Questions

by Don Boudreaux on March 31, 2009

in Frenetic Fiddling

In this new column in the Pittsburgh Tribune-Review, I ask some questions of those persons who propose greater government control over the economy, such as:

President Obama proclaims that it is “ingenuity and resilience that makes us who we are.” Nice words. But if he really believes his rhetoric, why is he using taxpayer dollars to protect GM and Chrysler from bankruptcy? Surely an ingenious and resilient people can weather the bankruptcy of these ancient behemoths.
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Michael Smith March 31, 2009 at 7:36 am

The belief in the efficacy of central planning and government economic regulation must surely qualify as one of the world's great faiths, for it persists not merely in the absence of supporting evidence but in the face of overwhelming, global-scale evidence to the contrary.

How many times, and on what scale, must government intervention fail — how many countries must experience impoverishment or outright starvation — before the left gives up on its dream of total government control of our lives?

The answer, of course, is that they will never give it up — because their brains are set to work in reverse, such that each new failure of intervention becomes the excuse for advocating still more intervention.

Obama is leading us to disaster.

vidyohs March 31, 2009 at 8:04 am

Michael,

You've fallen off societies train of flat cars and survived, welcome to the America of freedom and revolution.

Once you're off the train and can look back at what people there are doing as they go by on their journey, the idiocy and arrogant wastefulness of how resources and people are used up there on the train just stands out like a beacon.

I saw in the last post on this blog that Russ has also seemed to have fallen off the flat car.

Great days are ahead, thanks to the Obamfools shoving people off the train. They don't know the mistake they are making.

Daniel Kuehn March 31, 2009 at 9:12 am

RE: "those persons who propose greater government control over the economy"

I think it's probably worth differentiating what type of government control different people are advocating. This presupposes that there is some monolithic bloc of opinion that holds that "any intervention is good intervention".

Maybe that is true of the Rick Sanchez's of the world – and quite a few other people. But it's worth engaging the specific positions that people have put forward.

Other places on this blog I've seen Paul Krugman and Brad DeLong held up for criticism in the same breath. However, they have very different positions on the bank plan.

Rather than talking about "the left" or "people who propose greater government control" – why not engage things more specifically?

And granted – specific ideas have been engaged here. The specific GM plans were addressed yesterday. I'm just left scratching my head at who these "people who propose greater government control" are. They seem to be a pretty motley crew.

muirgeo March 31, 2009 at 9:22 am

As I am not one who supports greater government control over the economy it's a little hard for me to say. I do support smarter, more efficient and fair rules from Washington. But the current administrations action can at best be described or hoped for as a means to an such ends. But precedent setting makes the whole process problematic.

It seems to me we had two choices coming into this crisis. One was the non-interventionist path to let it all crumble and rebuild itself. The other was to support the current structures of the economy to keep things intact and ideally minimize the depth of the recession and expedite it's recovery.

Ideologically the former option is the purest but was it not a possibility that it could have lead us to a more severe recession/ depression? Is there anyone who really can answer that question with certainty? The ladder option is sloppy, uncomfortable and even uncertain but is it possible it could ultimately be more efficient?

Maybe part of who we are IS having a government that bumbles and intervenes but ultimately does a decent if erratic job as referee over society. In some ways the sloppiness of the government is nothing knew. The lack of pureness of its interventions and actions are nothing new. And yet are we living like kings? Are we on our way to a better society or will we eventually collapse into something horrid?

I honestly don't claim to know. But likewise the absolutist proclaiming the merits of non-intervention who have me wondering if indeed they aren't right on that point… likewise to them I am pretty certain they have no certainty either. They have no idea what the world would look like right now if we'd chose their path.

Daniel Kuehn March 31, 2009 at 9:32 am

muirgeo -
RE: "The ladder option is sloppy, uncomfortable and even uncertain but is it possible it could ultimately be more efficient? "

This point is very well taken. If you're afraid to make mistakes, obviously this isn't the path for you. It's often trial and error, and it's often messy and incorrect.

RE: "As I am not one who supports greater government control over the economy it's a little hard for me to say. I do support smarter, more efficient and fair rules from Washington."

Nuance? Differentiation between good and bad regulation? Ingenius!

People are lobbying me hard to conclude that you're crazy, muirgeo. Then you keep throwing me curveballs like this one.

Methinks March 31, 2009 at 9:34 am

Rather than talking about "the left" or "people who propose greater government control" – why not engage things more specifically?

