Coordination Problem

‘an oppression of the weak by the incompetent and an exploitation of the poor by the lazy’

|Peter Boettke|

EconTalk this week on urban planning and economic forces at work in the everyday deliberations of city dwellers and builders and architects is highly recommended.

LISTEN ... and pray that someone like Julian Simon can emerge to bring reason and evidence back into the conversation

|Peter Boettke|

Climate change is real; climate change is man-made, but once we agree on that there is still the matters of (1) trade-offs that must be made in negotiating public policy priorities and alternatives, (2) the adaptations and adjustments that human choosers will make due to the incentives they face as change is impressed upon them, and (3) the technological innovations that can in many cases ameliorate problems if not eliminate. 

In studying this process of adaptation and adjustment, the ultimate resource we must remember is the human imagination, and the greatest tools we have for directing that imagination in productive directions is property, prices and profit and loss.

None of this is recognized in this episode of On the Media, May 31, 2019.

So respectfully listen, think hard about the issues raised, do the necessary reading of the scientific literature. But just make sure to add Julian Simon to your list and weigh his arguments in your adjudication efforts.

Reason, not emotion; weighing of evidence, not mood affiliation is the only way we can seriously tackle serious issues.

 

 

Facts Should Get In The Way of a Good Story!!!

|Peter Boettke|

James M Buchanan — my teacher — has had a rough couple years where historians and other critics have in essence insisted that the facts should never get in the way of their preferred narrative.  BUT THEY SHOULD!  It is a sad tragedy when they don’t because the allure of ideological blinders is just too great.

So one small set of facts — the visitors brought to Thomas Jefferson Center at UVa.

Visiting scholars at UVA's Thomas Jefferson Center under James Buchanan's watch:

1958 (Spring semester) - Frank Knight
1958-59 - Maurice Allais
1959-60 - Bertil Ohlin
1960-61 - Bruno Leoni 
1961 (Spring semester) - F.A. Hayek
1961 (Fall semester) - Michael Polanyi
1962 - Duncan Black 
1965-66 - W.H. Hutt

Notable guest lecturers brought in:

1957 - Ronald Coase (later joined faculty)
1958 - Charles Lindblom
1958 - Peter Bauer
1959 - Robert A. Dahl
1960 - T. W. Hutchison

 

And, just another set of facts, first Presidents of Public Choice Society.

James M. Buchanan - Economics

Gordon Tullock - Law and Economics

William H. Riker - Political Science

Vincent A. Ostrom - Public Administration

Otto A. Davis - Economics

Mancur Olson - Economics

James S. Coleman - Sociology

And, within the next few years Elinor Ostrom - Political Science; Charles Plott - Experimental Economics; and Vernon Smith - Experimental Economics, would be elected to serve as President of PCS.

So, do let facts get in the way — those stubborn facts — and challenge your priors and your preferred narratives.

Oh, two more — (1) John Rawls was in correspondence with Buchanan and Tullock, and attended the Committee on Non-Market Decision Making, and (2) Buchanan argued throughout his career for a 100% inheritance tax.

Facts are pesky critters.

Liberalism, Democracy and Political Economy for 21st Century

|Peter Boettke|

My Grove City College frat brother and intellectual confidant Matt Kibbe interviews John Taylor and me prior to recent MPS meeting in Dallas. Thanks Matt for this opportunity.

The MPS meetings focused in ‘Contentious Issues’ and was in my humble opinion at great success and wonderful learning experience. Congratulations to Bob Lawson (SMU) and Ben Powell (TTU) for putting together such a great meeting.

Timeless Message

|Peter Boettke|

Don’t chase after others, look inside and do your best.

 

The Trend of Economic Thinking Redux

|Peter Boettke|

Greg Mankiw will no longer be teaching Principles of Economics at Harvard and instead Raj Chetty will be. How fortunate are those students to be exposed to such a brilliant mind at the beginning of their education. And there is no doubt Chetty is brilliant.  But his plan is to change the style and more importantly the content of the course.  

You can be brilliantly wrong, which is what I believe Chetty is in making this move. Economic theory, understood correctly, cannot be so easily dispensed with because it is not so easily learned either. Students have to be taught the economic way of thinking to make sense of the big data they are processing and asked to analyze. Theory is the set of eyeglasses through which we can ‘read’ the chaotic world and make sense of it.  Without it, we are ‘blind’ to the world we are studying with all its beautiful complexity and creativity.

