I am reading Alfie Kohn's book Punished by Rewards, which assaults incentive systems, bonuses, pay for merit, praising children, and any other extrinsic reward. Rewards are extrinsic when they arise outside a task. If I blog because I enjoy it, then the reward is intrinsic, but if I blog because of the great fame it brings me, then the reward is extrinsic.
Kohn's is a no-bathroom theory. That is, if I hire a contractor to build me a bathroom, and I tell him that his reward will be intrinsic rather than extrinsic, then I will get no bathroom. A more primitive example is a cave dweller who works harder than his neighbor to bag two mammoths instead of one. The second mammoth is his reward. He is not punished by the reward, for his family is better fed and may live longer. His hungry neighbor may spend his time on intrinsically rewarding tasks like drawing on cave walls, but the neighbor's family goes hungry. The industrious cave dweller is rewarded, and the reward is natural.
Mark Twain's Tom Sawyer convinced his friends to whitewash a picket fence because it was fun. Most of the time, though, my offering merely intrinsic rewards to contractors will not result in a contract. Modern economies are based on contracts, hence they are based on rewards, incentives, and bonuses.
I do not doubt the gist of Kohn's book: Experimental evidence developed by social psychologists in laboratory conditions shows that interest in tasks wanes when rewards are introduced. Nevertheless, the real world differs from laboratory conditions. No one goes to work without an incentive, namely, a paycheck. "If any would not work, neither should he eat," (2 Thessalonians, 3:10).
The phenomenon of incentives' causing declining interest in a task is related to the theory of cognitive dissonance. Absent a reason for doing something, the mind invents a reason: I am doing it because I believe in it or because it's interesting. If we are doing something because we have decided that we believe in it, we will tend to be better at it because we believe in it. Pay introduces dissonance: We do not believe in what we are doing; rather, we are doing it because of pay. That may make us less attentive because the pay rather than the task is our reward.
However, without pay and without rewards many tasks will not be done because the reality, absent psychological manipulation, is that we do not care enough to do most work. The cave man did not invent the automobile not because he would not have benefited from the automobile but because he could not imagine it. We imagine not only because of intrinsic interest but also because of rewards. We would not have most of today's conveniences--cars, electronics, and the like--without the financial and social incentives that benefited the inventors. That can be seen in the lack of invention in societies in which rewards are absent--India and the USSR, for example. They have not been innovative because of their socialistic systems. America became increasingly socialistic after 1900, so innovation has gradually slowed from the 19th century rate.
Kohn attempts to deflect these points by differentiating between objectively determined rewards and those dependent on others' will--a distinction he mostly avoids when talking about gainsharing plans and stock options. On page 183 Kohn writes this passage, which is among the most realistic in his book:
When someone contacts me about giving a lecture or writing an article, I ask how much is involved and often negotiate for the maximum amount that seems to be fair and that the organization can afford to pay. Then, assuming we have come to an agreement, I do my best not to think about the money again. I do this because I fear the consequences of construing what I am doing in terms of what I am being paid: eventually I might find myself thinking, "A is paying me twice as B, so I'd better do twice as good a job for A. If I ever reach that point, my integrity will be gone, and my intrinsic motivation will have fled along with it.
What I attempt to do, in other words, is decouple the task from the compensation. Since I am self-employed, this is largely a matter of how I think about my work--what I attend to, and when, and how. But for people who do not work for themselves, it is imperative that the act of decoupling be facilitated by the organization. This is done mostly by avoiding certain practices--specifically, anything that encourages people to become preoccupied with what they will get for what they are doing.
In other words, Kohn finds financial incentives amenable when he receives them because he believes that he is intelligent enough to decouple the reward from the task, but he has no such faith in workers, whom he sees as lacking his ability to put things in perspective because they need employers to do their thinking for them. Kohn applies similar elitist reasoning to students. He claims that students study for grades because the system has inculcated in them a belief in incentives. He does not believe that students can think for themselves, as he believes he can, and develop interest in a subject.
