Fallacies of Capitalism 12: The Lump of Labour Fallacy

The Lump of Labour Fallacy

The lump of labor fallacy is a mistaken belief that there is only a fixed amount of work or jobs available in an economy. It suggests that if someone gains employment or works fewer hours, it must mean that someone else loses a job or remains unemployed. However, this idea is flawed.

Here's a simple explanation:

1. Fixed Pie Fallacy: Imagine a pie that represents all the available work in the economy. The lump of labor fallacy assumes that the pie is fixed, and if one person takes a larger slice (more work), there will be less left for others. This assumption overlooks the potential for economic growth and the creation of new opportunities.

Example: "Assuming that there is only a fixed amount of work available is like believing that the pie will never grow bigger, even when more bakers join the kitchen."

2. Technological Advancements: Technological progress often leads to increased productivity and efficiency. While it may replace certain jobs, it also creates new ones. The lump of labor fallacy fails to account for the dynamic nature of the job market and how innovation can generate fresh employment opportunities.

Example: "When ATMs were introduced, people worried that bank tellers would become jobless. However, the technology not only made banking more convenient but also led to the emergence of new roles in customer service and technology maintenance."

3. Changing Demand and Specialization: Economic shifts and changes in consumer preferences continually reshape the job market. As demand for certain products or services diminishes, it opens up avenues for new industries and occupations to thrive. The lump of labor fallacy overlooks this adaptive nature of economies.

Example: "When the demand for typewriters declined, many feared that typists would become unemployed. However, the rise of computers and the internet created a surge in demand for IT specialists and web developers."

In summary, the lump of labor fallacy wrongly assumes that there is a limited amount of work available, failing to consider factors like economic growth, technological advancements, and changing market demands. By understanding the dynamic nature of economies, we can see that job opportunities can expand and transform rather than being fixed or limited.

Fallacies of Capitalism 5: The Self Regulating Market Fallacy

How does the "self-regulating markets" fallacy fail to account for the need for government intervention to address market failures and ensure fair competition? 

The "self-regulating markets" fallacy is the belief that markets can regulate themselves without the need for government intervention. This idea suggests that if left to their own devices, markets will naturally correct any imbalances and ensure fair competition. However, this fallacy overlooks the need for government intervention to address market failures and promote a level playing field. Let's explore this concept with simple examples:

1. Market failures: Markets can experience various failures that prevent them from functioning optimally. For instance, externalities like pollution or the depletion of natural resources are costs or benefits that affect third parties not directly involved in transactions. Without government intervention, these external costs or benefits are not taken into account, leading to inefficient outcomes. For example, if factories are allowed to pollute freely, it may harm public health and damage the environment, but the market alone may not correct this issue. Government intervention, through regulations or taxes, can internalize these externalities and ensure a more efficient allocation of resources.

2. Monopolies and market power: Unregulated markets can result in the concentration of market power and the emergence of monopolies. Monopolies can abuse their power by setting high prices, reducing quality, and stifling competition. This restricts consumer choice and hampers innovation. Government intervention, such as antitrust laws and regulations, helps prevent and address monopolistic behavior, promoting fair competition and benefiting consumers. For example, if a single company dominates the internet search engine market, it may unfairly prioritize its own services over competitors' offerings, leading to biased search results. Government intervention can help maintain a competitive market where multiple players have an equal opportunity to compete.

3. Information asymmetry: In many transactions, there is an imbalance of information between buyers and sellers. This information asymmetry can lead to market failures. For instance, in the market for used cars, sellers may have more information about the condition of the vehicle than buyers. This can result in "lemons" being sold at higher prices, as buyers are unable to make informed decisions. Government intervention, such as consumer protection laws and regulations, can require sellers to disclose relevant information and ensure transparency, enabling fair transactions and reducing information asymmetry.

4. Ensuring fair competition: Self-regulating markets may not always guarantee fair competition. Unfair business practices, such as price fixing, collusion, or deceptive advertising, can harm consumers and undermine competition. Government intervention through competition policies and regulatory bodies ensures that businesses compete on a level playing field, preventing anti-competitive behavior and promoting fair markets. For example, if two competing companies agree to fix prices, it harms consumers who are deprived of the benefits of competitive pricing. Government intervention can enforce regulations that prohibit such anti-competitive practices.

