Why is the world like it is right now?
Why does it seem that we are putting more of ourselves than ever before into efforts to help, to make the world a better place, but we seem collectively to be growing only more incompetent?
We are, as individuals, the largest, best educated cohort of human beings that have ever lived on Plant Earth. Sure, maybe Harvard teaches more woke stuff, or maybe we are manipulated by TikTok and Fox News or whatever. There have, nonetheless, never been more humans more capable and skilled at any other moment in human history. Todays' graduates of Harvard — and today's graduates of every State U — can read and write, perform mathematics, and make use of unprecedented technical tools more capably than any generation in history. If you are into IQ, the Flynn Effect means we are about as smart as we have ever been.
Yet collectively, we are fucking idiots. If I may quote Larry Summers, look around.
I want to posit a very simple explanation for much of our aggregate incapacity. We now devote ourselves much more to unsituated rather than to situated virtues. But constructive action depends primarily on accomplishing situated activities, which the extremity of our dedication to unsituated virtues now undermines.
What do I mean by "situated" and "unsituated" virtues? Unsituated virtues are virtues we can all recognize based on widely shared information and values. Situated virtues, on the other hand, are legible only within the context of specific institutions or circumstances. Only insiders, suffused in real-time institutional knowledge that would be difficult to formalize or communicate broadly, even perceive the choice set under which some actions would be virtuous and others destructive. Situated virtues encourage action that would further the mission of an institution in ways too indirect or internal or intuitive to easily communicate, let alone justify, to outsiders.
Racial justice is an unsituated virtue. We all understand why racial justice would be a good thing and is a goal worth striving towards, or conversely how it is a shibboleth that woke elites abuse in order to subjugate working people and then legitimate that usurpation with tokenistic "diversity". You don't need to actually work in admissions at some specific university to understand or participate in this debate. The director of admissions at an elite college, the (now deposed) board of the San Francisco Unified School District that devoted pandemic year to an ill-starred renaming project, the HR director of any major corporation, all understand the project of racial justice on similar terms.
Chris Rufo famously understood nothing about my alma matter before making it a battleground over "DEI". He didn't need to. His project is a "long march through" the institutions to counter what he perceives as the same long march through from the other side. His worldview leaves no room for the day-to-day, invisible-problems-solved, particular-goals-accomplished lifeblood of each institution. They are all just pieces on a vast chessboard, enacting a contest legible to all of us who let "politics" become our vocation and entertainment.
"Woke" and "anti-woke" both are pursuits motivated by unsituated virtues. Obviously, to activists within each of these projects, the other is not motivated by any virtue at all, but by vice. Whoever is right, whoever is wrong, they share the same fundamental characteristic: They are driven by an "idealism" — or a "grift", whatever — that is not tightly tethered to the particularities of the institutions they seek to alter. Their project is overarching. It supercedes little details. They may eventually have to attend to idiosynchracies in order to bend those institutions to their will, but the direction of the bending is determined long prior to that attention.
Another unsituated virtue is making money. Like woke and antiwoke, whether in some broad sense you consider making money virtuous or vicious is besides the point. It is a virtue in the sense that it is a thing many of us individually and collaboratively pursue. We behave as though making money, and making more money, would be a good thing. We certainly try to achieve it.
The "shareholder value revolution" that took root in the 1970s was explicitly and proudly a project intended to subordinate situated virtues (which economists disparaged as "agency costs") to the unsituated virtue of profit maximization. The theory was that profit maximization promotes economic efficiency and social good, so whatever firms do that is not conspicuously profit maximization — any way they attend unnecessarily to internal, invisible projects and concerns — can only constitute waste. By incentivizing managers to focus solely on externally legible shareholder value — and ripping away cash flows that might otherwise "burn a hole in managers' pockets" — the revolutionaries sought to make the real world fit a simple economic model under which perfectly competitive profit maximization yields at least Pareto optimal outcomes, if not a true maximization of welfare.