Because government is populated by petty bureaucrats in search of power. If history teaches us one thing, it teaches us that they won't stop at "good" intervention. They will seek to intervene in all matters, believing that their judgment is superior to everyone else's. I don't much care what the small differences between these petty bureaucrats and their supporters are. They are all my enemies.

John March 31, 2009 at 9:37 am

Sometimes I wonder if this trust in government is akin to a religion.
Being an organization with a monopoly on force, this unwavering faith in government can turn men into gods with the power to decide who lives and who dies.
This is paired with a belief that some people through education and intelligence are inherently superior to the masses, and as such should be given unquestioned power to lead.

Almost like the divine right of kings has returned.

Daniel Kuehn March 31, 2009 at 9:39 am

Methinks -
RE: "Because government is populated by petty bureaucrats in search of power… I don't much care what the small differences between these petty bureaucrats and their supporters are. They are all my enemies."

OK, well I'm not even talking about people who are actually in government. I'm talking about people who aren't in government who think that the government should do something, but who have varying ideas about what government should do.

It just seems like we're really just punting the issue if we consider all those people to be one single group and then reject it in toto.

Daniel Kuehn March 31, 2009 at 9:43 am

John -
RE: "this unwavering faith in government "

This is exactly what I mean. How many people do you know that have an "unwavering faith in government"? I'm not sure I know a single one. People's faith in government ALWAYS wavers. It's always conditional on what exactly it is that the government is doing.

Again, perhaps there is a large Rick Sanchez audience out there that is ignorantly faithful. But in terms of the people actually involved in policy making, who have a stake in it, and who discuss it day in and day out, NOBODY fits this stereotype. So why act like they do? It seems very easy to knock down that argument if you assume that people are just expressing "unwavering faith".

John March 31, 2009 at 9:44 am

"How many people do you know that have an 'unwavering faith in government'?"

Everyone I know who works for the government would fit that description.

Daniel Kuehn March 31, 2009 at 9:49 am

John –
RE: "Everyone I know who works for the government would fit that description."

Really?!?!? Wow. Somehow I missed that boat and got all the government employee friends who have realistic expectations of their employer. In fact, I've got one friend that works for the GAO, and his job is to assume that most of what the government does is BS and wasteful.

It might be worth pushing this a little further with them. I don't know anybody that has "unwavering faith" in their boss – even in the private sector. I can't imagine it's that common in the public sector.

Alright – I'll be out for a little while. Good discussion.

Methinks March 31, 2009 at 9:55 am

It just seems like we're really just punting the issue if we consider all those people to be one single group and then reject it in toto.

They are one single group whether you choose to accept that reality or not. Minor differences in HOW the government should act does not change the underlying belief that top down government control is the "answer". The only people who have that religious belief (and, yes, it is completely a religion because it is faith based and flies in the face of overwhelming empirical evidence) are Westerners. In the East, we've tried all this before and lost our religion. You're doing nothing new in the United States and you're not going to get a different result from the one we got.

Daniel Kuehn March 31, 2009 at 9:59 am

RE: "the underlying belief that top down government control is the "answer". "

But you're missing my whole point. My point is there is no underlying belief that top down government control is the "answer". I certainly don't and never have believed that kind of nonsense. When people do advocate intervention, it's always very context specific. If you don't address the specificity of these arguments, then you're just debating an imaginary opponent.

John March 31, 2009 at 10:03 am

DK,
How else would you describe people who put complete trust in government?
That takes faith.
How else would you describe people who think that only government can fix whatever is wrong?
That takes faith.
Government takes the role of the "Higher Power", the omnipresent omnipotent force that can fix all that is wrong and right all injustices.
That takes faith.

I can't think of any other way to describe it.

Daniel Kuehn March 31, 2009 at 10:09 am

John -
I don't have a problem with the word "faith". I just have yet to meet anyone actually involved in these types of issues and exchanges that "puts complete trust in government", "think that only government can fix whatever is wrong", or who would ascribe the words "omnipresent" and "omnipotent" to government.

If I ever came across such a person, you're right – "faith" is a great word for it.

What I'm saying is that if the only government employees you know really have those feelings about government, then I think you have a very, very, very unusual and rare collection of government employee friends.

Either that, or you've just misinterpreted their opinions.

John March 31, 2009 at 10:13 am

DK,
I'm intentionally exaggerating, but not much.
Oh, and they're not friends. I know them through work.

