THE EMPERORS ARE NAKED

From the quite brilliant Don Boudreaux (20 March) in Cafe Hayek HERE 

“Then a Miracle Occurs”

“The miracle assumed by the unscientific ‘scientific’ modern economist is that government will act (1) apolitically, (2) without any of the human imperfections, myopia, and psychological quirks that (are assumed to) give rise to the market imperfections that allegedly justify government intervention, and (3) with more information and wisdom than is discovered and used in markets. …

… But it is simply, deeply, and inexcusably unscientific for economists (or any one, for that matter) to simply assume that government will perform as the social-engineering theory requires it to perform.  Put differently, despite more than a half-century of scholarship in public-choice economics, too many economists mysteriously regard warnings about government failing to act ‘perfectly’ as being unworthy or, at least, only of secondary or tertiary significance.  It’s unscientific – deeply so.”

Comment

I agree completely with Boudreaux’s assessment of statists on the wonders of governments as against the fallacies of what they expect from the deliberations of politicians and administrators of state machinery.  His strictures against statist fallacies are well-targeted and amusingly credible. 

However, I am left speculating about the expectations of those of us who favour markets with similar fervour to those opposed to markets in favour of statist governments. I suggest that “too many economists mysteriously regard warnings about [markets] failing to act ‘perfectly’ as being unworthy or, at least, only of secondary or tertiary significance.  It’s unscientific – deeply so.” 

‘Pot’ and ‘Kettle’ analogies spring to mind. 

So much mumbo jumbo about universal ‘perfect rationality’ from single-track maximisation of utilities, backed by mathematical ‘proofs’ wrapped in claims for scientific status for its practitioners are deeply unconvincing to me nowadays. Samuelson tried to square the circle with his (1948) comments of the ‘selfish’ invisible hand that ensured that out of the mix would miraculously spring the ‘public good’, eventually. He clearly did not consult Adam Smith very closely.

Given the paucity of evidence supporting their assertions - and much of it showing that experience was quite different, I wonder if proponents of each single-sided different solution (State v Market) realise just how pathetic they really look to each other, and to more neutral observers of their naked Emperors as they pass by as partisan admirers of their own side’s naked emperor, dimly oblivious to the naked-state of their own champion, as they join the chorus about the wonders of their Emperors and his ‘wonderful’ clothes, with contempt for their rival’s nakedness?

That is why I agree with Adam Smith’s pragmatism: markets where possible, government where necessary.