Arbitrary Framing & Economic Reality

Subjectivism is popular at many universities. I am not talking about the economics kind in which people have a diversity of preferences. I’m talking about the subjectivism that permits different and conflicting assertions of truth to be simultaneously correct. This is where the ‘my truth’ language enters. Having a diversity of feelings is one thing – and unavoidable. Having different practical claims about the material world is another. Many universities have embraced Descartes’s unreliability of the senses writ large. The result is that people of seeming plentiful intellectual capacity dogmatize themselves into speaking such that nothing is considered a default. Nothing “is normal”, there is only “normal for someone”.

It’s a perfectly defensible model of the world. And, as we know, models are applicable only insofar as they’re useful. The subjectivist model is great at describing the diversity of preferences and priorities. The model is bad for math and achieving material ends. Further, it can serve to hinder our understanding of worldly or social phenomena.

Here’s an example.

Consider people who don’t speak the same language. They may or may not have some other compensatory skill. For Mandarin speakers, we can rightfully say that they can’t speak or communicate as effectively with the English-speaking majority of people in the US. We can also say the converse: The English-speaking majority can’t speak Mandarin or communicate as effectively with the Mandarin-speaking minority. There’s a certain symmetrical beauty to being able to interpret reality both ways. It exercises our cerebral cortex.

However, modeling the descriptive statements as intrinsically equivalent harms our ability to sensibly understand and analyze the circumstances. Specifically, we need to talk about opportunity costs.

Consider an urban storeowner in America who speaks only Mandarin. Consider also an only-English-speaking customer who has a question about an item for sale. We can perform the same symmetrical analysis as above saying that they both speak different languages. Importantly, however, they face substantially different opportunity costs in two ways.

First, the English-speaking customer has low-cost alternatives. The language barrier need not be insurmountable. If the transaction cost of more difficult communication is adequate, then the English-speaking customer can go elsewhere relatively easily and purchase from the English-speaking storeowner down the block. They have plenty of low-cost opportunities for gains from trade. Clearly, there is nothing intrinsically advantageous about speaking English. What’s advantageous is speaking the more popular language.

By having access to the larger market, the English speaker has access to greater specialization and to more buyers and sellers. If the language difference is the only difference between two people, then the one who speaks the majority language has an economic advantage. I mean ‘economic’ in both the pecuniary and non-pecuniary sense. Speaking the majority language has the consequence of greater income. But that comes from the very real differences in costs and benefits associated with trade. If the exact same person spoke only a minority language, then their income would be lower along with their lesser access to trading partners. Therefore, while it is symmetrically true that the English speaker can’t speak Mandarin and that the Mandarin speaker can’t speak English, it is not true that they face the same opportunity costs.

Second, and probably more trivially, it may be that most English speakers never have occasion to interact with any Mandarin-only speakers. Whereas Mandarin speakers in the US have constant potential interactions with English speakers. It would therefore belie the costs and benefits to simply say that they symmetrically can’t speak the same language. Indeed, many English-speakers have no motivation nor awareness of potential Mandarin-speaking trade partners. At the same time, in the US, Mandarin speakers would very much have an awareness and occasion to interact with English speakers. While it is true that they don’t speak the same language, they differ by their access to potential trade partners who speak a different language. It wouldn’t reflect the incentives to say that the English speaker is less able to communicate with Mandarin speakers when they largely lack even the awareness of the minority language.

Conclusion

An analysis of English and Mandarin speakers in the US is not a symmetrical analysis. It doesn’t matter whether we frame English speakers has having a lower opportunity cost to trading with Mandarin speakers, or whether we frame Mandarin-speakers as having a higher opportunity cost to trading with English speakers. The economic truth is that the opportunity costs differ, no matter how we might try to equivocate about what normal is. Obviously, the above analysis isn’t specific to Mandarin and English, nor to language necessarily. While framing a circumstance with a default is an arbitrary modelling decision, asserting that two alternatives means or practices have the same opportunity cost or the same productive capacity is indefensible and often doesn’t reflect the underlying economic reality.

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