic principle entitles us to postulate far more luck than our limited human intuition is comfortable with.
6. We should not give up hope of a better crane arising in physics, something as powerful as Darwinism is for biology. But even in the absence of a strongly satisfying crane to match the biological one, the relatively weak cranes we have at present are, when abetted by the anthropic principle, self-evidently better than the self-defeating skyhook hypothesis of an intelligent designer.  

Dawkins doesn't say what philosophy of mathematics he subscribes to. Suppose he is a constructivist. Then the complexity displayed by the natural numbers has evolved along with the minds that do mathematics but otherwise has no independent existence.

Suppose, on the contrary, Dawkins is a Platonist of some sort. Then, since the Platonic idea of Complexity pre-exists, he could scarcely say that 'complex structures must have simple causes'. Thus we know Dawkins isn't a Platonist. It is simply not credible to attribute to him the  belief that  individual horses participate in some Platonic idea of the horse.

Something else we know is that Dawkins is an Evolutionary Biologist. This doesn't force him to be nothing but a Constructivist in the Philosophy of Mathematics. He could be a Piercian Instrumentalist or a Heytig type Intuitionist or even a Formalist of a certain sort. What he can't be is a Mathematical Platonist of an extreme Tegmark type- believing 'All structures that exist mathematically also exist physically'- because that implies 
a) either accepting Godel’s proof of God, because mathematical structures would have what Godel calls ‘positive properties’- i.e. match to real world objects and so a principal ultrafilter of the St. Anselm type exists at least in some possible world- and if we are in the wrong world that’s just tough titty- we’re foredoomed to damnation

b) or denying mathematical structures can have positive properties- but this means minds have no way to ‘match’ with mathematical structures and so the human claim to be able to apodictically differentiate orders of complexity- P, NP, exponential etc- fails as these may be phenomenological artifacts.
What is true of Dawkins is true of each one of us.
In other words- though all the facts about the world don’t change, admitting Tegmark’s proposition alters what we can good faith affirm as being our own rational beliefs arrived at in accordance with best Public Justification practice.
Suppose we lower the bar and limit ourselves to what Quine & Putnam call ‘indispensable arguments’- i.e. stuff it makes sense to believe exists because our technology is based on it- is it unreasonable for Dawkins to a priori reject extreme Tegmarkism in favour of Constructivism (in which case the complexity of mathematical objects co-evolves with the minds that construct them)? Not at all, because currently there’s no way around ‘Beenakker’s boundary’. (http://arxiv.org/abs/physics/0702072v1)and there’s no Instrumental reason to counterbalance this objection.
Indeed, the reverse is the case, and what’s more Tegmark knows it.
What about Landsburg?
In this post, he writes ‘I claim to have explained in The Big Questions exactly how the first cause of our Universe could be a mathematical structure that is far more complex than the Universe itself; of course others, like Max Tegmark, have demonstrated this possibility in far more detail than I have. Whether or not Tegmark and I are correct in our beliefs, I claim we’ve at least demonstrated that (as far as we can tell) those beliefs could be true, which, once again, refutes Dawkins’s position.’

The problem here is that Computability puts a limit on the Complexity of what can be believed, other than by a leap of faith, about a mathematical structure . Either we have to believe things we can never prove or else there is a limit to the complexity only of mathematical but not of physical objects in Tegmark’s world (in which only computable mathematical objects are considered to be as real as physical objects ). Since we know the Red Queen effect drives co-evolved complexity for living things but not for mathematical objects considered as existing outside living minds and since we know some minds can grasp some complex mathematical objects but don’t know if the reverse is the case, it follows that it is impossible to demonstrate that a mathematical structure can be more complex than some currently living thing. Put another way, we know that some complex mathematical objects are ‘reducible’ for living organisms (otherwise we couldn’t say a living brain knows that a given object is complex) but we don’t know that the reverse is also the case- otherwise we’d have a proof that P equals NP.
For Economists, as opposed to philosophers, there is a big penalty involved in failing to grasp the central insight of Complex Adaptive Systems theory- viz. free agents, even with zero intelligence, create the Math that describes their behavior-that’s why we see real time polynomial complexity in price determination but not Walrasian fixed point algorithms running in exponential time (Axtell).
Mathematical Platonism is a bad habit for Econ, because it lets us off the hook for showing real time tractability for fixed point computation (necessary for things like the assumption of Ricardian Equivalence). True, one can adopt an an Austrian praxeology but the risk is of being ignored or sidelined by the mainstream.
The problem with Platonism is that it can cash out as faith in propositions known to be Mathematically unprovable. This is something worse than what Philip Mirowski decries- viz. neo-classical Econ’s tendency to take dis-confirmation as deep confirmation- it is a refusal to update the neo-classical Research Program in line with developments in Maths and computing and thus running the risk of becoming irrelevant.