Hayek’s inaugural lecture at the LSE back in 1933 faced down a similar challenge to the teaching of Economic theory, and Frank Knight addressed a similar concern in his 1950 AEA Presidential address. Everyone would do well to revisit those lectures in light of this development and contemplate what is at stake.  

It is high time for mainline economics to aggressively assert itself in the scientific and educational discourse against the trend of economic thinking in the mainstream.

McCloskey and Horwitz on Women, Markets, and Liberty

Steven Horwitz

Well, mostly McCloskey. This is the full recording of the inaugural Madam C. J. Walker Colloquium in Political Economy at Ball State University, sponsored by the BSU Institute for Entrepreneurship and Free Enterprise. Deirdre and I wandered over a lot of territory in the nominal topic of "Women, Markets, and Liberty" in the first hour, and we got some excellent questions from the attendees. I hope you enjoy it as much as we did. 

 

Art Carden reviews F. A. Hayek: Economics, Political Economy, and Social Philosophy (Palgrave/Macmillan, 2019)

|Peter Boettke|

Art Carden reviews my book on Hayek and the title of his review essay is "Read Hayek As If Your Children's Lives Depend On It."  I greatly appreciate Art's kind words and fully endorse the urgency of the task of reading and fully comprehending what Hayek is arguing in his various works, including The Road to Serfdom.  That book read rightly, not in the cartoon caricature of it depicted by its detractors, is extremely relevant for our times.  In fact, it presents a timeless message about the interrelationship between institutional context of social arrangements and realized outcomes from those social arrangements.  Democracy, for example, cannot function without certain institutions in operation.  Various economic policy ideas will cut against the operation of those institutions, so it must be recognized that some economic ideas are incompatible with certain political ideals and aspirations no matter how sincerely and intensely the advocate wishes it to be so.

There is, in analyzing social systems, a requirement to examine carefully the logic of choice that individual decision makers face, the organizational logic that must be wrestled with internally if the "machinery" is to operate, and the situational logic that individuals and organizations confront in their interactions with one another and with their environment (e.g.,given state of natural resources).  Only by working through this analysis can one subject conceptions of the socially desirable to a thoroughgoing examination to determine the feasible set, and furthermore to scrutinize the feasible to discover the social systems that are viable in any given time and place.  That takes a lot of patience, hard thinking, and to be honest sober thinking about ideas and institutions that often invoke great passion.  

Hayek's work gives us the tools.  It would be tragic we didn't use those tools judiciously.

Myth Busting and Economic Theory

|Peter Boettke|

I started reading John Quiggin’s Economics in Two Lessons, and its basically a critique of the proposition that market prices fully reflect opportunity costs. So the second lesson for Quiggin, as it was for Samuelson, teaches about externalities, monopoly power, business cycles, etc. in short, market failure theory.

But much of the great advances in economic science during the 1960s-1990s was blowing up the mythology of market failure and the idea of government as a corrective.

But the resurrection of market failure theory is not limited to Quiggin, but was evident already in writings earlier in the 2000s such as the books of Ho-Joon Chang

The trend is also evident in recent trends from behavioral economics to the sort of arguments one finds in Eric Posner and Glen Weyl’s Radical Markets.  Obviously, there is a ton to learn by engaging these works. But hopefully part of what is learned is the theoretical and empirical weaknesses reflected in these positions and how price theory is actually the best prophylactic against popular fallacies as Henry Simons argued for years in his introduction to U of Chicago graduate students.  It is time for economists to take economics seriously again, and critically engage this literature that has exploded in the last two decades.  

Happy Birthday Professor Hayek

|Peter Boettke|

F. A. Hayek was born on May 8th 1899 in Vienna.  His intellectual achievements are well documented and well-known, culminating in his being awarded the Nobel Prize in Economic Science in 1974.  The question that we must grapple with today is the evolutionary potential of his ideas for research in economics, political economy and social philosophy for our age.  On his birthday, look through the Living Bibliography to get a glimpse of the explosion of work done on Hayek's ideas over the past decades and suggest additional items.