This project was rich with an irony its protagonists mostly failed to notice. Politically they allied themselves with the Friedrich Hayeks of the world. But Hayek's enthusiasm for market mechanisms was based precisely on humility about what disembodied wise outsiders could possibly know about a world in which welfare-relevant information is radically and illegibly dispersed.
The shareholder value revolutionaries were not driven by humility. They were sure that an absurdly stylized model connecting immaculate profit-maximizing firms, share prices, and social welfare was all they needed to understand. They had no compunction about imposing the crudest incentives as strongly as possible for precisely the purpose of overwhelming any invisible, illegible, particular concerns that might interfere with the project of maximizing near-term — and therefore long-term, because our protagonists believed markets "efficient" — share prices. And so we emerged with leaner, more efficient, firms. Like Boeing.
Our poisonous overdedication to unsituated virtues is now structural. It is inseparable from the very transactional kind of society we've let usurp the banner of liberalism. Which was the chicken and which was the egg I don't know. But employers no longer offer anything like a lifetime career ladder, while the most skilled professionals often defer, or indeed never take on, very long-term institutional commitments. At a personal level, I'm deeply attached to continual reinvention and nomadism. But into what kind of institutions, what kind of societies, do all we nomads compose? And how does that liberty affect those less well-placed to pick-up stakes and reinvent themselves when things go awry?
The incentives of the portable professional are quite different than those of a dedicated lifer. Our careers flit between many firms in the private sector, or many roles and positions in nonprofits or public service. Skills we develop pursuing situated virtues aren't necessarily portable. They don't translate easily into resumé items. Whatever deep institutional know-how we acquire is rendered obsolete with our next pivot. A school board member can use her racial justice activism as a springboard for all kinds of other roles. It constitutes achievement legible to sympathetic outsiders. If she devotes the same energy to quietly organizing conversations, resolving internal disputes, facilitating consensus, all of which contributes to excellences in education provision that may or may not show up in standardized testing? From the outside all she has been is a faceless bureaucrat. She might receive a glowing reference, from a crony.
So individually, rationally, we look for overlaps between whatever our organizational roles might be and externally legible, unsituated virtues. But by seeking the kinds of achievements that help build our personal brands, we quietly deform institutions that we constitute, and starve them of the kind of work whose dividends are more subtle and collective. We end up with very brilliant people occupying all the roles of very dysfunctional organizations. Increasingly we find ourselves quite explicitly letting pursuit of unsituated virtues override the more specific purposes and goals of the institutions we participate in. (See New College, the Audubon Society, etc.)
This story has a lot of parallels, and touches on a lot of themes I've written about before.
"Situated versus unsituated virtues" is an institutional analog to extrinsic vs intrinsic motivation at an individual level.
I think increasing reliance on hard information rather than soft information has destroyed the unique role banks used to play in economic and social development. Abjuring soft information in pursuit of scale has rendered banks little more than crony-capitalist, too-big-to-fail gatekeepers between citizens and the use of state money. Soft information is information that cannot easily be made universally legible and verifiable. Acting on soft-information is necessarily a situated virtue.
The financial analog of a very transactional social liberalism is the cult of liquidity, which is the antithesis of investor commitment. Perhaps firms are better run and managed with investors who must devote some attention and voice to the management of firms they invest in, rather than investors all of whom imagine they can costlessly exit if the firm is mismanaged, or who simply diversify away any care.
Sometime in the 1980s, I think, David Letterman had on some MENSA person who was allegedly the smartest person in the world. So, he asked, why haven't you cured cancer?
We have all become that person. More or better education, always the liberal cure-all, is beside the point. It's our institutions that are illiterate, not the individuals who people them.
Garett Jones wrote a tweet that, more than a decade ago, I characterized as "the single most insightful economics tweet of all time". He wrote
Workers mostly build organizational capital, not final output. This explains high productivity per ‘worker’ during recessions.
Jones has since deleted this tweet. It was probably already out of date when he penned it. Times have changed, and not for the better.