Returning to Landsburg's post- first he makes a bizarre claim about what Dawkins is saying- viz. Dawkins isn't actually rebutting the Creationist 'argument from design' instead he's a mathematician working in Descriptive Complexity Theory who claims he has a proof that everything mathematicians call complex evolved from something simple. 
 Then Landsburg, by bringing up Tegmark, gives us the ammunition to prove, not Dawkins case (he wasn't talking about Tegmark universes) , but Landsburg's  Strawman-Dawkins case. At the same time, the atheist Landsburg, all unknowingly shows a way to save (or at least not destroy) the Creationist, Michael Behe's 'Irreducible Complexity' thesis. This is like Robin Hood aiming an arrow at the Sheriff of Nottingham and ending up killing Maid Marion and Little John and Good King Richard and Little Bo Peep.  But this is typical of Landsburg. His blog is pure intellectual slapstick.

Time and again we see Landsburg destroy the cause he claims to be defending with his weird logic and general air of illiteracy.  

Landsburg's wish to run with the hares and hunt with the hounds makes him a dangerous friend- in this case, he hasn't helped level the playing field for the Theists- only Narada's veena plucked by many fingered Time can do that- but he is a suicidal enemy. Aiming a blow at Dawkins he cuts off his own Tegmarkian head.

What is the moral of this story?

Survival of the fittest?

No, it is-  'more sex is safer sex when your name is Steven Landsburg and you are pleasuring the one great love of your life while typing up your blog with your other hand.'

Update

Landsburg latest comment is as follows- (my remarks are in bold)

Dawkins makes the statement that everything which is complicated arises from something that is simple. Dawkins does no such thing.  Dawkins doesn't say that Evolution always goes from the simple to the complex. The reverse happens if selection pressure eases up- for e.g. with Spiegelman monsters.  However, he does say that we human beings have evolved from relatively simple life forms. We weren't created by a more perfect, unimaginably more intelligent and complex being in the manner suggested by Genesis. Dawkins fails to define “complicated”, “simple” and “arises from”, so we have to guess what he means. Dawkins is a Public Intellectual writing in English. To find out what he means, you don't HAVE to guess, you can just ask him. In order to construct a potential counterexample to his statement, I have to come up with something that is complicated, but did not arise from a simple precursor, and the thing I have to come up has to satisfy this condition for a broad class of possible interpretations of Dawkins’s language. Dawkin's statement was domain specific. To refute him you have to come up with, not a potential, but an actual counterexample from that very same domain- viz. evolutionary biology. A

I claim that if the set of all true first-order statements about a structure X (in some appropriate formal language) is non-recursive, that’s a pretty good definition of complex — in the sense that no matter what everyday interpretation Dawkins intends of the word “complex”, anything that satisfies this definition will probably also satisfy his. See below

So: Dawkins says that the current state of the universe is complex, hence  must have a simple precursor. I observe that he hasn’t told us what he means by complex, but we can almost surely capture it by the difficulty of axiomatizing the set of true statements about the state of the universe. Therefore the right analogy is: No matter what you mean by complex, the natural numbers are almost surely complex by the same definition, and therefore the natural numbers — not any individual natural number, but the natural numbers, must have a simple precursor.