John March 31, 2009 at 10:16 am

DK,
Maybe it's a show that they put on in order to effectively do their job, if so then they got me fooled.

indiana jim March 31, 2009 at 10:47 am

Good questions Don; many blogging above seem not to have read them (those who are advocates for greater government control typically don't read they just act). I will list your questions below so that maybe the future czars of American will at least read them (even if their perception of their opportunity costs make it TOO, TOO costly to read your article):

"why do you suppose that giving this same error-prone and corruption-prone government more power will improve matters?"

"Why do you suppose that politicians have any particular expertise in running businesses?"

"Are you blind to, indifferent to, or do you applaud the fact that every dollar that government spends bailing out private firms is a dollar more of influence that politically powerful interest groups will exercise over the way these firms are run — and, hence, a dollar less of influence for consumers?"

"because no amount of government fiscal policy can forever enable consumers to spend more than they can really afford, when this reality finally catches up with us, won't the resulting economic downturn be worse than it would be if government today simply let firms fail and the market sort out viable from nonviable economic opportunities?"

"Do you feel no shame for passing along such debt to your children and grandchildren?"

"Why, then, do you propose to have these risks regulated by Uncle Sam? Do you not see that Uncle Sam is the one force that is not only the most system-wide institution in our economy, but also the only one that is virtually inescapable?"

"Why do you imagine that giving greater power to the one institution that intrudes itself into the affairs of all Americans will reduce systemic risks?"

"Why do you not see that, rather than "regulate" systemic risks, the better option is to reduce such risks as much as possible? And [why do you not see that]the best way to reduce these risks is to decentralize the economy[?]"

"do you not see that one of the most important commodities in our economy is supplied by a system-wide government monopoly? I speak here of dollars."

"why is he [President 0] using taxpayer dollars to protect GM and Chrysler from bankruptcy?"

Oil Shock March 31, 2009 at 11:30 am

Clever Danny boy is taking you all for a ride. He clearly knows that everyone here would like the government to do less than it has always been doing. He has you all dancing to his tunes. Who cares the silly details of the various "PLANS". Who cares if someone else has a different "PLAN".

Daniel Kuehn March 31, 2009 at 11:38 am

Oil Shock -
RE: "He clearly knows that everyone here would like the government to do less than it has always been doing."

Yes – I'm quite aware of that. It's not a "tune". It's a real question.

RE: "Who cares the silly details of the various "PLANS". Who cares if someone else has a different "PLAN". "

Who cares? I care, because as you say – more likely than not some sort of "plan" is going to be adopted in at least many of these cases. Seems worthwhile to figure out what different plans are being proposed and their relative merits – because I can guarantee you some are far worse than others. You may very well oppose all of them. It doesn't mean you have to pretend that everyone who doesn't hold your position is a part of some monolithic group.

Oil Shock March 31, 2009 at 12:07 pm

Who cares? I care, because as you say – more likely than not some sort of "plan" is going to be adopted in at least many of these cases.

Very clever Danny! You are on our side helping us pick the "PLAN" that is the least worst.

MnM March 31, 2009 at 12:40 pm

Shock, calm down brother. Daniel clearly isn't a troll.

He's right. Those in favor of government intervention aren't necessarily monolithic. If I'm reading him correctly what he's saying is that when all of your options are bad, choosing the one that is least bad is the greatest good that you can do (this assumes, of course, that he believes intervention is inevitable; he may be right on that point, but I'm not sure I'm quite that cynical yet).

Daniel,
I imagine that many of our responses to the various interventions would be very similar. The common theme (or at least it would be common in my objections; I probably shouldn't speak for anyone else here) is that government lacks the appropriate incentives to make better decisions than the private sector. Government often ignores opportunity costs, so the money isn't (likely) being put to it's best possible use.

Tangential to this is that government, generally speaking, has one large over reaching plan. The plan's size means that it lacks any meaningful* specificity, whereas individuals have enough information to make well informed and simple plans for themselves. Thousands of small, detailed and simple plans are better than one, large, vague and complex plan. As an engineer, I'm sure Oil Shock can tell you first hand that the more complex you build something, the more likely it is to break.

I know this doesn't cover everything. My responses would be more nuanced with the specific intervention being discussed, but I think this gives you a general idea of the Austrian position.

*By meaningful I mean that while the governments plans may go into great detail, they can't possibly go into greater detail than individuals have of their own situations.