In summary, the "self-regulating markets" fallacy fails to account for the need for government intervention to address market failures, prevent monopolies, mitigate information asymmetry, and ensure fair competition. Without appropriate regulations and interventions, markets can result in inefficient outcomes, reduced consumer welfare, and unequal distribution of resources. Government intervention plays a crucial role in maintaining a well-functioning and fair economic system.

Fallacies of Capitalism 4: The Free Market Always Leads to Optimal Outcomes

 The Free Market Always Leads to Optimal Outcomes' Fallacy

The "free market always leads to optimal outcomes" fallacy is the belief that a completely unrestricted market, with no government intervention, will always result in the best possible outcomes for individuals and society. However, there are several limitations to this idea. Let's explore them with simple examples:

1. Market failures: Free markets can sometimes fail to produce optimal outcomes due to various factors. For instance, in the case of public goods like clean air or national defense, individuals may not have sufficient incentives to voluntarily contribute or produce them. In this situation, the market fails to allocate resources efficiently, and government intervention may be necessary to ensure the provision of public goods.

2. Externalities: Externalities occur when the actions of one party impose costs or benefits on others who are not directly involved in the transaction. For example, consider a factory that emits pollutants into the air. The negative effects on the environment and public health are external costs that are not reflected in the market price of the goods produced. Without government intervention, the market fails to consider and address these external costs, resulting in suboptimal outcomes for society.

3. Monopolies and market power: Unregulated free markets can lead to the concentration of market power and the emergence of monopolies. Monopolies can exploit their market dominance by setting high prices, reducing quality, and stifling competition. This reduces consumer welfare and can hinder innovation and economic growth. Government intervention, such as antitrust regulations, may be necessary to prevent and address market distortions caused by monopolistic behavior.

4. Income inequality and social justice: Free markets do not necessarily lead to fair or equitable outcomes. In the absence of regulation and redistribution measures, income and wealth disparities can become significant. This can result in social unrest, decreased social mobility, and unequal access to essential resources and opportunities. Government intervention may be required to address income inequality and promote social justice.

5. Market imperfections: Free markets rely on certain assumptions, such as perfect competition, perfect information, and rational decision-making by all participants. However, in reality, these assumptions often do not hold true. Market imperfections, such as information asymmetry, unequal bargaining power, and imperfect competition, can distort market outcomes and lead to suboptimal results. Government intervention and regulations can help mitigate these imperfections.

In summary, the "free market always leads to optimal outcomes" fallacy fails to consider the limitations and challenges of unrestricted markets. Market failures, externalities, monopolies, income inequality, and market imperfections are examples of situations where the free market may not produce the best possible outcomes. Recognizing these limitations is crucial for understanding the importance of government intervention and regulation to promote a more efficient, equitable, and sustainable economy.

Fallacies of Capitalism 2: The Trickle down Effect

What is the "trickle-down" fallacy, and how does it relate to the distribution of wealth in a capitalist system?

The "trickle-down" fallacy is the belief that when the wealthy and corporations accumulate more wealth, it will eventually "trickle down" to benefit everyone in society. This theory suggests that if the rich have more money, they will invest, create jobs, and stimulate economic growth, which will ultimately improve the well-being of everyone, including those at the bottom of the income ladder. However, this theory ignores several important aspects of wealth distribution in a capitalist system. Let's understand it with simple examples:

1. Tax cuts for the wealthy: Advocates of the trickle-down theory often argue for tax cuts for the rich, believing that they will use the extra money to invest and create jobs. However, in practice, the wealthy may not necessarily invest their additional wealth in ways that benefit the broader economy. They might opt to invest in offshore accounts, buy luxury goods, or engage in speculative activities like stock trading, which may not lead to significant job creation or widespread economic growth.

2. Wage stagnation: Trickle-down economics assumes that as the wealthy accumulate more wealth, they will increase wages for workers. However, in reality, wages for many workers have stagnated or grown at a slower pace compared to the rising incomes of the wealthy. For example, over the past few decades, productivity has increased significantly, but the gains have primarily gone to executives and shareholders, while workers' wages have not kept pace. This demonstrates that the benefits of wealth accumulation often do not trickle down to workers in the form of higher wages or improved living standards.

3. Rising income inequality: Trickle-down economics fails to address the issue of income inequality. Over the past few decades, the wealth gap has widened, with the top earners capturing a disproportionately large share of economic gains. This suggests that the benefits of economic growth and wealth accumulation are not evenly distributed across society. Instead, they tend to concentrate in the hands of a few, exacerbating income and wealth disparities.

