Friday, March 24, 2017

The Myth of the Rational Actor

The main flaw I find in modern economic theory is that each individual is a rational actor.  I’ve come across this idea mostly in the libertarian schools of thought, either Chicago school or Austrian school.  In both cases, the theories presupposes that individuals will act in a manner that benefits themselves most of all, so long as there are no external forces working against said interests.

Why is this a flaw?  The answer is quite simple: human beings aren’t rational creatures, we are merely rationalizing creatures.  We half animal and half in the image of God (but not half-divine, there is a marked difference).

Consider for example the prevalence of low time preference individuals versus high time preference individuals.  If human beings were naturally rational actors, wouldn’t there be more low time preference people out there?

For one thing, the vast majority of the human species has an IQ below 100.  Lower IQs is a huge factor in high time preference people.  Lower IQ people have trouble planning for the future and thus are more likely to exhibit high time preference actions.

But that isn’t limited to low IQ people.  There are a lot of people with above average IQs who fail to plan for the future.  I recall seeing a hybrid car pull into a parking lot one day and it had a Mensa bumper sticker.  For those of you who don’t know what Mensa is, it’s just a collection of people with IQ of 132 or higher.

Anyway, the man got out of his hybrid car and he was morbidly obese.  He probably cleared 300 pounds easy and wouldn’t surprise me if he was close to 400 pounds.

Does someone who weighs that much sound like a person whose sum total of life choices were low time preference?

I listened to Common Filth for a time and one of the things he would say is that we have a high IQ and all we seem to do with it is rationalize our abominable sins.  Sin is, by its very nature, a high time preference action.  Any time we engage in vices, for instance, we are merely harming our bodies in the long term for short term pleasures, many of which fade very quickly.

Another point I’d like to make is that many of the secular libertarians tend to equate “rationality” with “good” and “irrationality” with “evil”.  This is largely because the atheist or agnostic cannot define human behavior in terms of good and evil as to do so would mean that there is a God who defines what is good and what is evil.

Instead, they have to state that rational behavior is good behavior and that irrational behavior is evil behavior.  Unfortunately, this is not the case and I believe that they are twisting the definitions of “rational” and “irrational” to jam in their secular worldview into their ideology.

And one of the core principles of Utopian ideologies is that mankind is naturally good or rational.  Because without that premise, all Utopian ideals would shatter in the face of the grim reality that people are sinners from birth until death in this life.

And this is why I don’t believe in the principle of the rational actor, at least as it is interpreted today.

Make no mistake, I prefer a more decentralized government with less emphasis on social ills.  I think that churches should step up, build communities, and promote good moral values through social shaming.  I think the government should only get involved when a person’s property, liberty, or life was taken through force or fraud.  Because we are seeing how morality gets applied through government these days and it isn’t pretty.

But I come at this libertarian conclusion from a different angle: because people are irrational and sinful by nature, you don’t want them ruling over you and telling you how to live your life from birth to death.  After all, that is how all manner of sins become public policy and tax payer dollars fund the destruction of our civilization.