Landsburg is making two different mistakes

1) A mistake about natural language- He assumes that the conventions determining the truth value of statements in English about a formal language arise from something intrinsic to the formal language and not to customary English usage. This is not true. By English convention, this statement is true-  'Number theory is simple.  Aesthetics is complex.' Arguments in Number Theory get resolved quickly with relatively short papers deciding the issue. Arguments in Aesthetics just run and run and involve vast and expanding universes of discourse. This is an example of a meaning of 'complex' which is in accordance with English convention. It suffices to refute Landsburg. 

2)  A mistake about formal language-  he says ' if the set of all true first-order statements about a structure X (in some appropriate formal language) is non-recursive, that’s a pretty good definition of complex.  A first order formal language includes the Existential Predicate, thus, it can feature impredicativity and hence non-recursivity.  But by the Godel's 'compactness' & the upward Löwenheim–Skolem theorem nothing relevant to complexity can be said in the first order language as opposed to the second order language.
Fagin's theorem is a result in descriptive complexity theory that states that the set of all properties expressible in existential second-order logic is precisely the complexity class NP. Thus Landsburg's claim that he has a 'pretty good' counter-example is refuted because we don't know if it is computable. We don't know if unicorns exist somewhere in the Universe. But referring to something which may or may not exist is not a 'pretty good' counterexample to a theory about what exists.

In any case, something whose descriptive complexity can be proved to be nameable in English by just two capital letters is pretty damn Kolmogorov simple if English is our universal descriptive language. 

In fact, as time goes by we all expect to see increased compressibility in model theory- i.e. proofs will get shorter and have more generality. However,  we don't currently expect to see increased compressibility in real world objects- e.g. I don't expect to see vat grown clones of myself which have the same biological age and memories and tastes and phobias. It may happen but there is no proof that it will happen. The same may be said about Landsburg one day speaking other than through his arse.

David Friedman getting it wrong on Bork & Landsburg

Steve Landsburg, the enfant terrible of Demotic, Joe-the-Fox-News-watching-Plumber, Economics, posted some typically distasteful and speciously argued entries to his blog on the subject of the Stuebenville rape. David Friedman, the son of the illustrious Rose & Milton, came to Landsburg's defence in a series of blog posts which made the astonishing claim that there was something philosophically interesting in what Landsburg had written.

Was Friedman right?

Briefly- No.
Both the Law and Moral Intuition are unambiguous in determining that the State and/or Community takes guardianship of a person who lacks competence and is duty bound to take action against any transgression of that person's rights. It is of the essence of both Property and 'Natural' rights that they do not cease to exist in the absence or incapacity of the owner. If this weren't true, deontics would be as impossible a project, for rational Public Discourse, as Witchcraft or Vodoo. This being the case, for deontics not to be empty it must minimally be the case that a deontically legitimate State and or Community has an over riding duty to punish transgression of rights otherwise unenforceable by reason of absence or incompetence of the agent concerned.

Yet, it is a fact that Friedman has argued differently. What were his arguments?

Turning to his first post on the topic, we find he makes the following claims

1) that there is some similarity between some argument to be found in Landsburg's post and a principle enunciated in an essay by the Originalist legal scholar Robert Bork.

2) that the conjunction of Bork's essay and Landsburg's post somehow raises the bogey that the 'libertarian principle that I have a right to engage in what Mill referred to as self-regarding actions, actions that only affect me, is either false or empty.'

3) That there is in Law or lay Moral intuition some distinction between physical and mental harm. Friedman writes '"knowledge that pains you" isn't injury in the same sense as causing you to get cancer is.

 On the basis of his intuition of the truth of these 3 claims, Friedman feels able to say-

Bork was arguing that the harm caused by the use of contraception and the harm caused by air pollution were ultimately of the same sort, that it was legitimate to ban pollution hence legitimate to ban contraception—his article was in part an attack on Griswold v. Connecticut, the Supreme Court case that legalized contraception, a fact I had forgotten when I started writing this post. Landsburg is arguing that rape that does only subjective harm is of the same sort as reading pornography that does only subjective harm (unlike Bork, it isn't clear that he is thinks his argument is right, only that he thinks it interesting), that it is not legitimate to ban the reading of pornography hence not legitimate to ban that particular sort of rape. 