4. Lack of investment in public goods: The trickle-down theory assumes that the wealthy will invest their additional wealth in ways that benefit the broader society. However, in practice, a significant portion of wealth accumulation may not be directed towards public goods, such as education, healthcare, infrastructure, and social programs. Instead, the wealthy may focus on maximising their personal wealth through financial instruments, real estate, or other investments that primarily benefit themselves, further exacerbating societal inequality.

In summary, the "trickle-down" fallacy suggests that the benefits of wealth accumulation by the rich will automatically benefit everyone in a capitalist system. However, this theory ignores the reality that wealth does not necessarily trickle down to the broader population. Instead, it often perpetuates income inequality, fails to address wage stagnation, and may not result in significant investment in public goods. Understanding these limitations is crucial for developing policies that promote a more equitable distribution of wealth and opportunities in society.

Fallacies of Capitalism 1: Inevitability of Inequality

How does the 'inevitability of inequality' fallacy ignore the role of social and institutional factors in perpetuating the unequal distribution of wealth and opportunities in a capitalist system?

The "inevitability of inequality" fallacy suggests that inequality is a natural and unavoidable outcome of a capitalist system, implying that it is inherently fair and just. However, this fallacy ignores the significant role of social and institutional factors that contribute to the unequal distribution of wealth and opportunities. Let me break it down with some simple examples:

1. Unequal starting points: In a capitalist system, individuals have different starting points due to factors like family wealth, education, and social connections. These disparities make it harder for those with fewer resources to compete on an equal footing. For instance, imagine two children who want to become doctors. One child comes from a wealthy family with access to the best schools and tutors, while the other child comes from a low-income family and attends underfunded schools. The unequal starting points put the second child at a significant disadvantage, limiting their opportunities for success.

2. Discrimination and bias: Social factors such as discrimination based on race, gender, or socioeconomic status can perpetuate inequality. Discrimination may lead to unequal treatment in hiring practices, education, or access to resources. For example, imagine a qualified job applicant who is denied a position because of their gender or ethnicity, while a less qualified candidate from a privileged background is chosen. Discrimination hinders individuals' ability to succeed and reinforces inequality in society.

3. Power imbalances: Capitalist systems often concentrate power and wealth in the hands of a few individuals or corporations. These powerful entities can influence policies, regulations, and institutions to their advantage, further perpetuating inequality. For instance, consider a large corporation that has significant political influence. They may lobby for policies that favour their interests, such as tax breaks or deregulation, while undermining measures that could reduce inequality, such as progressive taxation or workers' rights.

4. Lack of social mobility: Inequality can persist if social and institutional factors make it difficult for individuals to move up the social ladder. For example, imagine a society where access to quality education is primarily determined by wealth. If children from low-income families are unable to receive a good education, it becomes challenging for them to break the cycle of poverty and improve their economic prospects. This lack of social mobility reinforces existing inequalities over generations.

These examples demonstrate that the "inevitability of inequality" fallacy overlooks the social and institutional factors that contribute to the unequal distribution of wealth and opportunities in a capitalist system. By recognising these factors and working towards creating a more equitable society, we can address and reduce the systemic barriers that perpetuate inequality.

Quitting is underrated

We are far too stubborn, committing to an idea, job or romantic partner even when it becomes clear we’ve made a mistakeTim Harford in The FT

“I am a fighter and not a quitter,” said Liz Truss, the day before quitting. She was echoing the words of Peter Mandelson MP over two decades ago, although Mandelson had the good sense to speak after winning a political fight rather than while losing one. 

It’s a curious thing, though. Being a “fighter” is not entirely a compliment. It’s a prized quality in certain circumstances, but it’s not a word I’d use on my résumé or, for that matter, my Tinder bio. 

There can be little doubt about the term “quitter”, though. It is an unambiguous insult. That’s strange, because not only is there too much fighting in the world, there’s not nearly enough quitting. We are far too stubborn, sticking with an idea, a job, or a romantic partner even when it becomes clear we’ve made a mistake. 

There are few better illustrations of this than the viral popularity of “quiet quitting”, in which jaded young workers refuse to work beyond their contracted hours or to take on responsibilities beyond the job description. It’s a more poetic term than “slacking”, which is what we Gen-Xers would have called exactly the same behaviour 25 years ago. It’s also a perfectly understandable response to being overworked and underpaid. But if you are overworked and underpaid, a better response in most cases would not be quiet quitting, but simply quitting. 

