The cosmopolitan and civil libertarian core of economics

by on March 17, 2013 at 7:22 am in Economics, Philosophy, Uncategorized | Permalink

Here is my latest New York Times column, more philosophical than usual, excerpt:

Economic analysis is itself value-free, but in practice it encourages a cosmopolitan interest in natural equality. Many economic models, of course, assume that all individuals are motivated by rational self-interest or some variant thereof; even the so-called behavioral theories tweak only the fringes of a basically common, rational understanding of people. The crucial implication is this: If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.

At least since the 19th century, the interest of economists in personal liberty can be easily documented. In 1829, all 15 economists who held seats in the British Parliament voted to allow Roman Catholics as members. In 1858, the 13 economists in Parliament voted unanimously to extend full civil rights to Jews. (While both measures were approved, they were controversial among many non-economist members.) For many years leading up to the various abolitions of slavery, economists were generally critics of slavery and advocates of people’s natural equality, as documented by David M. Levy, professor of economics at George Mason University, and Sandra J. Peart, dean of the Jepson School of Leadership Studies at the University of Richmond, in “The ‘Vanity of the Philosopher’: From Equality to Hierarchy in Post-Classical Economics.”

Professors Levy and Peart coined the phrase “analytical egalitarianism” to describe the underpinnings of this tradition. For example, Adam Smith cited birth and fortune, as opposed to intrinsically different capabilities, as the primary reasons for differences in social rank. And the classical economists Jeremy Bentham and John Stuart Mill promoted equal legal and institutional rights for women long before such views were fashionable. Their utilitarian moral theories placed individuals on a par in the social calculus by asking about the greatest good for the greatest number.

There is more at the link of course, such as:

Often, economists spend their energies squabbling with one another, but arguably the more important contrast is between our broadly liberal economic worldview and the various alternatives — common around the globe — that postulate natural hierarchies of religion, ethnicity, caste and gender, often enforced by law and strict custom. Economists too often forget that we are part of this broader battle of ideas, and that we are winning some enduring victories.

I did not have the space to cover some additional questions of interest.  These include:

1. Will the move away from rational choice models, and toward a broader and larger empirical social science, including behavioral and neuro elements, nudge economics away from this heritage?

2. How much of the civil libertarian core, common among many economists, stems from the socioeconomic background of (many) current economists rather than from the economic method?

3. How do Indian economists poll on the caste system, relative to their socioeconomic peers?

4. How much will the extreme influx of non-Westerners into American and British graduate programs in economics affect the discipline in the years to come?

Michael G Heller March 17, 2013 at 7:44 am

“If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.”

That’s almost the best thing I’ve ever read you say.

Anatole France March 17, 2013 at 8:04 am

The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread

liberalarts March 17, 2013 at 9:01 am

The modern day equivalent of that statement (and one that I have heard from Republican friends) is that the current law does not discriminate against gays, because gays just like heterosexuals have the full legal right to marry someone of the opposite sex, bequeath tax free to him or her, etc.

Michael G Heller March 17, 2013 at 9:19 am

I believe you are somewhat missing the bigger picture, you know, stuff like the constitution, international law, society-wide entitlements, the banks, public choice concern about discretionary public policy, education and health systems, the Fed, the regulators of utilities, bankruptcy law … etc. You are free to include gay rights if this is what is important to you, personally.

liberalarts March 17, 2013 at 12:18 pm

What does the constitution have to do with libertarianism? To the extent that it protects individual freedoms, it is important, but to the extent that it doesn’t, it is a roadblock to libertarian principles. I am not gay, but the (current court) interpretation of the constitution clearly is at odds with libertarian principles. Actually, I am not a libertarian either, but I would think that holding the constitution as a good thing per se, rather than a tool for good things is something for the Tea Party and not libertarians.

maguro March 17, 2013 at 12:58 pm

Of course the founders weren’t libertarians, but I think it is odd to say that the constitution is a roadblock to libertarian principles. Is a positive right to state-endorsed same-sex marriage really a libertarian principle? I always supposed that the libertarian position would be to get the state out of the marriage-endorsing business altogether and let individual citizens marry whoever they want.