Let us now examine Friedman's 3 claims before evaluating his conclusion.

1) Is there a similarity between Landsburg's post and Bork's essay? 

No. A similarity between two texts can arise in the following ways

a) if they address the same issue or audience- this isn't the case. 

Bork is talking about the need for Supreme Court Justices to have a theory of the Constitution for Constitutional reasons. Landsburg isn't talking about any such thing. Furthermore, Bork wasn't against Contraception. On the contrary, he argued that the Statutory ban on it in Connecticut had fallen into desuetude and that it was ludicrous to pretend otherwise. What was mischievous about Grisworld vs. Conecticut was that the Judge had created a general right to Privacy which had no basis in the Bill or Rights, by pretending that the Connecticut statute still had some sort of force and thus presented an injury to the right of privacy. Friedman goes on saying 'Bork was against Contraception'. This is false. Bork says it would have been as ridiculous to enforce the relevant dusty old Statute as it would have been to arrest a Catholic priest under the Statute relating to Gambling just for hosting a Bingo night. To be clear, Bork was for Contraception or, at least, considered it as inoffensive as Bingo. There is not one iota of evidence for Friedman's claim yet he has made it on several occasions and on different fora. Bork's objection is to substantive due process as tending to the Judiciary's usurpation or unjust restriction on the proper operation of an essential function of the Legislature. Friedman does not understand this. He writes-

Bork's argument, in my words not his, goes as follows:

When I pollute the air I am injuring other people, so it is legitimate for the legal system to respond by penalizing me. What makes it an injury is not the fact that I affect the air but that the effect does harm; one could imagine an effect, such as a change in the ratio of two stable isotopes of trace gases in the atmosphere, that would not matter to anyone and so would not be seen as an injury or a proper subject for legal action.

Friedman is writing about what Lawyers call Justiciability which only arises when someone somewhere is injured either physically or feels a sense of moral outrage or affront or has some other objection to what is happening. The scenario Friedman puts forward- viz. one in which a harmless change in the ratio of stable isotopes occurs- is not justiciable because the point at issue is 'unripe'. Bork does not make this observation. It would have been ludicrous for him to do so since he was writing for Lawyers and Legal theorists perfectly familiar with this notion.

b) they share some premise or reflect upon a common history as happens if they have an intertwined intellectual genealogy- i.e Landsburg post encodes an intellectual tradition with which Bork had interacted in his essay. This is not the case. Friendman's reference to a chapter in his own book, on optimal punishment theory, is totally beside the point because Bork was an Originalist not a Utilitarian, and so, not surprisingly, there is nothing in his essay which shows an interaction with either Landsburg's intellectual precursors or those of Friedman.

c) they share a property of 'salience'- i.e. are important intellectual landmarks within a specific inter-subjective cognitive map. This is not the case. Bork's essay has salience- it was published in a respected Journal. Landsburg's blog post was a mere jeu d'esprit of a particularly juvenile and attention seeking sort.

Clearly, Friedman's claim is easily defeated by methods he must have some inkling of. The fact that he makes it anyway is evidence of either bad faith or mental impairment.

2) Even if there is no inter-subjective similarity between Bork and Landsburg, still subjectively Friedman has found, in their heteroclite conjunction, that a threat exists to the Libertarian principle re. self-regarding actions (i.e. those which have no 'externalities' i.e. impose no cost or benefit to others other than through the market). 

Is this claim reasonable?

 No. 

For two items in your train of thought to be related by succession does not constitute, except perhaps in Mantic poetry, a publicly justifiable claim that the terminus of that train of thought is indeed, objectively and for the purpose of rational discussion, inter-related with what went before. In this particular case, Bork's Originalism goes hand in hand with something else- viz. the Constitutional right of Americans to change the Laws of their Country by putting pressure on their Legislators whose rights Bork defends against curtailment or usurpation by the Judiciary through his critique of substantive due process. Hirshcman would call this having 'Voice'. Suppose, for some reason, Hirschman 'Voice' is ineffective, then Americans have a Constitutional right to leave that country, renounce their citizenship, and thus cease to be bound by the Constitution created by its Founding Fathers. But, since such emigration (Hirschman 'Exit') can occur through the market, no externality arises. Thus Bork's essay is not relevant to the bogeyman that Friedman has raised.  