I don’t mean this as a sneer at Gen-Z. I remember being utterly miserable at a job in my twenties, and I also remember how much social pressure there was to stick it out for a couple of years for the sake of making my CV seem less flaky. A flaky CV has its costs, of course. But if you’re a young graduate, so does spending two years of your life in a job you hate, while accumulating skills, experience and contacts in an industry you wish to leave. Most people cautioned me about the costs of quitting; only the wisest warned me of the costs of not quitting. 

Everything you quit clears space to try something new. Everything you say “no” to is an opportunity to say “yes” to something else. 

In her new book, Quit, Annie Duke argues that when we’re weighing up whether or not to quit, our cognitive biases are putting their thumb on the scale in favour of persistence. And persistence is overrated. 

To a good poker player — and Duke used to be a very good poker player indeed — this is obvious. “Optimal quitting might be the most important skill separating great players from amateurs,” she writes, adding that without the option to abandon a hand, poker would not be a game of skill at all. Expert players abandon about 80 per cent of their hands in the popular variant of Texas Hold’em. “Compare that to an amateur, who will stick with their starting cards over half the time.” 

What are these cognitive biases that push us towards persisting when we should quit? 

One is the sunk cost effect, where we treat past costs as a reason to continue with a course of action. If you’re at your favourite high-end shopping mall but you can’t find anything you love, it should be irrelevant how much time and money it cost you to travel to the mall. But it isn’t. We put ourselves under pressure to justify the trouble we’ve already taken, even if that means more waste. The same tendency applies from relationships to multi-billion-dollar mega-projects. Instead of cutting our losses, we throw good money after bad. 

(The sunk cost fallacy is old news to economists, but it took Nobel laureate Richard Thaler to point out that if it was common enough to have a name, it was common enough to be regarded as human nature.) 

The “status quo bias” also tends to push us towards persevering when we should stop. Highlighted in a 1988 study by the economists William Samuelson and Richard Zeckhauser, the status quo bias is a tendency to reaffirm earlier decisions and cling to the existing path we’re on, rather than make an active choice to do something different. 

Duke is frustrated with the way we frame these status quo choices. “I’m not ready to make a decision,” we say. Duke rightly points out that not making a decision is itself a decision. 

A few years ago, Steve Levitt, the co-author of Freakonomics, set up a website in which people facing difficult decisions could record their dilemma, toss a coin to help them choose and later return to say what they did and how they felt about it. These decisions were often weighty, such as leaving a job or ending a relationship. Levitt concluded that people who decided to make a major change — that is, the quitters — were significantly happier six months later than those who decided against the change — that is, the fighters. The conclusion: if you’re at the point when you’re tossing a coin to help you decide whether to quit, you should have quit some time ago. 

“I am a quitter and not a fighter.” It’s not much of a political slogan. But as a rule of thumb for life, I’ve seen worse.

The Straw Man and The Great Indian Kitchen

By Girish Menon

In the introduction to his book ‘How to win every argument’ Madsen Pirie writes:

Sound reasoning is the basis of winning an argument. Logical fallacies undermine arguments…Many of the fallacies are committed by people genuinely ignorant of logical reasoning, the nature of evidence or what counts as relevant material. Others however might be committed by persons bent on deception. If there is insufficient force behind the argument and the evidence, fallacies can add enough weight to carry them through.

The Malayalam film The Great Indian Kitchen is one such exercise in fallacious reasoning. The film maker sets up and destroys a Straw Man in the form of some highly conservative Sabarimala devotees who are male, upper caste and Hindu­. In such households, the film argues, the women are perennially confined to the kitchen and subject to male whims. Some women have bought into the system while the female protagonist and her mother-in-law take up the feminist cause of subversion and rebellion.

A Straw Man, Pirie writes, is a misrepresentation of your opponent’s position, created by you for the express purpose of being knocked down. This is usually done by over-stating an opponent’s position. If your opponent will not make himself an extremist, you can oblige with a Straw Man.

The Straw Man is fallacious because he says nothing about the real argument. Its function is to elicit, by the ease of his demolition, a scorn which can be directed at the real figure he represents.

This writer carried out a straw poll (not representative at all!) among those who supported the filmmaker’s thesis and not one of them stated that they were aware of such instances happening to people known to them. Instead, most of them pointed their fingers to North Kerala where apparently such practices are rife. I did ask a former resident of North Kerala if such things happened there and his response was that ‘Women everywhere were the same North or any part of Kerala’.