Overall, the constitution seems pretty consistent with libertarian principles. Freedom of speech, freedom of religion, freedom to bear arms, freedom from self-incrimination, freedom from unreasonable search and seizure. From a libertarian perspective, what’s not to like?

liberalarts March 17, 2013 at 1:09 pm

I probably wasn’t being entirely clear. I think that the constitution does a pretty good job for most things, such as the list you give. It is a tool for those objectives. I don’t think that it is a libertarian objective to have a positive right to freedom of marriage. But laws that create some people who are more equal than others certainly is not such a principle. Allowing gays to marry is one way to level the playing field. Removing all state recognition of marriage and related contracts is another way to do it. Not allowing gays in the army and then giving preferential treatment on government hiring to vets was another issue. Libertarians would be against such preferences, but surely it was an issue to give them to some but not all people based on discrimination.

maguro March 17, 2013 at 2:06 pm

Well. The constitution certainly doesn’t guarantee perfect implementation of libertarian principles, but that is much different from saying that the constitution itself is an obstacle to libertarian principles.

I have to think that US governance would be less libertarian, not more, if we operated without a written constitution like Canada and the UK.

liberalarts March 17, 2013 at 7:07 pm

The constitution is not in general an impediment to libertarian principles in general, but it is to some of them, and that was my point. Supporting the constitution just because it is the constitution is what gets my goat. I guess that I see libertarianism as a refreshing alternative to nationalism, because it advocates for a series of principles and rights that it believes improve the world. Nationalists support the constitution, because it is the U.S. constitution and it ought to be followed.

Claudia March 17, 2013 at 7:51 am

“Economic analysis is itself value-free, but in practice it encourages a cosmopolitan interest in natural equality.”

I would like to believe that is true, but I feel like an “interest” is not sufficient to later claim the mantle of “a more moral and more egalitarian approach to policy.” Our elegant math models today may impose equality via a representative agent, but that is usually a sterile simplifying assumption and not taught as a testament to human solidarity. Also I think an egalitarian approach should value the differences across people and not just shoehorn them into a common box … it makes economics feel out of touch with the range of experience around it. I suppose there are many economists who agree with the ideas in this piece but there are very few who are shouting it from the rooftops in a language any non-economists could understand. Nice piece, but a sad witness to what economics once was or could be…though I think we probably do more good in the world as ‘dentists’ than moralists.

Rahul March 17, 2013 at 9:14 am

Could you give a concrete example of what you mean? Especially by “an egalitarian approach should value the differences across people “

Claudia March 17, 2013 at 9:22 am

I disagree with the Chicago approach that says we all have the same basic tastes. I do think personal preferences differ, such as willingness to take risk, patience, and even the relative weights on the individual versus the collective interests (however, the latter is defined: family, community, country, etc.). We are not all maximizing the same objective function … even if we all faced the same constraints with the same endowments (which we don’t).

Ricardo March 17, 2013 at 10:21 am

Even orthodox economic models allow preferences over bundles of goods and risk aversion to vary across individuals.

The point I would make is that sociologists and anthropologists (justifiably, in my opinion) get irritated when they read silliness about the “deadweight loss” of gift-giving e.g. over Christmas. When economists write stuff like this, they seem genuinely oblivious to the fact that gift-giving almost certainly predates the market economy and that people outside their own discipline might have interesting things to say about why this “inefficient” act has been a fundamental part of the human life for the past 50,000 years.

Claudia March 17, 2013 at 10:28 am

“Even orthodox economic models allow preferences over bundles of goods and risk aversion to vary across individuals.” Fine they *allow* for it, but very few models actually assume differences in risk aversion. The Chicago approach mentioned in the article says preferences are the SAME. Whether economists believe that or not is a separate question from whether they actively model those differences.

Claudia March 17, 2013 at 9:36 am

Or to make a slightly different point … in my first comment swap “value differences” with “be concerned about differences.” It’s tough in standard macroeconomics to get inequality to matter much and yet lots of people are deeply concerned about inequality. Another question one could ask is if the egalitarian core of economics which treats people as the same ex ante blinds economists to inequality ex post.

BC March 17, 2013 at 12:59 pm

TC: “If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.”

That statement does imply a tendency towards equality of opportunity and equality of rights, equality “ex ante” as you put it. These are, in turn, basically incompatible with the notion of equality of results, or equality “ex post” to use your term. I wouldn’t say, though, that anyone is “blinded”, any more than an emphasis on equality, however defined, “blinds” one to inequality. It’s more accurate to say that an emphasis on equality of opportunity naturally leads one to de-emphasize the incompatible notion of equality of results (and vice-versa).

Claudia March 17, 2013 at 1:13 pm

yes, but if the equality of opportunity is by assumption…it is a pretty hollow equality and should not give a pass to the inequality of outcomes.