Kohn's lack of faith in students' ability to think for themselves falls apart with respect to their cheating. Despite being told over and over that cheating is wrong, many students still cheat. Kohn seems to think that it is impossible for students to think for themselves and develop interest in a subject because schools give rewards for study, but it is possible for students to think for themselves and cheat even though schools give punishment for cheating. Why is developing an intrinsic interest in the face of rewards more difficult than cheating in the face of punishment? Both are subject to external incentives.
Kohn's elitism is familiar to those who have thought about professionals' privileged roles in America's authoritarian economic system. Kohn himself has garnered rewards such as consulting contracts with major corporations, writing for the Harvard Business Review, and appearing on CNN. Why would such capitalist institutions be interested in supporting a radical, which Kohn claims he is?
Although Kohn claims to be opposed to rewards because they are, in his view, authoritarian, Kohn's solution set is authoritarian--and in many ways to the liking of authoritarian corporate bailout recipients. He sees no problem in using authoritarian, violent methods to ban products that do not match his personal tastes (p. 192):
But what interests me are the unpleasant jobs that do not have to be done in order for society to function, those whose existence reflects the premise of our economic system that if something sells, it has value by definition and should be produced. Should convenience foods or luxury appliances be made available if the human costs of preparing or assembling them are severe? Our answer may be yes, but the question needs to be asked. If the issue is rarely addressed, it is partly because many people are forced to choose between working at such jobs and not working at all--a choice framed not by "life" but by our economic system. These people are expected to be grateful that any employment is available, regardless of the psychic and physical toll of doing such work.
In other words, if Kohn feels that convenience foods are unnecessary, then Washington should send federal agents to force the producers to stop making those foods in the name of the producers' supposed authoritarianism in rewarding their employees.Violent federal agents are presumably not authoritarian in Kohn's world.
In fact, few workers earn an adequate wage. Incentives are a way for workers to improve their wage. Such improvement is possible on large scale only in a free economy. It exists nowhere else in the world other than in free market economies (including Sweden's relatively free one). It exists to a greater degree in countries that have freer economies than the US, such as Singapore, Hong Kong, and Switzerland, and it does not exist in countries where there are no incentives like North Korea and Cuba.
Why is Kohn popular among big business-related interests like CNN and the Harvard Business School? This point has been addressed by historians, such as Martin Sklar, who have studied the Progressive era. Big business has a lot to gain from not paying incentives to workers and from centralizing authoritarian control, where it can illegalize any business that it and Kohn find offensive. By avoiding incentive pay, corporations can save lots of money. Plus, they can put their competitors out of business by using government controls to shut down those that do.
Sunday, January 24, 2016
Monday, January 4, 2016
The Liberal Arts Can't Fix Higher Education
My essay "The Liberal Arts Can't Fix Higher Education" appeared at Minding the Campus on December 28, 2015. What can fix higher education? Better attention to basic skills, including memorization of the multiplication tables, reading-and-writing practice, writing correction, math correction, and grammatical skills are a start. These need to occur at the K-12 level, but they also need to occur at the college level when they are needed. Liberal arts is problematic because it's not done well. The liberal arts tradition was rooted in Latin, Greek, and Hebrew, but today's college students often cannot write English.
Indeed, the claim of today's colleges that they encourage diversity is belied by many students' (also here) getting no exposure to a language. Indeed, I very much doubt that most faculties can teach from diverse perspectives because they are trained in narrow specialties and mostly do not have broad education. As well, few are interested in improving the skills needed to study liberal arts, including writing.
Indeed, the claim of today's colleges that they encourage diversity is belied by many students' (also here) getting no exposure to a language. Indeed, I very much doubt that most faculties can teach from diverse perspectives because they are trained in narrow specialties and mostly do not have broad education. As well, few are interested in improving the skills needed to study liberal arts, including writing.
Wednesday, December 30, 2015
What Do Falling Oil Prices Tell Us about the Dollar?