Some feminists I know took up cudgels on behalf of the female protagonist even though their own life experiences did not match the film’s heroine. They quoted some sisters who were treated badly by their husbands, but added that these husbands also wanted to live of their wife's earnings. However, they were not willing to question the failure of the female protagonist, who is depicted as educated and modern, to carry out due diligence before entering into the marital contract.

In this writer’s view, the creation and destruction of the Straw Man is the only protest available to progressives and feminists. Because, despite the Supreme Court’s progressive decision in the Sabarimala case, even the progressive left government has declared its inability to implement reforms to Sabarimala rituals. This is because the majority opinion which includes many Hindu women want to maintain the status quo and are unconvinced by the feminist rhetoric.

The Buddha Speaks on Red Herrings and the Babri Masjid. Ep.2 English

A Bhakt and his Logical Fallacies and a Rebuttal

Logical Fallacies - How to win every argument

From Purdue Online Writing Lab

Fallacies are common errors in reasoning that will undermine the logic of your argument. Fallacies can be either illegitimate arguments or irrelevant points, and are often identified because they lack evidence that supports their claim. Avoid these common fallacies in your own arguments and watch for them in the arguments of others.

Slippery Slope: This is a conclusion based on the premise that if A happens, then eventually through a series of small steps, through B, C,..., X, Y, Z will happen, too, basically equating A and Z. So, if we don't want Z to occur, A must not be allowed to occur either. Example:

If we ban Hummers because they are bad for the environment eventually the government will ban all cars, so we should not ban Hummers.

In this example, the author is equating banning Hummers with banning all cars, which is not the same thing.

Hasty Generalization: This is a conclusion based on insufficient or biased evidence. In other words, you are rushing to a conclusion before you have all the relevant facts. Example:

Even though it's only the first day, I can tell this is going to be a boring course.

In this example, the author is basing his evaluation of the entire course on only the first day, which is notoriously boring and full of housekeeping tasks for most courses. To make a fair and reasonable evaluation the author must attend not one but several classes, and possibly even examine the textbook, talk to the professor, or talk to others who have previously finished the course in order to have sufficient evidence to base a conclusion on.

Post hoc ergo propter hoc: This is a conclusion that assumes that if 'A' occurred after 'B' then 'B' must have caused 'A.' Example:

I drank bottled water and now I am sick, so the water must have made me sick.

In this example, the author assumes that if one event chronologically follows another the first event must have caused the second. But the illness could have been caused by the burrito the night before, a flu bug that had been working on the body for days, or a chemical spill across campus. There is no reason, without more evidence, to assume the water caused the person to be sick.

Genetic Fallacy: This conclusion is based on an argument that the origins of a person, idea, institute, or theory determine its character, nature, or worth. Example:

The Volkswagen Beetle is an evil car because it was originally designed by Hitler's army.

In this example the author is equating the character of a car with the character of the people who built the car. However, the two are not inherently related.

Begging the Claim: The conclusion that the writer should prove is validated within the claim. Example:

Filthy and polluting coal should be banned.

Arguing that coal pollutes the earth and thus should be banned would be logical. But the very conclusion that should be proved, that coal causes enough pollution to warrant banning its use, is already assumed in the claim by referring to it as "filthy and polluting."

Circular Argument: This restates the argument rather than actually proving it. Example:

George Bush is a good communicator because he speaks effectively.

In this example, the conclusion that Bush is a "good communicator" and the evidence used to prove it "he speaks effectively" are basically the same idea. Specific evidence such as using everyday language, breaking down complex problems, or illustrating his points with humorous stories would be needed to prove either half of the sentence.

Either/or: This is a conclusion that oversimplifies the argument by reducing it to only two sides or choices. Example:

We can either stop using cars or destroy the earth.

In this example, the two choices are presented as the only options, yet the author ignores a range of choices in between such as developing cleaner technology, car-sharing systems for necessities and emergencies, or better community planning to discourage daily driving.

Ad hominem: This is an attack on the character of a person rather than his or her opinions or arguments. Example:

Green Peace's strategies aren't effective because they are all dirty, lazy hippies.

In this example, the author doesn't even name particular strategies Green Peace has suggested, much less evaluate those strategies on their merits. Instead, the author attacks the characters of the individuals in the group.

Ad populum/Bandwagon Appeal: This is an appeal that presents what most people, or a group of people think, in order to persuade one to think the same way. Getting on the bandwagon is one such instance of an ad populum appeal.  