[NB: I am an economist and I often find myself touting this logic to very strong opposition of non-economists. I think there is much wisdom in the economic approach, but I do not see it as the moral high ground on how to deal with the ex post reality...also known as 'real life.']

BC March 17, 2013 at 4:47 pm

The equal-results crowd often seems to believe that their case is made stronger by questioning the degree to which we have equality of opportunity. However, the equal-opportunity argument is not that equality of opportunity justifies unequal results. It’s that trying to force equal results *necessarily* requires unequal opportunity. We can have a level playing field, we can try to force a tie score, or we can do neither. We cannot however do both.

Pointing out inequalities of opportunity to justify advancing equality of results is like using the existence of gender discrimination as a justification for racial discrimination.

Claudia March 17, 2013 at 6:31 pm

watch the video: http://mashable.com/2013/03/02/wealth-inequality/ …people don’t want or expect equality…but there’s more inequality nonetheless. that’s what’s shocking and upsetting to people. Noah Smith, a left-leaning economist’s response to this was…have the poor save more. http://noahpinionblog.blogspot.com/2013/03/how-poor-can-and-should-save-money.html that may be egalitarian but it feels off. something is deeply unequal, so why are those at the bottom expected to set us right? Maybe that’s the only thing that would work, but it does not come as moral leadership, at least to me.

Oh and your logic in the last statement is getting a little too advanced for me. The simple point is equal start makes an unequal end easier to accept … unequal ends are never totally acceptable. still should have safety nets for pure bad luck and second chances, people are too valuable to be left behind for some poor choices. I worry more about human capital waste than moral hazard.

BC March 17, 2013 at 7:54 pm

I did not realize the degree to which we are not on the same page. I don’t believe that equal starts make unequal ends more acceptable. Equal starts *are* the goal. Equal ends make equal starts impossible to achieve. (Which is not to say that unequal ends imply equal starts, of course.) The statement on racial and gender discrimination was that it makes no sense to say, “Well, even if we end racial discrimination, people won’t be truly equal due to gender discrimination. Thus, racial discrimination is ok.” That makes no more sense than saying, “Since we don’t have a truly level playing field to begin with, it’s ok to add one more thing that will never allow the playing field to be level to achieve equal results.” I can see why you didn’t follow the logic since making the playing field level was not even the goal in your view.

Agreed that we need safety nets for the most needy, etc. To use your language, we can “accept” somewhat unequal starts to build safety nets. Of course, inequality of results says nothing about the strength of the safety net. When the stock market crashed in 2008 and the top 1% lost disproportionately more wealth, decreasing inequality, were the poor better off?

Regarding the video, I think this is an example of how poll question framing influences answers, especially when it involves statistical distributions and other complex mathematical concepts. Here is a poll that showed people wanted to raise the top marginal tax rate by lowering it from 35% to 30%: [http://thehill.com/polls/212643-hill-poll-likely-voters-prefer-lower-tax-rates-for-individuals-business]

When people are asked in plain English, rather than about complicated statistical distributions, about whether they prefer equality of opportunity or equality of results, Americans prefer equality of results: [http://www.pewresearch.org/daily-number/americans-western-europeans-differ-on-the-role-of-the-state/]. I don’t believe that this is a question of framing because Europeans give the opposite answer.

BC March 17, 2013 at 7:59 pm

Sorry, poll shows Americans prefer equality of *opportunity*.

Claudia March 17, 2013 at 10:27 pm

I agree equal starts are the goal, but saying it does not make it so. If the ends are wildly unequal the starts are likely still unequal. Of course making the ends equal implies some implicitly unequal start. It’s a balancing act not a zero-one state. I think we’re close on the goals and not so close on the means to the end. Celebrate the common ground and work around the differences. Also note, like many others here I have an annoying contrarian tick so what I write is not always what I think. Appreciate your thoughts though.

Admirer March 18, 2013 at 12:29 am

I’d like to thank you both for this intelligent, polite, and interesting conversation. It was a delight to read, very informative, and all too rare on the Internet. Good show!

derek March 17, 2013 at 3:37 pm

Economists fail when they try to predict, and the failures usually stem from the human tendency towards irrationality that is displayed in cultural norms, etc. that are very difficult to model in predictions.

Take the predictions out of the picture and the attempts to describe what is happening, to find patterns among the data, are egalitarian. And it often highlights the cultural or other prejudices that often times result is less than optimal results for certain populations.

