MARKETS WHERE POSSIBLE, STATES WHERE NECESSARY
Don Boudreaux posts on Café Hayek Blog (7 March) HERE a thoughtful quote and
commentary, typical of his literate, hard Libertarian thinking, titled “Witch Doctory”, from pages16-17 of the 3rd
edition of Paul Krugman’s and
Robin Wells’s Economics (2013): “When markets don’t achieve
efficiency, government intervention can improve society’s welfare. That is,
when markets go wrong, an appropriately designed government policy can
sometimes move society closer to an efficient outcome by changing how society’s
resources are used… An important part of your education in economics is
learning to identify not just when markets work but also when they don’t work,
and to judge what government policies are appropriate in each situation.”
Don reports this passage from Jim Gwartney’s talk at the 2014 meeting of
the Public Choice Society (in Charleston, SC – one of Don’s “favorite towns on
the planet”). Jim Gwartney notes that “too many econ textbooks are ignorant of
public choice” and the Krugman-Wells text “apparently has zero mention of public choice or of
government failure (despite that book’s many mentions of market failure).”
The theme of Jim’s talk “was that it is not only intellectually sloppy
or lazy but, in fact, deeply unscholarly and unscientific for economists today
to ignore public-choice analyses of political decision-making.
The quotation from Krugman’s and Wells’s book “is just one example – of
the still-widespread failure of economists to take public choice seriously… and
an embarrassingly large number of such texts – many written by the world’s most
acclaimed economists, such as Paul Krugman – are surprisingly naive and
unscientific. The authors of these texts pretend to write about reality,
but they instead write about a fantasy world and “Far too many economists, such
as Krugman – because they either ignore or are ignorant of public choice –
simply assume that
government somehow is not affected by the many imperfections that these economists
readily find in markets”
Don Boudreaux suggests that Krugman and Wells should have ended with a
different concluding paragraph that he kindly writes for them:
“An important part of your education in economics is learning to identify
not just when governments work
but also when they don’t work, and to judge what market policies are appropriate in each situation.” That is, “if
someone suggested that you assume
that markets always work perfectly (or always work better than government),
what sort of scientific credibility would you accord to that person? I
hope none. It’s profoundly misguided simply to assume that, if government
fails to achieve some attainable and desirable outcome, that outcome can be
achieved instead by markets that are assumed to operate perfectly. Such an assumption about
market perfection (or superiority) would be unscientific. But such an assumption – as is made by too
many economists today – about government perfection is equally unscientific.”
Jim Gwartney rightly laments that far too many economists today
simply assume that the
witch doctor – the state – has both the miraculous powers and the benevolent
interest necessary to cure all social ailments, or at least to deal with these
ailments better than can admittedly ‘imperfect’ markets.”
Comment
These are typical debating styles in ‘close-quarter’ contests between
adherents of polar opposite ideas, common in economics, and rampant in politics,
such as in ‘Markets versus ‘States’ debates.
However, I suggest, the habit is universal on all sides of these
irresolvable arguments.
Many people are deeply antagonistic to Markets, even considering them
immoral and unnatural. Others are
equally antagonistic to States, considering them captive to special, corrupting
interest groups or dictators and fantasists.
I prefer to be guided by the philosophy closer to the pragmatics of Adam
Smith: Markets where Possible, State where Necessary”.
2 Comments:
No, none of these men are claiming that Government is perfect. There is no market without government which is why before modern markets move in they require first a violent and forceful imposition, costly in terms of human life, productivity, and indigenous property but highly profitable for parasitic government created state franchise we often refer to as corporation. All value added by the corporation to the area is destroyed by the destruction it caused moving in, the corruption they always encourage in their favor, and the destruction it causes when it leaves and it always does when the area starts to get it's head above water. The idea that markets somehow replace the state is indeed part of discussion one often sees among idiots who like to play hopscotch with definitions and philosophy in order to believe how they please in spite of the facts. The market and the government are one. That anyone claims there's an actual difference is baffling.
No one is making the claim that Government is perfect. Don Boudreaux tu quoque when in actually its just him saying it about markets. Markets are unnatural unless you want to make irrational claims about what a market is in order to link it to any sort of distributive scheme which inevitably starts with the social and cultural interactions that make up the manner by which a group of people chooses to order, or rather govern, themselves. There is no market without government which is why before modern markets move in anywhere they require first a violent and forceful imposition of a peculiar legal regime that is very costly in terms of human life, productivity, and indigenous property but highly profitable for parasitic government created state franchise we often refer to as corporation. All value added by the corporation to the area is destroyed by the destruction it caused moving in, the corruption they always encourage in their favor, and the destruction it causes when it leaves and it always does when the area starts to get it's head above water. The idea that markets somehow replace the state is indeed part of discussion one often sees among idiots who like to play hopscotch with definitions and philosophy in order to believe how they please in spite of the facts. The market and the government are one. That anyone claims there's an actual difference is baffling.
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