Example:

If you were a true American you would support the rights of people to choose whatever vehicle they want.

In this example, the author equates being a "true American," a concept that people want to be associated with, particularly in a time of war, with allowing people to buy any vehicle they want even though there is no inherent connection between the two.

Red Herring: This is a diversionary tactic that avoids the key issues, often by avoiding opposing arguments rather than addressing them. Example:

The level of mercury in seafood may be unsafe, but what will fishers do to support their families?

In this example, the author switches the discussion away from the safety of the food and talks instead about an economic issue, the livelihood of those catching fish. While one issue may effect the other it does not mean we should ignore possible safety issues because of possible economic consequences to a few individuals.

Straw Man: This move oversimplifies an opponent's viewpoint and then attacks that hollow argument.

People who don't support the proposed state minimum wage increase hate the poor.

In this example, the author attributes the worst possible motive to an opponent's position. In reality, however, the opposition probably has more complex and sympathetic arguments to support their point. By not addressing those arguments, the author is not treating the opposition with respect or refuting their position.

Moral Equivalence: This fallacy compares minor misdeeds with major atrocities, suggesting that both are equally immoral.

That parking attendant who gave me a ticket is as bad as Hitler.

In this example, the author is comparing the relatively harmless actions of a person doing their job with the horrific actions of Hitler. This comparison is unfair and inaccurate.

Why blame culture is toxic for sport

Ed Smith in Cricinfo

Is ranting at players during team talks like bloodletting in the age of quack doctors?


Shouting at players: Satisfying? Yes. Effective? No © AFP



The subversive in me would love to whitewash over the usual clichés and catchphrases that are splashed on dressing-room walls and replace them with a more cynical message:

The six phases of a project:

1. Enthusiasm
2. Disillusionment
3. Panic
4. Search for the guilty
5. Punishment of the innocent
6. Rewards for the uninvolved

Not very cheering, I admit, but a salutary warning about our obsession with blame - a preoccupation sustained by dodgy narratives about "causes" that leads not to institutional improvement but to self-serving politics. Having pinned the blame on someone - rightly or, more likely, wrongly - the next task is "moving on". Sound familiar?

The "six phases" were attached to an office wall by an employee at the Republic Bank of New York. The story appears in Black Box Thinking, Matthew Syed's new book. Syed (a leading sports columnist and double Olympian) argues that our preoccupation with convenient blame - rather than openness to learning from failure - is a central factor holding teams and individuals back from improving. I think he is right.

Syed expresses admiration for the airline industry and its commitment to learning from failure - especially from "black boxes", the explosion-proof devices that record the conversations of pilots and other data. If the plane's wreckage is found, lessons - no matter how painful - must be learned. In the jargon, learning inside the aviation industry is an "open loop". (An "open loop" leads to progress because the feedback is rationally acted on; a "closed loop" is where failure doesn't lead to progress because weaknesses are ignored or errors are misinterpreted.) Syed presents harrowing examples from hospital operating theatres, of "closed loops" costing lives. Indeed, with its recurrent plane crashes and botched operations, the book takes the search for transferrable lessons to harrowing extremes.

One question prompted by Black Box Thinking is why is sport is not instinctively enthusiastic about evidence-based discussion. You might think that sports teams would be so keen to improve that they would rush to expose their ideas to rational and reflective scrutiny. But that's not always the case. As a player I often felt that insecure teams shrank from critical thinking, where more confident teams encouraged it.

The first problem sport has with critical thinking is the "narrative fallacy" (a concept popularised by Nassim Taleb). Consider this statement, thrown at me by a coach as I left the dressing room and walked onto the field after winning the toss and deciding to bowl first: "We need to have them five wickets down at lunch to justify the decision."

Hmm. First, even thinking about "justifying" a decision is an unnecessary distraction. Secondly, it's also irrational to think that the fact of taking five wickets, even if it happens, proves the decision was right. I might have misread the wicket, which actually suited batting first, but the opposition might have suffered a bad morning - five wickets could fall and yet the decision could still easily be wrong.

Alternatively, the wicket might suit bowling - and hence "justify" my decision - but we might bowl improbably badly and drop our catches. In other words, it could be the right decision even if they are no wickets down at lunch. What happened after the decision (especially when the sample of evidence is small or, as in this instance, solitary) does not automatically prove the rightness or wrongness of the decision.

Fancy theorising? Prefer practical realities? This kind of theorising, in fact, is bound up with very practical realities. Consider this example.

