Category Archives: civic theory

how markets “think” about politics

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As I write, US stocks are plunging. I have no idea what will be happening by the time you read this post. However, stepping back from the moment, what does it mean that Wall Street indexes rose after Trump won the 2024 election but fell last week? Or that Ukrainian government bond prices rose from October 2024 until last week and then fell rapidly?

One view is that markets have wisdom–or at least predictive value–because they aggregate information from many people. Investors think critically and rigorously because their money is on the line. The recent trends make sense on their face and confirm that markets are rational.

A different view is that capitalism involves a class struggle, and capital markets rise when the upper classes expect their interests to prevail. This model has no trouble explaining why business leaders, including registered Democrats, would tell Steven Rattner that they like Trump. They were not predicting prosperity for all but expecting to profit for themselves.

I would endorse a third model. Friedrich Hayek had a genuine insight: individuals have limited cognitive capacity and diverse motives. Therefore, individuals cannot reliably assess whole societies, let alone predict the future of anything large-scale. However, says Hayek, within our own domains of experience and expertise, we can reasonably predict specific prices. After a tough spring, farmers will expect the price of wheat to rise.

Prices allow us to plan efficiently. Many people do not seek to maximize wealth but to accomplish something else, such as holding onto a valued job or retiring soon. Nevertheless, the result of all their private planning is a market that is–in certain respects–efficient.

However, markets also create opportunities to profit by correctly predicting the large-scale situation. In turn, such predictions require assessing the present. For example, to guess how the US economy will fare over the next four years, it’s necessary to evaluate Donald Trump as a leader. One can buy bonds and other securities partly on the basis of such predictions. In this way, an accurate evaluation of Trump could pay off financially.

But Hayek’s defense of markets would not encourage us to trust the aggregate results of such thinking. Just because many people trade securities, it does not follow that their overall understanding of the present or their predictions for the society as a whole are reliable.

On the contrary, each participant in a market who tries to predict how a whole economy or country will perform is subject to the same cognitive limitations that–according to Hayek–beset us as voters and policymakers.

Markets do respond intelligibly to news. Wall Street indices fall every time Trump announces tariffs and rise whenever he seems to back off. But these changes are not predictive. In fact, we can easily predict market shifts as soon as we know what Trump says. The market adds little new information.

It’s true that putting money on the line gives an individual a motivation to think rigorously and critically. But motivations do not solve cognitive limitations. The businessmen who confided in Rattner said that they didn’t like “woke stuff” under Biden. Such feelings should not directly influence their market behavior under Trump. Nevertheless, their hostility to “woke stuff” could affect their stock trades by influencing their moods or by leading them to consume news and information that is tilted in favor of Trump. As cognitively limited creatures, we must rely on limited sources and a priori models–also known as ideologies.

In recent months, CEOs reported rising confidence in the economy, while consumers’ confidence slipped. A closer look at consumer confidence reveals that it fell by 28 points among Democrats but rose by 32.8 points among Republicans between January and February. So we can compare three changing predictions: those of corporate bosses, Democrats as consumers, and Republicans as consumers. Why do the Democrats diverge from the CEOs and the average Republicans?

  • The CEOs tend to have different values from the Democratic consumers. If everyone agreed that Trump’s tax policies will boost corporate profits but hurt the environment, CEOs would be more positive than representative Democrats.
  • The CEOs have different information from Democratic consumers. They are awash in data about their own balance sheets, plus business-oriented news. Democratic consumers are seeing negative assessments of Trump.
  • The CEO’s and the Democrats probably hold different mental models of such fundamental issues as the role of government and businesses in our society. Everyone holds such models, without which we cannot absorb new information.
  • Partisan identity is working as a powerful heuristic. Americans are using the party of the incumbent president to predict the economy. This may be unwise, but human beings must use heuristics, and a party label does convey relevant information if you combine it with a model of the society.
  • Some people act performatively. I would probably answer almost any survey question about Trump in a way that made him look bad, even if I didn’t completely believe the literal truth of my response. Some may even buy financial instruments to make a point–witness the popularity of Trump’s cryptocurrency.
  • Finally, the information that people absorb may reflect political agendas. Rupert Murdoch, Jeff Bezos, and other media barons want to affect public opinion, although their impact is uneven because news consumers are sorted ideologically.

This is not a simple model, but it does have a simple core. It is methodologically individualist, presuming that the decision-makers are human beings rather than classes or other abstractions. Regardless of their interests and social positions, these individuals are cognitively constrained and not primarily concerned with assessing the whole society. When they do make general assessments and predictions, these decisions reflect their mental models (which, in turn, often reflect their social positions), limited information, and concrete issues that are salient for them at the time. As a result, markets respond intelligibly to widely reported breaking news but have little predictive value.