If one studies the rise of Japan, for example, after looking at all the influences of trade balances, investment, etc. it comes down to the cultural norms that drove the economy forward. On the other hand you can study inner city US where cultural norms, prejudice, effects of government policy, etc. had the opposite effect in an otherwise thriving national economy. If you start with the assumption that everyone is pretty well equal, the differences in result come from somewhere, and if they are the result of oppression or prejudice or counterproductive government policy, then the argument can be made to fix them.

The Anti-Gnostic March 17, 2013 at 9:10 am

I agree with the basic premise. The beauty of the market is that the $100 in my wallet is worth the same as the $100 in Bill Gates’s wallet, though Bill Gates will undoubtedly get more solicitous attention when he walks into a store than I will. Humans are social and hierarchical animals who differ radically in talent and all sorts of other ways. Even the epitome of libertarian social organization, the publicly traded corporation, is extremely hierarchical. If libertarian economists must venture into normative territory, they should restrict themselves to decribing a society where people can find their own level. Equality doesn’t exist in nature and never will.

I take it from this post that libertarian/minarchist economists are finally realizing that other than a few outliers like Thomas Sowell and Walter Williams (both quite elderly), their group is whiter than Augusta National.

prior_approval March 17, 2013 at 12:16 pm

Bill Gates has zero need to bother with a wallet, and does not need to care in the least about 100 dollars. That is the real distinction.

GiT March 17, 2013 at 2:36 pm

The $100 is worth the same to the shopkeeper of the store which you’re walking in to. It’s not worth the same to you and Bill Gates, to a different shop keeper, or to the current shop keeper’s shopgirl/boy…

The Original D March 18, 2013 at 2:20 am

The shopkeeper may rationally expect to get more money from Bill Gates in lifetime value, so he may invest more in Gates to deliver a satisfying experience. Even if Gates never sets foot in the store again, an autographed picture of Gates may serve the shopkeeper well, much as photos of Tony Bennet, Frank Sinatra etc adorn Italian restaurants.

That said, people do all kinds of irrational things for celebrities. Animal spirits at work.

Rahul March 17, 2013 at 9:12 am

“3. How do Indian economists poll on the caste system, relative to their socioeconomic peers?”

You ought to do a post on this, Tyler!
Post-colonial India might have the longest running experiment on affirmative action. Not just preference, but strict and complex reservations (caste, sub-caste, sex, linguistic, etc.) that cover not just employment but education, local-governments etc.

Currently, more than 50% of all public employment is, in some way, earmarked for particular classes. The scale of this social engineering is unthinkable anywhere else, I think!

It’s a grossly under-reported topic outside India.

JWatts March 17, 2013 at 10:06 am

I too would be interested on a post on that topic.

anon March 17, 2013 at 11:58 am

+1

Fourmyle March 17, 2013 at 9:14 am

1. Probably not. People are not perfectly rational, and a smart economics will recognize that. But on the other hand, Jews, Catholics and Anglicans are all irrational in the same ways, so it still doesn’t make sense to treat them differently.

With one exception: it’s well established that men and women have differently structured brains. (Non-egalitarian) If science establishes that these differences affect voting behavior there may be a returned push to limit the franchise to the gender which votes in a less socially harmful way. I’m not saying which gender that it! Just that if it was shown that because of brain architecture, one gender was heavily predisposed to vote for something that doesn’t work in a modern society, that would be grounds (maybe) for reinstituting a 3/5ths law or a more limited franchise.

2. A fair bit, but that’s because today’s economists grew up in the society that yesterday’s economists voted for. You’ve already internalized the lessons like “Jews should be allows to vote.”

3. Good question.

4. It will regress, but see answer #2. They’re just a generation or to removed. Their kids will probably be pretty modern.

john personna March 17, 2013 at 12:18 pm

1. We should be wary of the baggage in “rational versus irrational” comparisons. An innate bias for cooperation spans human populations, is irrational, and is “good.” It also puts a little sand in the gears of rational choice models.

prior_approval March 17, 2013 at 2:36 pm

But selfishness is a virtue that can triumph even over such things as the innate human bias for cooperation.

Well, at least in some self-proclaimed value free views of how humans always act as economic beings..

john personna March 17, 2013 at 2:44 pm

“selfishness,” like “irrationality,” has a lot of value loading. If we step back and look at humans as if we were visiting naturalists, I think we’d see individual survival imperatives and various forms of group survival imperative. “Selfish” is an accusation that someone has too much individual survival (or individual prosperity) bias. The very existence of the word confirms the group “obligation,” of course.

And yes, some take pride in “selfish” behavior, seeking to reduce any group obligation, innate or otherwise.