Sam Grove March 31, 2009 at 12:44 pm

How many times, and on what scale, must government intervention fail

Government intervention never fails…by definition. In the political world, intentions are all that matters, results be damned!

I think it's probably worth differentiating what type of government control different people are advocating.

Not anymore, because this:

This presupposes that there is some monolithic bloc of opinion that holds that "any intervention is good intervention".

is not the case.

I understand that there are those who think that intentions matter most of all, but any justification for government intervention can justify any government intervention…and usually does.

Sam Grove March 31, 2009 at 12:47 pm

This is exactly what I mean. How many people do you know that have an "unwavering faith in government"? I'm not sure I know a single one. People's faith in government ALWAYS wavers. It's always conditional on what exactly it is that the government is doing.

No, it's conditional on how much panic there is.

This is ancient tribal instinct, when danger threatens, gather behind the leaders.

muirgeo March 31, 2009 at 12:48 pm

Nuance? Differentiation between good and bad regulation? Ingenius!

People are lobbying me hard to conclude that you're crazy, muirgeo. Then you keep throwing me curveballs like this one.

Posted by: Daniel Kuehn

Liberalism doesn't allow for much nuance. That's why I'm here a communist. If you don't think exactly the same way you're not one of them. Kinda wierd huh?

Oil Shock March 31, 2009 at 12:57 pm

Those in favor of government intervention aren't necessarily monolithic.

Very obvious! I don't think this needs to be specifically pointed to Russ and Don.

If I'm reading him correctly what he's saying is that when all of your options are bad, choosing the one that is least bad is the greatest good that you can do

Disagree. He just wants us stop putting up any fight. If it was a choice between losing a limb and losing life, I would chose losing the limb – but I will never think it was the greatest good. If you go back and read his first comment on this thread and then read his response to my comment, you can always see a change in tone, change in attitude. I have noticed the same change in all the comments he makes on this blog.

(this assumes, of course, that he believes intervention is inevitable; he may be right on that point, but I'm not sure I'm quite that cynical yet).

Yes, he does believe that intervention is inevitable, and that some specific intervention is better than no intervention, he also believes that intervention of the kind where government increases the role is better than one where government reduces its current level of involvement ( of course I am generalizing. I am sure there some specific areas where this might not be the case )

Sam Grove March 31, 2009 at 12:57 pm

Arvon: "Take control because "A".
Barvon: "Take control because "B".
Carvon: "Take control because "C".

Result, government takes control because that's the only thing it knows to do.

Your explanation defines part of the problem.
In the end, it doesn't matter why Arvon, Barvon, and Carvon urge the government to take control.

The end result is that the call for government to take control turns into a mandate for government to take control, and those that take control don't have to worry about the different reasons, indeed, if there are too many reasons, it can't worry about them, it takes control BECAUSE there is demand for it to do so.

The demand becomes THE reason.

Sam Grove March 31, 2009 at 1:02 pm

George slays more straw men.

We aren't a club here. You can find way back where methinks and I have had absolute disagreement, and likely others as well.

Guys, the challenge Daniel offers here is that you have to avoid sloppiness in your argument.

Methinks March 31, 2009 at 1:03 pm

My point is there is no underlying belief that top down government control is the "answer".

Regulation is top down. Bailouts are top down. Government plans are top down. Arguing about which top down plan is better is still arguing from a top down perspective, Dan. You can rename it and rephrase it all you want. It's still the same pile of poo – whether it's DeLong's poo or Krugman's poo.

John March 31, 2009 at 1:09 pm

I'm starting to think that government intervention is inevitable, because not doing anything is to guarantee a loss in the next election.
This is what happens in a nation of children in adult bodies who see government as their parent, and look to their parent as provider of all things and solver of problems.

MnM March 31, 2009 at 1:24 pm

It's still the same pile of poo

Just different sides of the same poo and perhaps with a different funk… ;o)

Okay, that joke was in poor taste. I apologize.

Daniel Kuehn March 31, 2009 at 1:25 pm

muirgeo -
RE: "If you don't think exactly the same way you're not one of them. Kinda wierd huh"

I think that's quite an overstatement for most people on this blog, but yes, I've come across some of that. It is ironically illiberal, isn't it?