See also: The truth in Hayek; making our models explicit; social education as learning to improve models; how intuitions relate to reasons: a social approach; etc.

features of effective boycotts

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Classic boycotts have these features:

  1. A goal: What the boycott aims to achieve.
  2. A target: a decision-maker who is capable of doing something relevant to the goal.
  3. A demand: something that the target could agree to do.
  4. A cost: something that the target will lose if they don’t meet the demand.
  5. Negotiators: Individuals who can credibly agree to stop the boycott if the target complies sufficiently.
  6. A message: a description of the boycott that is aimed at relevant third-parties, such as observers who are undecided about the issue.
  7. Accountable leaders: people who decide on the previous six points and are answerable to those who actually boycott.

I am not posting this list to cast shade on the national boycott that took place on Feb. 28. I participated! And some of these components may have been in place. For example, people who boycotted through “Black churches with longstanding social justice ministries (like Trinity UCC in Chicago)” did have accountable leaders who articulated a message.

Also, it is possible that the seven features that made the Great Salt March and the Montgomery Bus Boycott succeed are not required in every successful action.

Nevertheless, we must think critically about strategy, or else we are less likely to win. I would recommend attention to the strategies that were so important to Gandhi and King.

A teaching case that I wrote for Johns Hopkins’ Agora Institute about the Montgomery Bus Boycott is available free here and can be used by voluntary groups as well as by students in courses. At its heart, it asks people to think about goals, targets, demands, methods, and decision-making processes.

See also: the current state of resistance, and what to do about it; strategizing for civil resistance in defense of democracy; building power for resisting authoritarianism; Rev. James Lawson, Jr on Revolutionary Nonviolence; three new cases for learning how to organize and make collective change; learning from Memphis, 1968; etc.

a generational call to rebuild

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In January 2024, I wrote a post entitled “calling youth to government service.” I noted that many talented young people would vote to expand government, but few were interested in working in government. I posited both demand- and supply-side explanations. Young people do not know enough about public-sector employment, nor do they sufficiently value it. At the same time, the federal government has been very bad at recruitment and retention.

Now, as someone who advises many talented and idealistic undergraduates, I cannot encourage them to apply for federal jobs.

We don’t know how long “now” will last. Bad-case scenarios envision an extended period of crisis and the kind of kleptocratic authoritarianism that will keep federal (and some state) agencies from functioning appropriately for years.

Nevertheless, it is important to begin envisioning a rebuilding phase, even while we also strive to defend current institutions. The opportunity to rebuild could begin as soon as two years from now. At least, that is when presidential campaigns will launch, and one of their core messages could be rebuilding the government. Meanwhile, today’s college students and recent graduates can be obtaining further education or experience in local government or the private sector with an eye to joining the federal civil service in 2028.

Besides, having a positive vision can change the political situation in the present. Optimism is important for morale. We should be struggling to make change, not just to block threats.

Donald Trump and Elon Musk are already educating Americans about the value of the federal government. In the latest CNN poll, substantial majorities of Americans oppose “laying off large numbers of federal government workers,” “shutting down the agency that provides humanitarian aid in low-income countries,” and (by the widest margin) “blocking health agencies from communicating without approval from a Trump appointee.” Since foreign aid generally lacks public support, and the Trump/Musk layoffs have yet to affect many voters directly, I suspect that subsequent cuts will be even more unpopular.

Many of my recent predictions have been wrong. I thought that some of the Biden-era spending would be popular, and I thought that Musk’s layoffs at Twitter would break that platform. Nevertheless, I predict that mass federal layoffs will raise awareness of the value of the federal workforce. Meanwhile, the civil service already needs hundreds of thousands of new workers to replace retiring Baby Boomers, and Trump’s layoffs will create many additional vacancies.

Under these circumstances, how should the federal civil service be rebuilt? I would posit these principles:

1. We need an eloquent generational call. Today’s young people can reconstruct their government to address social and environmental challenges. This is their historical calling. Government service is an essential means to the ends that many of them care about, including saving the earth from climate change.

    2. The paradigm of service should be a full-time, professional career in the government. I am not against social entrepreneurship or temporary community service, but the civil service is much larger and more important. We do not need alternatives to government careers nearly as much as we need more and better positions within the civil service (federal, state, and local).

    3. The goal is not to return to 2024. The federal workforce had well-documented problems before Trump was inaugurated. Although we must tolerate some degree of sclerosis and waste in any large system–and although current federal workers deserve credit for much valuable work under difficult circumstances–there was already a need for change. Young people should be recruited to rejuvenate and reform federal systems, not just work in them.

    4. But any changes should be scrupulously legal. Rule of law is a fundamental value, and nowhere is it more important than in the executive branch, which monopolizes the legitimate use of violence in our society. The federal government can kill, imprison, monitor, or financially ruin people. Its every action must be governed by statutory law. This means that rejuvenating the federal civil service must proceed within the clear statutory authority of the president, unless new legislation passes. (And I am not expert enough on this topic to recommend legislation.)