Pensans March 17, 2013 at 9:53 am

They voted for RomanCatholic/Jewish cosmopolitanism. Today, England is lost. What does that show?

Rahul March 17, 2013 at 9:58 am

……shows that frivolous, distant, cherry-picked correlation is not causation?

ladderff March 17, 2013 at 10:32 am

not always, anyway

Pensans March 17, 2013 at 10:37 am

Tyler picked the importance of this vote in praising economists as cosmopolitans. Now that England has been overrun by “cosmopolitans” it might seem obvious where the economists went astray.

john personna March 17, 2013 at 12:20 pm

Missing counter-factual? If the British Empire had really tried for racist, fascist, totalitarianism, would it actually have “won?”

Pensans March 18, 2013 at 12:00 pm

The opposite of cosmopolitanism is not racism, but it is telling that you frame it that way. This is precisely the kind of thinking that lost England.

john personna March 18, 2013 at 12:34 pm

“overrun” is usually a good tell. If you have a different and better counter-factual, bring it.

Pensans March 18, 2013 at 2:48 pm

Allowing the nation to subsist without mass immigration is the nontotalitarian alternative I had in mind. I concede that the u.s. And europe have all implemented cosmopolitanism and are suffering the consequences.

john personna March 18, 2013 at 7:31 pm

Britain would have had an interesting contraction from Empire, without some level of immigration. And of course the US would have had to juggle the transition from “immigrant nation” to non.

Careless March 27, 2013 at 1:21 pm

We did that 90 years ago, John. Worked out rather famously well.

paul March 17, 2013 at 9:57 am

“Economic Analysis itself is value free.”

True only in the most narrow of senses. As soon as you decide which assumptions about reality you will make (i.e. as soon as you begin), economic analysis ceases to be value free.

JWatts March 17, 2013 at 10:08 am

Yes, but your comment is also “true only in the most narrow of senses”. There will always be bias, but you try to minimize it.

prior_approval March 17, 2013 at 11:05 am

‘Economic analysis is itself value-free’

‘There will always be bias, but you try to minimize it.’

The first statement directly contradicts your much more intelligent framing, it must be noted.

Chris March 17, 2013 at 10:06 am

“Bentham and Mill didn’t support personal liberty in every instance — Mill was a proud imperialist when it came to India”

because being anti-suttee and anti-slavery means being against personal liberty?!?

shrikanthk March 19, 2013 at 12:04 pm

Referring to John Stuart or his dad James Mill?

James Mill was definitely an imperialist. He also authored one of the early histories of India widely acclaimed at the time as being comparable to Gibbon’s writing.

Would be interested to know what was John Stuart’s take on British imperialism.

Rahul March 17, 2013 at 10:41 am

“For example, Adam Smith cited birth and fortune, as opposed to intrinsically different capabilities, as the primary reasons for differences in social rank. ”

Paging Steve Sailer, Charles Murray, James Watson……..

TMC March 17, 2013 at 1:20 pm

You forgot Mr. Obvious.

Morgan Warstler March 17, 2013 at 10:46 am

And yet the best way to actually create policy is to ASSUME there is a hegemony, identify the hegemony, and limit your policies to things the hegemony can accept.

In the US, that hegemony is the top 1/3+ of Americans who spend part of their earning life in the top 20%.

The other policy mistake in US is pretending we are in bi-polar game, in US it is tri-polar.

Like the US Cold war we have:

A power: top 1/3 – money and votes
B power: top 1% – money
C power: bottom 2/3 – votes

As China proved the best play for the C power is to consistently swing their allegiance between both A and B power.

The mistake made by progressive wonks, those who believe they can solve for the C player’ interests, is that they exclusively side with B power. This is why over pat 30 years, the C power lost $, the B power gained $, and the A power played to a draw.

JWatts March 17, 2013 at 3:17 pm

That doesn’t sound quite right, but it’s an interesting framing.

TGGP March 18, 2013 at 8:50 pm

You were babbling about the “hegemony” of SMB owners in the run-up to the election. I thought you had admitted you got everything wrong then.

Steve Sailer March 17, 2013 at 11:33 am

Tyler writes:

“2. How much of the civil libertarian core, common among many economists, stems from the socioeconomic background of (many) current economists rather than from the economic method?”

In other words, how much of the cosmopolitanism uber alles ideology of contemporary economics is a rationalization of that not very principled question: “Is it for the Jews?”

TGGP March 18, 2013 at 8:52 pm

Determining whether something is “good for the Jews” would require some actual analysis, which I think might be granting too much credit.