Oil Shock -
RE: "Yes, he does believe that intervention is inevitable, and that some specific intervention is better than no intervention,"

I believe in a lot of cases it's inevitable, but that's besides the point. You're making the exact same mistake that I'm trying to point out. You're speaking in very, very, very general terms. I think that in some cases an intervention IS better than no intervention, so long as it is a good intervention. In other cases, I think that no intervention is best and we should have less intervention. The point is it's context specific. You talk as if the context is irrelevant, and THAT'S what I'm disagreeing with. And maybe it's irrelevant to you in the sense that you will always have the same answer – but that doesn't mean that it's irrelevant to the question – just to your answer to the question.

Methinks -
RE: "Regulation is top down. Bailouts are top down. Government plans are top down. Arguing about which top down plan is better is still arguing from a top down perspective, Dan."

Again, you are totally missing my point. Yes, those things are top down. What I'm saying is that a supporter of the bailouts (I'm one of them – at least if we're talking the TARP bailout… I have reservations about the auto bailout) doesn't have "an underlying belief that top-down government control is the 'answer'". I'd wager that NO ONE has that underlying belief. It's a ridiculous belief, and pointing out that it's ridiculous doesn't get you very far because I'd say just about everyone in government agrees with you.

Maybe it would be easier to understand if I put it this way: Proving that top-down government control isn't always the answer does nothing to prove that top-down government control is never the answer. Does that make my position on the relevance of this whole debate a little clearer?

RE: "It's still the same pile of poo – whether it's DeLong's poo or Krugman's poo."

On some issues, DeLong's poo and Krugman's poo are very, very different. By pretending that they're the same, all you're doing is recusing yourself from the discussion. And that's fine. But if this blog is all about plugging your ears and pretending there is some undifferentiated mass of "statists" out there, I doubt I'll stay too long. I don't think it is – I think there are a lot of people on here who don't respond that way.

Oil Shock March 31, 2009 at 1:25 pm

Muirgeo Comments:

Money being recirculated in civil projects like roads and infrastructure is more productive then money sitting in off shore accounts or re-invested overseas.
Posted by: muirgeo | Aug 28, 2007 3:54:43 PM

Saul.

I suggest you lobby your congressman and senators if you can get their attention away from the guys with more free-speech…I mean more money then you. They are the ones who like the tax system the way it is. They are the ones paying the politicos to put the gun to your head.

Posted by: muirgeo | Aug 29, 2007 5:04:14 PM

My comment: But muirgeo thinks if he give more power to congressmen lobbying will stop.

Saul,

I thought about it some more and you are right. If you don't want to pay your taxes you shouldn't have to and you shouldn't be arrested. But the very second you trespass on common public property. Say like a highway, a National Forest, or if you use our currency, or if you use a Federally insured bank, or an FCC licensed radio show ect…if you do any of those things after not paying your taxes THEN you should be arrested at gun point if necassary for trespassing on "public" property. You do believe in property rights don't you?…so do we….and we own a lot of property.

Posted by: muirgeo | Aug 29, 2007 7:08:09

My comment: muirgeo is a freedom loving person. He doesn't see the monopoly force he supports. He will continue to rant and rave about monopolies

1. “The rising income discrepancy is what prevents people from obtaining affordable housing.”
Posted by: muirgeo Nov 2007

Muirgeo wants to prevent falling housing prices, just like many in Washington D.C

"Suffice it to say individualism where ever it surfaces is ultimately self-destructive.”
Posted by: muirgeo | Mar 15, 2008 11:29:41

Muir pretends to be a friend of freedom

“Planning and tinkering will definitely have a place in creating a strong competitive market. The invisible hand……YOU'RE FIRED!!!… well or at least demoted.”
Posted by: muirgeo | Mar 17, 2008 9:13:45 AM

”I compete with other doctors for my patients and market forces are somewhat in effect. A government single payor(sic) system could actually increase consumer choice and market competition.”
Posted by: muirgeo | Mar 21, 2008 9:10:06 PM

Watch yourself Frederick, at some point you'll be lumpable with the Holocaust deniers….the numbers ARE staggering!!!

Posted by: muirgeo | Nov 21, 2007 10:22:23 AM

The above was in the context of climate change

John March 31, 2009 at 1:34 pm

You have a muirgeo file or something?

John March 31, 2009 at 1:35 pm

close bold? What do you do, inject html or something?

Oil Shock March 31, 2009 at 1:43 pm

I doubt I'll stay too long.

No worries. Muirgeo will be here. He will always come back here even if he think he is unwelcome.