It appears that Friedman's invocation of the name and fame of the great Robert Bork- a hero to many-  in the context of Landsburg's puerile exhibitionism arises either from mental infirmity or bad faith. 

3) Neither the Law nor Moral Intuition makes any distinction between purely mental and physical pain. Why? If I make a credible threat that I will kill or torture you unless you do what I want, a crime has occurred, your rights have been violated, even if, by reason of your compliance, I do not actually carry out that threat. A little thought will show why a distinction between mental and physical injury- even if the two can be meaningfully distinguished- utterly vitiates any regime capable of enforcing Property or Natural Rights meaningfully. 

Friedman's motivation, it appears, is to isolate spurious from genuine claims of Psychic harm. In Economics, this is termed the problem of Preference Revelation. Yet neither Bork nor Landsburg nor Friedman himself address the topic. Instead, he uses the fact that this problematic is a feature of any Human Society to pretend to be a deep thinker. Once again, this is evidence of either mental infirmity or bad faith.

Having shown that Friedman's claims are false, and false in a particularly stupid and self-serving manner, we are in a position to pass judgement on his conclusion- viz that there is an intellectually plausible argument such that in our Society- 'rape that does only subjective harm is of the same sort as reading pornography that does only subjective harm'

This is false. 

Rape, by definition, is a Rights Violation. The State or the Community or whatever body it is that takes cognizance of Rights, has a duty to punish the transgressor of those Rights though that duty may be defeasible for all sorts of reasons. Bork's Originalist theory re. Constitutional Law is perfectly compatible with the view, which is now the mainstream view, that the Right to Privacy covers reading certain kinds of Porn- or indeed Landsburg's blog- but not others.

Friedman's own optimal punishment theory, without ambiguity or encountering any philosophical aporia, militates for this 'common sense' view. Even if the Local Govt. of Stuebenville had sold its right to Law enforcement back to the Community, rape that did not physical damage but 'only subjective harm' would still be punished. 

Now, to fully 'internalize' -in the Coasian sense- the benefit to the criminal of the crime as well as the benefit to others of his remaining free it is possible to stipulate- as happens in some Islamic regimes- that blood money or other compensation has to be offered the relatives of the criminal you want to execute or imprison. True, that is a possible market solution. But that doesn't militate against the principles involved here or my conclusion that Friedman's blog post evidences either bad faith or incapacity to reason.

Friedman's subsequent posts

Friedman's second post on this topic seeks to make a case that there is a fundamental distinction between 'property rules' and 'liability rules'. I have asked him to explain why this might be the case and if any relevant literature exists which supports his claim. He has not bothered to reply. I suggested reasons why Friedman is wrong in an earlier post.
Friedman writes-

I think I have now answered Steve Landsburg's puzzle. The difference between his example (or mine) of an action that imposes only subjective costs and his example of an activity such as reading pornography, or Bork's of using contraception, that imposes only subjective costs, is not the nature of the harm. The difference is that in the one case the cost is of a sort that can be measured, the action controlled, via a property rule. In the other, it is not. 

This is sheer nonsense. The same difficulties in imputing costs arise regardless of whether it is a property owner claiming damages or an appellant seeking compensation under a liability rule. Indeed, the distinction becomes meaningless if liability rule damages are assignable and survivable as is indeed the case for offences against the Right to Publicity, as opposed to that of Privacy.

In his third post on this topic, Friedman says that Landsburg's post is philosophically interesting and not trivial at all. Why? Well, it turns out he believes that Rights only obtain against the action of humans. If a bear attacks you, no question of Rights arise. If a human attacks you, the reverse is the case.
This is nonsense. It is of the essence of a Right that it arises independent of the species of the transgressor. I have a right to kill a bear who threatens me even if that bear belongs to someone else. I don't have the right to kill that bear, even if it belongs to no one, absent either a recognition that the act occurs in terra nullis or that the right has been ceded me either by Custom or Statute or some defeasible process of Public Reasoning.

