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« Friedman, Pinochet and the Moral Responsibility of Those Giving Economic Advice | Main | Is Economics a Public Good? »


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David Colander's commentary is especially thoughtful. I just hope that this does not turn into another round of people with strong opinions about the economic and political views of particular economists engaging in then either applauding or excusing or criticizing their particular interventions or actions in the public arena simply on the basis of their own personal prejudices.

Barkley's right --- lets focus on the substantive arguments, not the personalities of various economists. Think of it this way --- if you had to provide an academic discussion of the underlying discourse in the Inside Job, how would you go about doing it? What ideas would you draw on, which one's would you criticize; which one's are most suggestive for future development?

I remember some conversations with Walter Block back when I was an undergraduate and he a graduate student at Columbia. As I recall, he was worried about economists (mainly Chicago economists) becoming efficiency experts for the state. The analogy was made to a hypothetical economist who might have advised the Nazis about how to kill Jews more efficiently. Obviously, this is the use of "objective knowledge" in the service of bad ends.

But one can make arguments short of the Nazi argument. Suppose one believes that the welfare state in some particular regard -- or generally -- is wrong. Then it is arguably wrong for an economist to give advice to the government on how to make these programs more efficient. (I say "arguably" because a lower tax burden -- if it occurred -- would be good but that is not the only possible outcome of the efficiency advice.)

Giving advice to governments is a tricky business because all policy advice involves value judgments in the giving of the advice. As Neville Keynes argued, the art of political economy (say, policy) involves using the science in the service of ends that are philosophical or moral in nature.

Now consider how a "typical" economist might treat this issue: The voters, through their elected representatives, choose the goals or ends of policy. We, the economists, simply use our knowledge of the science to inform them about how to achieve these goals more efficiently or with fewer conflicts of goals.

But I do not believe that an economist should abdicate his moral responsibility so easily. He must also ask himself the question: Do I want to be part of an a structure that promotes these goals?

W H Hutt wrote good stuff on the role and responsibilities of economists re policy, with case studies.

Mario Rizzo's comment above reminds me of Milton Friedman's claim that those who favor small government should cherish the inefficiency of big government. Yet, he himself advocated a more efficient monetary policy. It seems hard to resist advocating against blunt policy failures, especially since the public interpret the negative impact of bad policy as market failure.

Twenty years ago, when I was doing consulting work in the former Soviet Union on market reform and privatization, I recall having a conversation with a couple of Russian economists about what they considered "necessary" in a post-communist state. (These were classical liberal-oriented Russian economists, familiar with both Austrian and Chicago School literature.)

They said they wanted a limited, but "strong" state. This seemed strange to me at first, until they explained that while the power of the state needed to be constitutionally restrained to "limited and enumerated functions," it had to be, at the same time, "strong enough" to protect individuals rights (including market-based property rights) from violence and trespass by private gangs, thugs, and plunderers, whom they feared would exist in a post-Soviet Russia.

The problem is, how do you keep (assuming you believe even in a limited government?!) government "strong" and efficient in those areas of responsibility consistent with the protection of individual liberty and property rights, and, at the same time, "weak" and inefficient in those areas in which he threatens or acts to encroach upon people's liberty and property?

Richard Ebeling

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