Steve Sailer March 17, 2013 at 11:37 am

Tyler writes:

“IN any case, there is an overriding moral issue. Imagine that it is your professional duty to report a cost-benefit analysis of liberalizing immigration policy. You wouldn’t dream of producing a study that counted “men only” or “whites only,” at least not without specific, clearly stated reasons for dividing the data.

“So why report cost-benefit results only for United States citizens or residents, as is sometimes done in analyses of both international trade and migration? The nation-state is a good practical institution, but it does not provide the final moral delineation of which people count and which do not. So commentators on trade and immigration should stress the cosmopolitan perspective, knowing that the practical imperatives of the nation-state will not be underrepresented in the ensuing debate.

Harry Dexter White himself couldn’t have said it better. Sure, White in effect embezzled a quarter of a billion dollars from his own country and gave it to the Soviets, but from the viewpoint of cosmopolitan ethnics, concepts like “treason” seem so crude and outdated.

Daniel March 17, 2013 at 12:52 pm

I take it this is an accurate and non-ironic summarization of your views

http://www.youtube.com/watch?v=IhnUgAaea4M

David R. Henderson March 17, 2013 at 1:58 pm

Daniel,
I watched the whole video. I don’t get it. The one mention of immigrants was pro-immigrant. How does this accurately summarize Steve Sailer’s views?

GiT March 17, 2013 at 2:43 pm

Are you sure it’s not this?

http://www.youtube.com/watch?v=768h3Tz4Qik

Brian Donohue March 17, 2013 at 8:31 pm

Steve, you need a much better example than Harry Dexter White for the argument you’re trying to make here.

Chris March 17, 2013 at 12:06 pm

esoteric tyler cowen: “economists’ cosmopolitan and egalitarian arguments should be treated with particular skepticism because they are the product of unexamined premises rather than results of their rigorous enquiries”

Greg Ransom March 17, 2013 at 1:09 pm

Tyler, you are mistaking the rationalists version of Christian utilitarianism for economics.

What you are talking about is the consequences of Fransic Hutchison ans John Wesley, not the consequences of the math economics of Hicks, Samuelson, Arrow, Nash, and Walras.

maguro March 17, 2013 at 1:10 pm

Three cheers for the Balkanization of America. Because it worked out so well for the Balkans.

CPV March 17, 2013 at 1:28 pm

Reading the fully article I was struck by the fact that you don’t think that nations/states should act in their own interest. IE their utility function should include the utility functions of all other humans on the planet. So, I assume that applies to individuals as well. Proceeding down this line of thought, I suppose you would argue that individuals should be donating most of their income to charity, at least until their living standard is reduced to something like the average living standard around the globe.

The Anti-Gnostic March 18, 2013 at 8:09 am

I guess Tyler Cowen is really an anarcho-capitalist. In which event, people will draw their own borders and ‘immigrants’ won’t exist. There will only be owners, tenants and trespassers.

Rahul March 18, 2013 at 8:39 am

That was one huge jump from what TC wrote to your dysfunctional scenario.

The Anti-Gnostic March 18, 2013 at 1:09 pm

If, as Tyler says, nation-states should not act to advance the interests of their own citizens as opposed to the interests of people on the other side of the globe, then what is their justification? Why should US taxpayers support what purports to be their military if it’s just going to act in British-French interests, or the interests of the Karzai clan?

A lot nation-states don’t even make sense. Haiti would collapse into the dirt without foreign aid. Kurdistan exists on the ground but is denied on paper. Kosovo is a NATO protectorate. The US is striving mightily to purge itself of any national sense. (I predict this effort will succeed beyond the cosmopolitan-libertarians’ wildest imaginings.)

I think it’s actually a pretty small jump from these observations to the position of just letting people sort these things out on their own. The nation-state has actually gone from being a stabilizing force to a de-stabilizing one.

CPV March 18, 2013 at 8:31 pm

“So why report cost-benefit results only for United States citizens or residents, as is sometimes done in analyses of both international trade and migration? The nation-state is a good practical institution, but it does not provide the final moral delineation of which people count and which do not. ”

So why perform cost-benefit analyses using only your own utility function? I don’t see that the arguments are that much different. Are they?

Greg Ransom March 17, 2013 at 1:33 pm

Bentham’s utilitarianism does come out of 20th century math Econ, it comes straight out of the Christian theology of Joseph Priestley.