In his fourth and final post on this topic, Friedman makes some disconnected references to issues in the Philosophy of Mind to suggest that at the root of his intervention in the Landsburg affair is some 'frightening idea' such that Moral Intuitionism cashes out as Nihilism or some other such Nasty. However, Friedman has never demonstrated any awareness or engagement with the areas of Philosophy which might make his claim plausible.  Here, more nakedly than elsewhere we see Intellectual mediocrity, if not meretriciousness, strutting its stiff on the catwalk or fashionable inanity as part of the 'Blogging Professor's collection'  brought to us by the 'Emperors without Clothes' Couture House or Designer Label.

Shame on David Friedman. He comes of distinguished stock. He has great talents- not least as a story teller.
Still, at least he isn't quite as awful as Landsburg. But Landsburg has worked hard to lower standards. Friedman can't hope to permanently boost his Blogger stats simply by becoming a free-rider on Landsburg's gadarene gravy train of thought.

Landsburg, Efficiency and Rape.

Steve Landsburg has been getting very hot and bothered about the Stuebenville rape. He asks 'Let’s suppose that you, or I, or someone we love, or someone we care about from afar, is raped while unconscious in a way that causes no direct physical harm — no injury, no pregnancy, no disease transmission. (Note: The Steubenville rape victim, according to all the accounts I’ve read, was not even aware that she’d been sexually assaulted until she learned about it from the Internet some days later.) Despite the lack of physical damage, we are shocked, appalled and horrified at the thought of being treated in this way, and suffer deep trauma as a result. Ought the law discourage such acts of rape? Should they be illegal?

As usually happens with Landsburg's lucubrations, there is something obvious he is missing. 
What is it?  Public policy, in Econ, is about balancing costs and benefits. It is the latter he has forgotten to speak off so as to elide the obvious fact that Laws are created by either
1) the 'Stationary Bandit' of the State which taxes benefits accruing to individual agents for which task it gains legitimacy by levying punitive fines and/or imposing corporal punishment on transgressors of Social Conventions. One reason people may acquiesce in the State's policing functions is that their own property and personal rights are safeguarded in their absence or other state of non-competency. In the rape case, the State became the guardian of the girl once she lost competency by reason of intoxication and has, as a matter of empirical fact not moral speculation, the duty to punish the transgressors- perhaps in a way that sets an example and creates a deterrent.
2) Communities bound together by some tie- perhaps contiguity, perhaps genealogy, perhaps identity of interest cab create Laws vesting different types of Rights. Once again, it is the essence of rights possessed by virtue of belonging to the Community that they continue to operate and remain enforceable in the absence or non-competence of the agent concerned.

In neither case, does any philosophical puzzle for Utilitarianism arise from the Stuebenville rape case because that ideology has always recognized that
a) doing righteous things itself generates Utility
b) present Utility can be the capitalized value of a future stream
c) (since Wicksteed) that the correct Utility calculus in (b) concerns true opportunity cost- i.e. is computed globally across all possible worlds.

Now, following H.L.A Hart, it is entirely uncontroversial to say that it is of the essence of the Law and Social Conventions that they are defeasible especially under the rubric of a change in the information set regarding Wicksteed opportunity cost. But this does not give rise to any great quandary for the layman nor any aporia for the intellectual.

To see why, suppose the following-

We learn that an act of necrophilia has been committed on a corpse in a mortuary. The immediate friends and family of the victim bear a terrible psychic cost. The friends and families of other eligible corpses handled by that mortuary also bear a high psychic cost. Anybody about to die or who has friends or family about to die also bears a psychic cost. More generally, there is a diffused psychic cost of an ‘what sort of world are we living in?’ type.