I recently blogged about my bearish positions on the oil and gold markets. Today, the Wall Street Journal observes that oil prices are falling on the Saudi oil minister's statement that despite falling prices Saudi Arabia won't change its output. Despite prices that are below most US producers' break even points, the US producers are covering their variable costs. The journal writes: "U.S. oil stockpiles remain near levels not seen for this time of the year in around 80 years." Stockpiles' rising to record levels will further pressure ]oil prices. In the short run the situation is bearish, but in the long run it is bullish.
What does this tell us about the dollar? America's Keynesian and monetarist economists, Democrats and Republicans, have created a monetary system whereby the dollar serves as a reserve currency; governments, central banks, and citizens around the world hold dollars; and the dollar is backed by the full faith and credit of the government that fought the Iraqi War in order to eliminate weapons of mass destruction. The rationale for this system is that the sovereign dollar holders will act rationally.
Nevertheless, the sovereign producers of oil are also the sovereign holders of dollars. As producers of oil, many are now producing at a loss. If there can be a glut in the oil market, how can these sovereign producers assume the mantle of rationality when it comes to holding dollars?
The famous game theory model of the prisoner's dilemma predicts that when two parties do not share information the solution to the problem of choosing whether or not to collude tends to be suboptimal. Of course, central banks speak to one another--much as European governments spoke to one another before a millennium of wars.
What does this tell us about the dollar? America's Keynesian and monetarist economists, Democrats and Republicans, have created a monetary system whereby the dollar serves as a reserve currency; governments, central banks, and citizens around the world hold dollars; and the dollar is backed by the full faith and credit of the government that fought the Iraqi War in order to eliminate weapons of mass destruction. The rationale for this system is that the sovereign dollar holders will act rationally.
Nevertheless, the sovereign producers of oil are also the sovereign holders of dollars. As producers of oil, many are now producing at a loss. If there can be a glut in the oil market, how can these sovereign producers assume the mantle of rationality when it comes to holding dollars?
The famous game theory model of the prisoner's dilemma predicts that when two parties do not share information the solution to the problem of choosing whether or not to collude tends to be suboptimal. Of course, central banks speak to one another--much as European governments spoke to one another before a millennium of wars.
Sunday, December 27, 2015
Trump versus Sanders
The Wall Street Journal blog reports that Bernie Sanders aims to win Donald Trump's supporters' votes, for they are anxious about the economy, whose decline Sanders blames on greed. Greed, of course, has always existed, and there is no evidence that there is more greed now than there was in the free market period of American history, when real wages grew at 0.5% to 2.5% per year.
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Mr. Sanders is right: There is little difference between Mr. Trump and him. Both are big government advocates. Mr. Sanders sees government redistribution as the cure to greed, an absurd, impossible plan, and Mr. Trump sees government immigration restrictions as the cure to job loss, an equally absurd non-sequitur.
While Hitler, like Trump, was a racist, he was also, like Sanders, a national socialist. The twenty-five-point Nazi plan of 1920 contains much overlap with Mr. Sanders's views, albeit Sanders's Brooklyn Jewish background may not have been to Hitler's taste.
Point six of the Nazi twenty-five-point plan, for instance, was nearly identical to Sanders's position on immigration: "Non-citizens may live in Germany, but there will be special laws for foreigners living in Germany."
The Nazis also agreed with Mr. Sanders's redistributionist schemes, as in points ten and eleven: "Every citizen should have a job. Their work should not be selfish, but help everyone. Therefore we say...No one should live off money from rents or other income unless they have worked for that money."
Like Sanders, the Nazis hoped to repeal greed. Since greed is a natural impulse like sexual desire or hunger, aiming to repeal greed opens the door to repression and ultimately murder, as has been the case with a long list of large-scale socialist states over the past century.
The Nazis' immigration policies, redistributionist schemes, and opposition to selfishness parallel Bernie Sanders's platform. The American left is a reincarnation of the Nazi movement, with the racist (but not anti-Semitic) element excised.