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楼主: 布拉格之春

When economists lose the plot entirely and show their colours

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 楼主| 发表于 2017-9-4 10:48:47 | 显示全部楼层
It is “really terribly, terribly, simple”.

Economists often say that governments should try to dismantle real world “rigidities” (as they call them), which would include laws that prevent price gouging, so that they can move the economy closer (but not to) perfect competition – because in their fantasy world textbooks this is the ideal state.

The Theory of Second Best tells us that if you do not have that “ideal state” and you dismantle one so-called “rigidity” but leave others then you can make things worse off.

The other point is that often it is “better” for governments to introduce new “rigidities” to confront existing departures from perfect competition.

The point is that the theory of second-best destroys the capacity of the mainstream economists to use “perfect competition” models, as in Worstall’s case, as an authority in the policy debate. The text book models have no legitimacy in the policy domain.

That is why you won’t read much about it in the newspapers or other media where economic policy is discussed.

So even before we invoke moral or other value type judgements, it is unlikely that it is efficient to allow price gouging in this situation.

It is also unlikely to be efficient to deprive a significant proportion of the population access to essential goods and services when society has invested so much in them by way of early health care, schooling, and other resources.

But, beyond those arguments, we note that the view that the economy is somehow separate from us and sacrosanct denies our essential humanity.

Research shows that humans intrinsically think it is better to have collective outcomes.

Think about sport. It is a major aspect of our collective lives. Millions of people watch it, play it and obsess about it every week.

We talk about competition – one team outcompeted another! That competitiveness is the secret to good sporting outcomes.
 楼主| 发表于 2017-9-4 10:49:03 | 显示全部楼层
But that perception is fraught. We organise and regulate sport to suppress competition or at least harness it so as to elevate equity to ensure it remains interesting and exciting.

The ‘free market’ doesn’t exist in sport. We would not tolerate sporting competitions being distorted year after year by moneyed interests being able to deprive less moneyed clubs/teams of resources that would render the competition meaningless.

Even in the so-called heartland of market competition – the US – the US sporting teams revenue share to ensure there is evenness. Draft systems, salary caps, constraints on engine specifications, sizes of golf clubs etc are all designed to keep the playing field level – or at least interesting.

Our basic propensities appear to be collective and cooperative.

Please read my blog – Humans are intrinsically anti neo-liberal – for more discussion on this point.

So to bang on as if there is a ‘free market’ operating as in the textbook is quite obscene when you consider the real world consequences of his suggestions.

In Houston, where poverty has increased dramatically in the last three decades, and where drinking water is now being sold by private sellers at ridiculously high prices, the incentives are there for people without means to compromise their values and steal or else suffer dehydration and negative health consequences.

Young children dying of dehydration is not an efficient outcome for a society.

It would also be an indecent outcome and reflects a value system that had been distorted by a socio-pathological tendency.

Conclusion

It is no wonder Forbes withdrew the article. Even within the spectrum of lunatic articles they feel free to publish, Worstall went too far.

He disclosed the tendency of those trained in economics to engage in anti-people logic and deploy these textbook models as if they are reality and authorities.

Fortunately, society has a habit of winning out when the chips are down and these sociopaths should just get back in their dirty box and refrain from uttering their obscene but also non-authoritative garbage.

And that is from a person with a PhD in economics who understands it as well as anybody.
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