Ricardo March 18, 2013 at 9:58 am

Priestley was a philosopher and a scientist who denied free will. That may make him a very materialistic and secular theologian or a philosopher who embraced Christianity but describing his ideas as having come from Christian theology seems a bit incomplete.

CVP March 17, 2013 at 1:34 pm

Also it seems quite odd to claim a high degree of civil libertarianism among economists, many of whom support > 50% taxation rates unless economic freedom is not considered a civil liberty? If not, why not?

Greg Ransom March 17, 2013 at 1:36 pm

make that, Bentham’s utilitarian does not come out of 20th century math econ

Therapsid March 17, 2013 at 1:42 pm

So what? No ethical system is going to come out of 20th century math econ.

Greg Ransom March 17, 2013 at 2:43 pm

Cowen claims Betham’s view came out of math modeling — the facts argue something different.

Greg Ransom March 17, 2013 at 2:09 pm

Hayek contra Tyler Cowen, market analysis begins by positing men who are happy with resources being distributed unequally among all members — and this move toward such tolerance for inequality of men marks the beginning of trade society.

Bill March 17, 2013 at 2:10 pm

Re: “Will the move away from rational choice models, and toward a broader and larger empirical social science, including behavioral and neuro elements, nudge economics away from this heritage?”

Let’s not assume that the “past” is necessarily a “heritage” to be cherished. At every every point in development there is a cherished past, a cherished “heritage”. But, learning and empiricism trashes parts of the past that cannot sustain scrutiny or empirical support. So, we change. Today, we have behavioural economics, a large, dynamic growth in network economics and network theory since 1998 which have powerful explanatory models…cascades, social network and economic networks, a better understanding of irrational choice, etc.

So, what is a heritage other than something that has to be challenged, if wanting, to undergo change.

Get with it.

Heritage, schmeritage.

Edmund Burke March 17, 2013 at 8:36 pm

Nonsense!

Greg Ransom March 17, 2013 at 2:10 pm

A better case than Tyler’s can be made that hyper-rationalists and tunnel vision math obsessives in fact did more damage to rule of law and equality before the law than anyone else.

Bill March 17, 2013 at 2:39 pm

+1

Math is the Servant,

Not

The Master

Paul Seabright March 17, 2013 at 3:03 pm

I’m surprised you don’t more of the fact that the assumption that all economic agents are fundamentally the same has not been universal in economics, but was really the legacy of Adam Smith and lasted until the rise of the adverse selection revolution in the 1960s. Prior to Adam Smith (especially visible in the writings of Ibn Khaldun but going back to Herodotus at least), social scientists – if that’s not too anachronistic a term – were fascinated by the differences between peoples (civilized and barbarians for Herodotus, Arabs and Berbers for Ibn Khaldun). Adam Smith then told us that underneath the superficial differences human beings were fundamentally the same. Not until asymmetric information was really taken seriously did economists start to think that the differences between human beings might matter even more than their similarities. Nowadays economists are as fascinated by the challenges of matching (people to jobs, types to contracts, people to people) as by the challenge of changing the behavior of people of a given type. I think it would be intriguing to poll economists as to whether they think there are greater welfare gains to be made from solving adverse selection problems than from solving moral hazard problems – I suspect many would think so. At any rate, a tendency to think in terms of adverse selection problems is not particularly egalitarian – economists who talk continually in terms of “high” types and “low” types are not likely to feel that what unites humanity is more important than what divides us. In short, your discussion of the egalitarian tendency in economics is true of an age that extended from the late eighteenth century to the late twentieth century, but I think it is an age that is no longer with us.

Thursday March 17, 2013 at 3:32 pm

1. Will the move away from rational choice models, and toward a broader and larger empirical social science, including behavioral and neuro elements, nudge economics away from this heritage?

Are we seeing the birth pangs of a truly conservative economics, one that is neither left- nor right-wing liberal?

2. How much of the civil libertarian core, common among many economists, stems from the socioeconomic background of (many) current economists rather than from the economic method?

How much of it stems from people on the autism spectrum being attracted to the subject?

Rory Sutherland March 17, 2013 at 3:45 pm

+1

Alan March 17, 2013 at 4:13 pm

Does Tyler think he has finally found a way to get his readers to think that economists are nice people? If so, see “Cockatoos exhibit self-control in nut-trading games.”

Greg Ransom March 17, 2013 at 4:02 pm

Bentham trashed the concept of individual rights & sanctified idea of collective ends justify treating individuals as mere means.

Hyper-rationalism and math economists sanctified turning over unequal power to elite who were allowed to treat humans as cogs without rights.