For much of medical history, bloodletting was a common and highly respected procedure. When a patient was suffering from a serious ailment and went to a leading doctor, the medical guru promptly drained significant amounts of blood from an already weak body. Madness? It happened for centuries.

And sometimes, if we don't think critically, it "works". As Syed points out, in a group of ten patients treated with bloodletting, five might die and five get better. So it worked for the five who survived, right?

Only, it didn't, of course. The five who were healed would have got better anyway (the body has great powers of self-recuperation). And some among the five who died were pushed from survival into death. Proving this fact, however, was more difficult - especially in a medical culture dominated by doctors who advocated and profited materially from bloodletting.

The challenge of demonstrating the real usefulness (or otherwise) of a procedure led to the concept of the "control group". Now imagine a group of 20 patients with serious illnesses - and split them into two groups, ten in each group. One group of ten patients gets a course of bloodletting, the other group of ten (the control group) does not. If we discover that five out of ten died in the bloodletting group and only three out of ten among the non-bloodletting group, then, at last, we have the beginnings of a proper evidence-based approach. The intervention (bloodletting) did more harm than simply doing nothing. It was iatrogenic.

Iatrogenic interventions are common in sport, too - such as when the coach tells a batsman to change his lifelong grip before making his Test debut. (Impossible? Exactly that happened to a friend of mine.) The angry team meeting is a classic iatrogenic intervention. Shouting at the team and vindictively blaming individual players, like bloodletting, provides the coach with the satisfying illusion that it works well sometimes. By "it works", we imply that the team in question played better after half-time or the following morning. Even having suffered an iatrogenic intervention, however, some teams - like some patients enduring bloodletting - inevitably play better afterwards. But on average, all taken together, teams would have playedbetter still without the distraction of a raging coach. (This insight helped win Daniel Kahneman a Nobel Prize, as I learned when I interviewed him.)

The great difficulty of sport, of course, is the challenge of conducting a proper control group experiment - because the game situation, pressures and circumstances are seldom exactly the same twice over. However, merely being open to the logic of these ideas, constantly exposing judgements and intuitions to critical thinking, takes decision-makers a good step in the direction of avoiding huge errors of conventional thinking.

That is why much of what Syed calls "black box thinking" could, I think, be filed under "critical thinking" - the desire to refine and improve one's system of thought as you are exposed to new experiences and ideas. Here is a personal rule of thumb: critical thinkers are also the best company over the long term. Critical thinkers are not only better bets professionally, they are also more interesting friends. Who wants to listen to the same set of unexamined views and sacrosanct opinions for decades? If you believe that your ideas don't ever need to evolve and adapt, can we at least skip dinner?

It is hard to imagine how anyone who is interested in leadership, innovation or self-improvement could fail to find something new and challenging in this book. Rather than presenting a simplistic catch-all solution, Syed takes us on a modern and personal walk through the scientific method. The book makes an interesting contrast with Syed's first book,Bounce, which proposed that talent is a myth - an argument that can be summed up in a single, seductive phrase: genius is a question of practice.

Rather than presenting a single idea, Black Box Thinking circles around a main theme - illustrating and illuminating it by drawing on a dizzyingly wide and eclectic series of ideas, case studies and lines of philosophical enquiry. The reader finishes the book with a deeper understanding of how he might improve and grow over the long term, rather than the transient feeling of having all his problems solved. The author, we sense, has experienced a similar journey while writing the book. Syed doesn't just preach black-box thinking, he practises it.

Where Cruelty Is Kindness

Those who promoted laissez-faire economics required an explanation when the magic of the markets failed to deliver their promised utopia. Malthus gave them the answer they needed.

GEORGE MONBIOT in Outlook India

Kindness is cruelty; cruelty is kindness: this is the core belief of compassionate conservatism. If the state makes excessive provision for the poor, it traps them in a culture of dependency, destroying their self-respect, locking them into unemployment. Cuts and coercion are a moral duty, to be pursued with the holy fervour of Inquisitors overseeing an auto da fé.

This belief persists despite reams of countervailing evidence, showing that severity does nothing to cure the structural causes of unemployment. In Britain it is used to justify a £12 billion reduction of a social security system already so harsh that it drives some recipients to suicide. The belief arises from a deep and dearly-held fallacy, that has persisted for over 200 years.

