Friday, June 28, 2002

pluralistic ignorance, incentives, and government charters Send this entry to: Spurl Ma.gnolia Digg Newsvine Reddit

pluralistic ignorance, incentives, and government charters Peggy Noonan, writing about "The rise of the White Collar Big Money Psychopath," contrasts the ascendance of criminally dishonest corporate officers with a more general trend towards virtue:
Forty years ago men in the New York City borough of Queens ignored the screams of a waitress named Kitty Genovese as she was stabbed to death in an apartment building parking lot. Today men of Queens are famous for strapping 60 pounds of gear on their back and charging into the towers.
Noonan's comparison, however, is shockingly ignorant (or, perhaps, brilliantly sophistic). I suppose it's possible that Kitty Genovese died because the men of Queens were less virtuous 40 years ago. But my inner social psychologist thinks a much more plausible explanation is pluralistic ignorance:
In the first test, a group of three -- two actors and one unknowing subject -- were asked to fill out questionnaires in a room at the top of a six-story building. After a few minutes, smoke began to jet into the room. Because the two actors ignored the smoke, so did the unknowing individual. "The individual is sure that the smoke isn't dangerous because the others didn't react," says Darley. In a second test, three ordinary people were placed in the room. Remarkably, the result was the same: No one left the room, because each person was waiting for someone else to take action. When no one did, each person assumed that the smoke wasn't a danger.
The 9/11 rescuers were certainly brave. (Visiting Manhattan at the time, I myself hero-worshippingly went and thanked the firemen down the street.) But comparing rescue workers doing their jobs to average citizens stuck in a psychological trap is poor grounds on which to claim that we "have arguably in some interesting ways become better [people]." (Incidentally, "Pluralistic Ignorance" would be a good name for a team blog.) The rest of Noonan's article decries the betrayal of a "Novakian" aesthetics/ethics of capitalism:
As for business leaders, their responsibility is to shape a corporate culture that fosters virtue; to exemplify respect for the rule of law; to act in practical ways to improve society; to communicate often and openly with investors, pensioners, customers and employees; to contribute toward improved civil society; and to protect--lovely phrase coming--"the moral ecology of freedom."
While I agree that these would all be "nice-to-haves," I don't see how they became "responsibilities." People, after all, respond to incentives. And the combination of a stock market whose only care is earnings (which I blame mostly on investor psychology) with corporations whose only care is stock price creates powerful incentives for executive malfeasance. And a large part of the problem, I believe, is the corporate structure, which enables the aggregation of arbitrarily large amounts of capital under very narrow control. If we believe that power corrupts, then why are we surprised at misbehavior when we entrust corporate officers with billions of dollars of other people's money but little (downside) responsibility for what they do with that money? Although I am in no sense a "progressive," I agree with the spirit of these sample LTEs on Enron. I've earned much scorn from my libertarian (and Randroid) friends, who believe that the profit-maximizing corporation is the essence of freedom and virtue. But I see corporate charters (much like patents) as governmental grants of privilege, whose costs and whose benefits must be carefully weighed against one another in any sensible analysis. And insofar as corporations are government interference in the market (limited liability doesn't grow on trees!), I don't share the libertarians' knee-jerk opposition to restrictions on corporate behavior. (I meant also to talk about the stock market, but this is too long already. I'll save that for another time.) Godless chimes in: Methinks you are too kind to Mrs. Noonan. The topic of "pluralistic ignorance" is an interesting one, but I think that you inadvertently give too much intellectual heft to Noonan's work. Noonan is a blatantly partisan idiot. Here's a solid debunkment and here's a statistical account of her partisan language. Moreover, not only is Peggy blatantly partisan, her prose is also contentless. Peggy Noonan is the Maureen Dowd of the right. With her excessive fixation on personality over policy, she is more town gossip than dispassionate pundit. She's not a serious policy analyst, and her writing does not deserve to be taken seriously or pored over for contradictions. Here's the key graf from Chait's dissection:

The interesting thing here isn't Noonan's devotion to the president--most conservatives praise Bush, just as most liberals criticize him--but rather the personal nature of that devotion. She exhibits little interest in the president's policies except as windows into the greatness of his character. ... The hallmarks of the hero-worship style are a Manichaean moral sensibility, eloquent prose, and assertion rather than argument. This might seem like a harmless, even refreshing, counterpoint to the politics of personal destruction, which both parties now disdain as mindlessly partisan and corrosive to civic health. But Peggy Noonan's glorification of George W. Bush isn't a departure from the politics of personal destruction at all. It's the very same thing.

Basically, anyone who Peggy thinks well of (firefighters, Republicans) gets a host of nice adjectives tossed his way, even ones for which there is no basis in fact. Of course the converse also holds. She's exactly the type who would condemn Clinton for a DWI conviction (had one come to light) while simultaneously giving Bush a free pass. Digression: Whether a private liaison between consulting adults (the meat of the indignation was over this rather than perjury) is worse than a drunk-driving incident (which puts others at risk) is for the audience to judge, but one would expect even a diehard moral crusader to pause at the arrest of a 30-year-old drunk, especially when said drunk is supposed to have a shining "moral character". Noonan, however, seems incapable of recognizing the hypocrisy, let alone choking on it.

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