Cowen has this story up side down.

sp6r=underrated March 17, 2013 at 7:36 pm

Economists will wrap themselves in the cosmopolitan flag as wages continue their decline and unemployment becomes more and more common like the failed politician with the actual flag.

Things will get very interesting once the Euro implodes and Israel attacks Iran launching unemployment from anywhere to 10-40% throughout the developed world.

jurisdebtor March 17, 2013 at 7:57 pm

“even the so-called behavioral theories tweak only the fringes of a basically common, rational understanding of people.”

Wow. What a wonderfully failed attempt to marginalize behavioral economics and the insights it has brought to the economics field. I wonder why you would do this . . .

“The crucial implication is this: If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.”

Right. Because you are beating the luck egalitarian drum.

Brian Donohue March 17, 2013 at 8:41 pm

Yeah. To me, it all flows from the core (unintuitive and distinctive) economic idea that exchange is not zero-sum.

Roxy March 17, 2013 at 10:13 pm

This column may be the pinnacle of the disciplinary narcissism of economics.

What’s next — did economists teach us how to split the atom?

asdf March 18, 2013 at 12:04 am

Economist aren’t hard to figure out. They are largely nerdy white dudes with bad social skills and above average IQs who don’t mind working hard but only on things that intrinsically interest them while they have a good degree of autonomy (so IB or BIGLAW is out). They also need a career that has enough security, renumeration, and social status to eventually land an acceptable wife and a house in a “bubble” neighboorhood.

So that answers why economist want the job. Why do people pay them?

Obviously if someone is paying you money they are getting something out of it. Economists mostly get paid by large institutions (either directely or indirectely through grants and donations). Those institutions must be getting something out of it. Since economist usually advocate for policies one would assume therefore that the overall affect of those policies favors those institutions.

Now, I’m sure some economist is going, “well I don’t advocate for corporatism I advocate for free markets.” However, since free markets would be bad for the institutions paying them we can assume that the likely result of their advocacy is not free markets. The likely result is that whatever policy advocation that is actually politicaly or culturaly effective will probably be pro-corporatist policy, while the anti-corporatists parts of the policy are likely ineffective politically and culturally. Thus, the overall affect of funding the economist is pro-corporatist policy. His salary is justified.

I think economist are especially good partners in this because they tend to be mildly autistic, and thus don’t understand the likely political & cultural effects of their actions. This combined with the fact that its in their economic and social best interest to remain ignorant is usually enough.

Andrew' March 18, 2013 at 6:35 am

“renumeration,” I like it. Really.

Andrew' March 18, 2013 at 7:51 am

It’s like the opposite of a Malapropism.

Brian Donohue March 18, 2013 at 8:05 am

To the (limited) extent this is true, you’ve forgotten the great swath of economists who have stumbled on the lucrative business of telling governments they should be doing this that and the other.

gaddaph gaddaph March 18, 2013 at 10:15 am

“Obviously if someone is paying you money they are getting something out of it.”

So what are the puppet-masters getting out of providing a salary to critical theory sociologists and other basket-weaving professors?

anon March 18, 2013 at 11:45 am

Acolytes and votes.

Frere Jacques March 19, 2013 at 9:02 am

Repressiv desublimation, i.e., making believe that change can be achieved within the system.

Andrew' March 18, 2013 at 6:34 am

The academy is going to have to do a lot of remedial work that has previously been done by parents and culture. So, they are just going to have to do a little more of what they have taken credit for doing.

Steven Kopits March 18, 2013 at 8:57 am

Dead wrong, Tyler.

Economic analysis implies the most efficient use of scarce resources from the perspective of the individual.

If you’re a conservative, then economic analysis is the most efficient use of scarce resoures from the perspective of the group. For example, a conservative can send a soldier to die in Iraq. This is (potentially) optimal for society; not so for the soldier.

Second, conservatives are about standards, which are usually both arbitrary and absolute. Try shaking hands with your left hand. After all, you’re an individual. Why be limited to shaking with the right hand? See how that goes.

Third, egalitarians reject the notion of scarce resources. Thus, you will find that they almost inevitably do only benefit analysis, not cost/benefit analysis. Without property rights (or with the ability to seize others’ assets or incomes), scarcity is not a constraint in analysis. Read just about anything from Menzie Chinn to convince yourself of this.

So, economics is about the optimal use of scarce resources from the perspective of the individual. If resources are not treated as scarce, or the individual is not the unit of analysis, then economic analysis as you mean it is not value-free.

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