Sunday, July 10, 2016

Tom Hickey — Some Reflections on Economics and Public Policy.

Here are some thoughts that occurred to me while reading a post somewhere on economics and public policy.

It's really quite laughable how so many economists presume that all problems are economic problems at bottom and so they can be professionally diagnosed by economists and treatment successfully prescribed.

Get over yourselves. You are making yourselves look ridiculous in assuming that you have some special talent for designing public policy that will solve societies' social and political problems, which generally go way beyond economic issues alone. Yes, I am talking about things like education and poverty, which are sociological and psychological as well as economic. Even development is not simply a matter of getting the economics right as though one shoe fits all.

Get some humility and do some reading beyond your field. Otherwise, you're just moralizing. Why do you think you have expertise in that?

Social engineering requires a broadly scientific approach involving input from many disciplines. The end-in-view is effectiveness. To summarize Peter F. Drucker on the effective executive, "Efficiency is doing things right, and effectiveness is doing the right things." Finding out what works is a matter for research and testing. The issues are broad and no single discipline can resolve issues of this magnitude and depth. Economists have role to play in this, of course, but it is complementary role.

In addition, the real issue in a liberal society and among liberal societies is reconciling the trifecta of social, political and economic liberalism instead of assuming that economic liberalism resolves all social and political challenges through imposing economic liberalism alone or even chiefly. 

Right, I know, "Rothbard." Utopia. Never going to happen. Get a grip.

In the first place, it's beyond complicated, as in complex adaptive systems and emergence. Secondly, its not even possible to impose economic liberalism thoroughly owing to asymmetries, especially those involving power that tip the playing field, as evidenced in growing inequality approaching feudal proportions, not to mention path dependence owing to imperialism and colonialism that continue to disadvantage many countries and peoples, especially indigenous people.


Andrew Anderson said...

Right, I know, "Rothbard

Murray Rothbard was a gold-bug. He should have paid more attention to Moses, a believing Hebrew, and less to Mises, a non-believing one.

It's ironic that the same critique applies to modern day purported Christians.

Also, social engineering without true* banking reform has been tried and it failed in the Soviet Union.

*Putting the State is charge of private credit allocation is no improvement over the current system of government subsidized private credit allocation it seems, given that the Soviet Union fell.

Matt Franko said...

Roger recommended an MMT interdisciplinary steering committee probably 5 years ago and they just blew him off...

Random said...

Most Economics theorems are not of the sort "we can prove that X holds in general, except maybe in some irrelevant special case Y", but "we can prove that there exists an irrelevant special case Y under which X holds, and then we will truthfully claim that X holds without adding (in some artfully chosen special case)".

The real skills in Economics are figuring what result the sponsors like and then finding a set of assumptions no matter how narrow or comical under which it can be "proven".

André said...

Very good post!

Andrew said...

@Andrew Anderson: There are lots of possible systems with government involvement. Not sure why you're dragging out the Soviet Union trope.