Now let us look at an actual case- a young woman in Taiwan was raped by a mortuary attendant. The rape caused her to come back to life. Her family decided to forgive the mortuary attendant. Here the ‘victim’ who previously bore no psychic cost receives such a large psychic benefit that it makes sense for Public Policy to make an exception to the rule ‘punish necrophiliacs’ such that it becomes ‘punish necrophiliacs IFF their horrible crime fails to restore life to the corpse they violate AND Society is so constituted that the victim may be reasonably be expected not to suffer so extreme a stigma as to prefer death’.
True, the Social Cost of such a Law may be more cases of necrophilia but the pay off might be  more victims brought back to life who might otherwise have been killed by their violators.

By failing to take notice of psychic benefits- or Kenneth Boulding's notion of psychic capital- Landsburg condemns himself, and his readers, to an exercise in futility. He refuses to give himself access to the Econ theory which made talk of costs relevant to issues of Public Policy. One reason why he might be inclined to do so has to do with the redistributional consequences of external costs, including psychic costs. Now, standard Econ- e.g. in constructing Cost of Living indices- distinguishes an Income effect from a Substitution effect such that one can meaningfully speak of Hicks-Kaldor improvements- i.e. situations where Society is made better off because it is possible for the people gaining a benefit to compensate those incurring a cost such that the latter are no worse off than before. If one does not distinguish the Income effect from the plain fact that an adversely affected agent has accepted some substitute by way of compensation, one can't say if a Hicks-Kaldor improvement has occurred. For e.g.  Paul Pennyfeather, in Waugh's first novel, suffers a catastrophic loss by reason of the drunken loutishness  of a fellow undergraduate at his Oxford College.  Paul loses a valuable scholarship, his place at University and his chance to rise in the world. The offending student, Sir Alastair Digby Trumpe, sends him Five pounds by way of compensation. Since Paul is now a much poorer man he has to take the compensation- but this does not mean it is adequate. (In the novel, his High Victorian scruple that 'a gentleman never accepts an illicit perquisite' is shown to be deontological pi-jaw simply). Later, however, it turns out that being expelled from College is what permits Paul to marry a wealthy widow with whom he is infatuated. Alastair now qualifies as his true benefactor and best man. However, it turns out that the widow is running a White Slavery syndicate- for which Paul receives the blame and has to go to Jail. Oddly, Jail suits Paul and he is perhaps better off than in his original position. 
In Waugh's books- Decline and Fall, Vile Bodies, A Handful of Dust- though people have consistent preferences under the rubric of the Substitution effect- they continue to prefer caviare to bacon and Dickens to Maeterlinck whatever their socio-economic position- the reverse tends to be the case for massive reversals of Fortune which Economists study under the rubric of the Income effect. The upshot is that Waugh, inheritor of the High Victorian Gothic style, is able to arrive at a sort of Stoic ataraxia such that the Efficient cause of Happiness is immune to Externality. True, the Substitution effect, at the level of cocktails and canapes, continues to operate and, absent transaction costs, can be brought under the banner of the market; but radical Income effects open the gates to a Catholicity of inwardness.

Returning to Landsburg, for whom the Income effect is anathema because it raises the question of Income distribution in Society (vide his misreading of the Ramsey rule) ,  every access and approach to ataraxia must be vitiated by the putting forward of the following false question to The Law.

' When we say that the law should encourage all and only those actions that are efficient, what, exactly, should we mean?'

further to which he offers the following analysis.

Definition 1. The action is efficient if my willingness to pay exceeds your willingness to accept. For example, if I’m willing to pay $100 for the privilege of harvesting the tree, and if you’d accept less than $100 to part with it, then the tree-cutting is efficient.

Definition 2. The tree-cutting is efficient if it would occur in a world with no transactions costs (i.e. a world in which there are no impediments to bargaining).

In many circumstances (ones where Income effects are negligible, for example) these definitions are equivalent, and economists often pretend they’re equivalent always — (well, bad economists do when writing stupid blogs) but sometimes they’re not

Example 1. I want to punch you in the nose non-consensually. (The non-consensuality is a big part of my enjoyment.) I’d pay $100 to punch you in the nose, and you’d accept $50 to take the punch. By Definition 1, the punch is efficient. But the punch would be unlikely to occur in a world with no transactions costs, because it would require bargaining, hence consensuality on your part, which kills my interest. So by Definition 2, the punch is inefficient.