    5. Federal agencies already do some work that I would label “civic”: collaborating with groups in civil society, convening citizens for important conversations, and educating (not propagandizing) the public. But they also (inevitably) play many roles that are bureaucratic, technocratic, and managerial. A rebuilding effort should emphasize the civic aspects of government, because these are valuable, they can appeal to younger people who are skeptical of bureaucracy, and they can reinforce the public legitimacy of the executive branch. If you want people to trust experts, give them opportunities to work with experts on common problems.

    The overall message should acknowledge the value of the institutions that we have built so far–and the service of our current and past public sector workers–while envisioning new and better ways of governing.

    See also: calling youth to government service and putting the civic back in civil service.

    was Weber wrong about bureaucracy?

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    With the US civil service under attack, it’s worth revisiting classical ideas about bureaucracy. Max Weber begins his hugely influential discussion (Weber 1922/1968) with this paragraph:

    Experience tends universally to show that the purely bureaucratic type of administrative organization—that is, the monocratic variety of bureaucracy—is, from a purely technical point of view, capable of attaining the highest degree of efficiency and is in this sense formally the most rational known means of exercising authority over human beings. It is superior to any other form in precision, in stability, in the stringency of its discipline, and in its reliability. It thus makes possible a particularly high degree of calculability of results for the heads of the organization and for those acting in relation to it. It is finally superior both in intensive efficiency and in the scope of its operations, and is formally capable of application to all kinds of administrative tasks (223).

    Weber seems to have a kind of Darwinian model in mind. Given a soup of different kinds of organizational forms, the bureaucratic ones will prevail thanks to their superior efficiency. Socialism requires bureaucracy, and Weber even lists soviets (communist workers’ councils) as one of the bureaucracies of his time. He also interprets modern capitalism not as a system of market exchanges but as a space in which corporate bureaucracies grow. “Capitalism in its modern stages of development requires the bureaucracy” (p. 224). In fact, state agencies and corporations use convergent methods. Today, the same Microsoft Office tools can generate similar-looking Key Performance Indicators or org charts for a company, a nonprofit, or a state agency, because these organizations work very similarly.

    If you asked people to associate words with “bureaucracy,” I doubt that many would suggest “efficiency.” Quite the contrary: words like “bloat” and “waste” would come to mind. Few would worry that we are trapped in a world in which bureaucracies metastasize because they are so efficient. Their spread would be treated as a sign of declining efficiency and would be blamed on the self-interest of the bureaucrats.

    Was Weber right about the bureaucracy of Wilhelmine Germany but wrong to generalize, because bureaucracies tend to become inefficient? In that case, was he wrong to see their growth as inevitable? Or was he right about bureaucracies, and critics mistake bureaucratic systems as inefficient when they actually maximize outputs? Are many people undervaluing bureaucratic work as a calling, in Weber’s sense? Do people dislike the means that bureaucracies use, or resent their inevitable costs, or disagree about their ends? Are bureaucracies efficient for their own goals but not for the public good?

    Source: Max Weber, Economy and Society: An Outline of Interpretive Sociology, 1922. The translation of this section is by Talcott Parsons (Bedminster Press, 1968). See also in defense of institutions as “garbage cans”; radical change needs institutional innovation; what to do about the guy behind the desk

    strategies, policies, and skills

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    I’m thinking about the differences among strategies, policies, and skills, mainly because the Tufts Civic Studies Major, which I direct, aims to teach all three. I assume that definitions of these concepts have been extensively discussed, but without consulting any literature, I’m inclined to categorize them as follows:

    • Skill: The ability to do something useful. A skill can be quite concrete (e.g., conducting an interview) or more abstract (leading a team). Developing a skill often involves imitation, practice, and perhaps a dose of theory. Typically, we attribute skills to individuals, although I suppose that a group can be skillful.
    • Policy: A choice that an institution makes that affects people and/or nature. Such a choice need not be conscious and deliberate. However, if something happens by necessity, I wouldn’t call it a policy. A policy is something that the institution could change by choosing otherwise. Therefore, policy-analysis is about identifying the choices available to institutions, predicting their consequences, and assessing which one is preferable.
    • Strategy: A planned sequence of actions by an individual or group that aims to accomplish some goal. A strategy that’s worthy of that name considers the opportunities, constraints, risks, and threats, including the possible reactions of other people and groups. A strategy can leave room for revision and improvisation, but it needs enough detail to inform action. Therefore, learning about strategy involves identifying possible courses of action and their likely impact and assessing which course is preferable.

    These categories relate and overlap in many ways. Policy analysis and strategic planning are skills. Good strategy involves the application of available skills. (For instance, the first part of a strategy might be to deploy skilled people to recruit members.) A strategy can aim to affect policy. A policy can be part of a larger strategy. Institutions may enact and implement policies to develop skills. And so on.

    Nevertheless, these concepts are sufficiently distinct that I hope that we offer each to our students.

    I would also note that skills, strategies, and policies can be good or bad. The difference depends on their ethics and their outcomes–both their means and ends. Therefore, normative analysis and argumentation must complement any education about skills, policy, and strategy.