Poverty was once widely understood as a social condition: it described the fate of those who did not possess property. England's Old Poor Law, introduced in 1597 and 1601, had its own cruelties, some of which were extreme. But as the US academics Fred Block and Margaret Somers explain in their fascinating book The Power of Market Fundamentalism, those who implemented it seemed to recognise that occasional unemployment was an intrinsic feature of working life.

But in 1786, as economic crises threw rising numbers onto the mercy of their parishes, the clergyman Joseph Townsend sought to recast poverty as a moral or even biological condition. "The poor know little of the motives which stimulate the higher ranks to action — pride, honour, and ambition", he argued in his Dissertation on the Poor Laws. "In general it is only hunger which can spur and goad them onto labour; yet our laws have said, they shall never hunger."

Thomas Malthus expands on this theme in his Essay on the Principle of Population, published in 1798. Poor relief, he maintained, causes poverty. It destroys the work ethic, reducing productivity. It also creates an incentive to reproduce, as payments rise with every family member. The higher the population, the hungrier the poor became: kindness resulted in cruelty.

Poverty, he argued, should be tackled through shame ("dependent poverty ought to be held disgraceful") and the withdrawal of assistance from all able-bodied workers. Nature should be allowed to take its course: if people were left to starve to death, the balance between population and food supply would be restored. Malthus ignored the means by which people limit their reproduction or increase their food supply, characterising the poor, in effect, as unthinking beasts.

His argument was highly controversial, but support grew rapidly among the propertied classes. In 1832, the franchise was extended to include more property owners: in other words, those who paid the poor rate. The poor, of course, were not entitled to vote. In the same year, the government launched a Royal Commission into the Operation of the Poor Laws.

Like Malthus, the commissioners blamed the problems of the rural poor not on structural factors but on immorality, improvidence and low productivity, all caused by the system of poor relief, which had "educated a new generation in idleness, ignorance and dishonesty". It called for the abolition of "outdoor relief" for able-bodied people. Help should be offered only in circumstances so shameful, degrading and punitive that anyone would seek to avoid them: namely the workhouse. The government responded with the 1834 Poor Law Amendment Act, which instituted, for the sake of the poor, a regime of the utmost cruelty. Destitute families were broken up and, in effect, imprisoned.

The commission was a fraud. It began with fixed conclusions and sought evidence to support them. Its interviews were conducted with like-minded members of the propertied classes, who were helped towards the right replies with leading questions. Anecdote took the place of data.

In reality, poverty in the countryside had risen as a result of structural forces over which the poor had no control. After the Napoleonic wars, the price of wheat slumped, triggering the collapse of rural banks and a severe credit crunch. Swayed by the arguments of David Ricardo, the government re-established the gold standard, that locked in austerity and aggravated hardship, much as George Osborne's legal enforcement of a permanent budget surplus will do. Threshing machines reduced the need for labour in the autumn and winter, when employment was most precarious. Cottage industries were undercut by urban factories, while enclosure prevented the poor from producing their own food.

Far from undermining employment, poor relief sustained rural workers during the winter months, ensuring that they remained available for hire when they were needed by farms in the spring and summer. By contrast to the loss of agricultural productivity that Malthus predicted and the commission reported, between 1790 and 1834 wheat production more than doubled.

As Block and Somers point out, the rise in unemployment and extreme poverty in the 1820s and 1830s represented the first great failure of Ricardian, laissez-faire economics. But Malthus's doctrines allowed this failure to be imputed to something quite different: the turpitude of the poor. Macroeconomic policy mistakes were blamed on the victims. Does that sound familiar?

This helps to explain the persistence of the fallacy. Those who promoted laissez-faire economics required an explanation when the magic of the markets failed to deliver their promised utopia. Malthus gave them the answer they needed.

And still does. People are poor and unemployed, George Osborne and Iain Duncan Smith claimed in this week's Sunday Times, because of "the damaging culture of welfare dependency". Earlier this month, Duncan Smith, in a burst of Malthusiasm, sought to restrict child benefit to two children per family, to discourage the poor from reproducing. A new analysis by the Wellcome Trust suggests that the government, which is about to place 350 psychologists in job centres, now treats unemployment as a mental health disorder.

The media's campaign of vilification associates social security with disgrace, and proposes even more humiliation, exhortation, intrusion, bullying and sanctions. This Thursday, the new household income figures are likely to show a sharp rise in child poverty, after sustained reductions under the Labour government. Doubtless the poor will be blamed for improvidence and feckless procreation, and urged to overcome their moral failings through aspiration.

For 230 years, this convenient myth has resisted all falsification. Expect that to persist.