Example 2. I am willing to pay $100 to cut down a tree; you are willing to accept no less than $150 to part with it. By Definition 1, the cutting is inefficient. But part of the reason I’m willing to pay only $100 is that I’m credit constrained. In a world with no transactions costs, I’d borrow more, and would be willing to pay $200 to cut down the tree. So by Definition 2, the cutting is efficient.

Example 3. I am willing to pay $1000 to cut down a tree; you are willing to accept $500 to part with it. By Definition 1, the cutting is efficient. But the only reason I’m willing to pay so much is that I make an excellent living in my job as a mediator who helps people overcome transactions costs. In a world with no transactions costs, I’d be much poorer and would be willing to pay only $200 to cut the tree. So by Definition 2, the cutting is inefficient.

Landsburg's confusion, which arises out of his failure to do a proper Cost/Benefit, Income distinguished from Substitution effect, Econ analysis, nevertheless reveals  a fundamental problem re. Counterfactuals and Revealed Preferences. Essentially, to be able to speak of efficiency we have to have something like a David Lewis/Stalnacker  notion of ‘closest possible worlds’. But, once we grant the metaphysical reality of these worlds strange things start to happen which beg the question of whether Preferences can be consistent. If they can’t, then talk of efficiency is stymied- it’s an anything goes universe.
In
Example 1) we might make a sort of Konus index over possible worlds so that you get to non-consensually punch a guy whom we know (by examining the closest possible world) would settle for less than you are prepared to pay. But this does not really get rid of the problem. If your Preferences are consistent and robust to small perturbations of the Information set, you don’t want to non-consensually punch the guy whose closest, possible world, counter-part consents. This is when things get spooky. There are a whole lot of things you want to do now, and would happily pay for, but which you wouldn’t if you knew how easy, uncontroversial and therefore the reverse of thrilling, they are in the closest possible world. In other words, knowledge of your Konus Preference Map over all possible worlds would cause you to change that very Preference Map, more especially for positional goods or thymotic services.
There are a lot of problems with modal realism of this sort even though Lewis developed it going forward from a Schelling type analysis of the Co-ordination problem. Essentially, for this approach to work, there has to be some underlying ‘basic preferences’ that can be objectively determined which agents ‘ought’ to have. But if such basic preferences are inter-subjectively discoverable in some possible world then who needs markets? An altruistic Central Planning Authority, setting each agent's ration, would eliminate a source of Pareto inefficiency.
2) This same consideration arises with respect to Landsburg's Second Example.
 Here the credit constraint mentioned is equivalent to assuming imperfect arbitrage relating to information available from possible worlds. Clearly, in this scenario, my ‘true’ credit worthiness, based on modal realism, is greater than what obtains in this world and this creates the inefficiency. Again, spooky stuff starts happening when we think about this. If modal realism is true, why don’t we know more about possible worlds? Or perhaps we do have this knowledge at some ‘basic’ level. 
Here we come up against Lewis’s arguments that there is some ‘elite eligible’ criterion which is just better at determining the truth of things than that which arises out of our, this world, conventions.

Example 3) The transaction cost arbitrageur here, to be successful, must have better ‘Lewis elite eligible’ criteria yet he is an agent in this world just like any other. But this means the quest of Efficiency must give rise to a Rent. The spooky bit arises because, admitting a notion of meta-preferences, the arbitrageur can have a rent dissipation ratio higher than One. This is because self-contestation of the rent can outweigh the Rent to Information or potential Efficiency gain.In any case, iff, as I think plausible, the diachronous nature of meta-preferences makes them essentially ontologically dysphoric, then Consequentialism is empty.

I suppose Paul Pennyfeather, who returned to College to study Theology, might well have changed his name to Frank Ramsey. Landsburg, on the other hand, in a glaring example of a blogger becoming as egregiously shite as the type of bigot attracted to his blog, might just as well change his name to Sanjeev Sabhlok and get himself a Baba already.