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« Phil Magness on Piketty | Main | 'the smelly little orthodoxies which are now contending for our souls' »


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I couldn't agree more on this point: "So the #1 rule of economic policy should be "wishing it so doesn't make it so"

The trouble is, it's usually very badly applied in practice. In my experience nine times out of ten someone that says this in a dialogue has actually been presented with an argument - not just wishful thinking - and for whatever reason they're not willing to engage the argument they've been presented with.

It is important as a principle but more often than not it's a conversation stopper.


What stops conversations more?

The claim that the world is full of knaves, fools and me (and my friends who agree with me).


Folks, lets remember that we live in a world of scarcity and thus we face trade-offs that must be negotiated carefully -- have you thought about the incentive compatibility issues and the knowledge problems that proposal must deal with? If not, then perhaps we have to go back to the drawing board.

To me the first is what happens when we politicize economics, whereas the second is when we recognize that the science of economics provides an important grounding to the conversation in the art of political economy.

Nobody wants to stop a conversation, the question is instead how to engage in an economically meaningful conversation.


Peter - both are a problem. I'm not sure I could assess the frequency of each.

Of course phrasing it the way you did above is fine. The trouble is when people don't, declare that someone is just doing wishful thinking, and don't engage the argument.

"Nobody wants to stop a conversation"

Unfortunately, I'm not so sure about that!

The difficult part is of course some people ARE knaves and fools. Evaluating a "knaves, fools, and me" argument is an empirical question and one people will differ on, so I think it's harder than just dismissing "knaves, fools, and me" arguments as inherently bad practice.

I assume you have not criticized Selgin's recent Cato Journal article or Gastelle's doctoral dissertation along the "knaves, fools, and me" line have you Peter? For that matter, you make what read like "knaves, fools, and me" arguments all the time (for example your "Keynesian Avalanche" post and associated writing).

Presumably you differentiate these because you think one is empirically right and one is empirically wrong. The structure of the argument, though, is precisely the same.

"In my experience nine times out of ten someone that says this in a dialogue has actually been presented with an argument"

One would say it depends on the argument. If it is something along the lines "the world is to complex not to have a creator" or the paradox of thrift or that inflation causes an increase in savings or that higher prices increase the bargain power, it is very hard to take those seriously. Time is a very expensive commodity and so one must choose his dialogue partners based on the quality of the arguments if he wants progress in his line of thinking.

"Nobody wants to stop a conversation"
Most people do actually when the conversation leads nowhere. If one thinks that talking to himself is more productive than a conversation with X, why should he continue?

"the question is instead how to engage in an economically meaningful conversation"
That's easy: choose dialogue partners with good arguments for opinions contrary to yours. Problem solved.

Daniel, what do you feel is wrong with Selgin's article? I assume you're referring to "Operation Twist the Truth"?

John S -
I'm not sure anything is wrong with it, that's sort of the point of my comment. "Knaves, fools, and me" arguments are empirical arguments. I haven't read it yet and he may be exactly right. But he's clearly making the same sort of argument Krugman has, that people he disagrees with aren't just wrong but twisting the truth for knavish reasons (in this case, defending their institution rather than the common good).

I doubt any society has ever been different. In writing about Germany from the advent of socialism in the 1870's until Hilter, Mises makes the point that the socialists always blamed residual capitalism for all problems, even though the cause of the problems was obviously socialism.

Socialists keep a small space for markets around for two reasons: 1) to keep socialists from starving and 2) to have someone to blame for the problems socialism causes.

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