People are lobbying me hard to conclude that you're crazy, muirgeo. Then you keep throwing me curveballs like this one.

Muirgeo is myopic with his Republican Democrat nonsense. He sees everything through the prism of this prism. He was against TARP because Bush was president, he is for all the other bail outs since Jan 20th, 2009. He has constantly made baseless accusations that commenters on this blog are all in favor of bail outs. You have clue Danny.

Muirgeo is a 100% troll. He has spoiled many thread on this blog by making it a discussion of libertopia, regardless of what the original post was.

It is amazing that you would give any credibility to this tool, against Russ and Don who have a lot to lose in terms of credibility.

You talk as if the context is irrelevant, and THAT'S what I'm disagreeing with.

You and me think differently. Interventions beget more interventions, in the end government end up owning more and more of the economy. It doesn't matter how many utilitarian arguments you can come up with, it is about individual liberty. If government wants to bailout banks and bail out autos, they can do it as long as they don't take my money now or in the future.

Oil Shock March 31, 2009 at 1:45 pm

closing bold

Daniel Kuehn March 31, 2009 at 1:51 pm

Oil Shock –
RE: " He was against TARP because Bush was president, he is for all the other bail outs since Jan 20th, 2009."

I hope you know I just think this back and forth over muirgeo is funny at this point. Like my views on politicians in general, I've seen some good things out of him, and I've seen some really crazy things out of him :)

This is interesting – perhaps I need to observe him during the change of an administration! Bush's response to the financial crisis was actually the first time in about five or six years that I respected the man. He put his ideology aside and focused on the problem. Maybe you guys think he had the wrong solution, but I'd make the case that it wasn't an ideological approach to the problem – and I was glad for the solution (and I'll note, it seemed to get the TED spread down to mid-2007 levels, which is an enormous relief… although still not out of the woods yet).

Oil Shock March 31, 2009 at 1:55 pm

I don't imagine the 30's or the WW2 period were the best of times but I suspect the people actually living the times and re-electing FDR and Truman to office says a lot more about FDR's success then an economic analyisis written 60 years later.
Posted by: muirgeo | Dec 15, 2008 9:03:03 PM

Muirgeo is an ardent believer in mob rule. He has repeated several times on this blog that the seeds of the current crisis were laid in 1980, with Reagan "deregulation". I wonder if he will apply the same logic he stated above to the years since 1980.

BTW, I don't vote, if I ever did, I am likely to vote for a libertarian party candidate than a democrat or republican.

Seth March 31, 2009 at 2:01 pm

"that government lacks the appropriate incentives to make better decisions than the private sector. Government often ignores opportunity costs, so the money isn't (likely) being put to it's best possible use."-MnM

BINGO!

"Government intervention never fails…by definition. In the political world, intentions are all that matters, results be damned!"-Sam Grove

Jackpot!

DK – These two articulated well why we don't try to find the lesser evil. In order for us to do that, you first need to convince us that these points lack merit.

Trying to get us to play in your ballpark is sneaky, but if you're not willing to address how the incentives around government action can be changed to react to opportunity costs, indirect costs and results, then we aren't playing in the same league. We may not even be playing the same game.

John March 31, 2009 at 2:06 pm

A lesser evil is still evil.

Daniel Kuehn March 31, 2009 at 2:16 pm

Seth -
RE: "DK – These two articulated well why we don't try to find the lesser evil. In order for us to do that, you first need to convince us that these points lack merit. "

I'm not sure I ever asked anyone to find the lesser evil – if that's not what you want to do, that's fine. I think I was just saying that it's ridiculous to pretend that every position that's not yours is exactly the same.

As for their points, I would just say – as I've always said – that "in general" I wouldn't argue with them. I don't think anyone would. Government is a very blunt tool.

But there are incentives – we can vote them out if we don't like them, or arrest them if they're corrupt. Those are the most basic incentives.

But I'd also just argue that just because government doesn't have a price mechanism to observe these issues, doesn't mean they aren't cognizant of it. Listen to why the Obama administration opposed taxing the AIG bonuses – their explanation is filled with talk of unintended consequences and opportunity costs. Larry Summers got hammered by Congressmen for defending contracts when he was talking with George Stephanapolus (sp?). Listen to the Congressional testimony – listen to Geithner explain why they are proceeding cautiously amid calls for nationalization. It's all about the indirect costs. Listen to Congressmen bickering over the stimulus package – it's all about opportunity costs.

I agree completely with MnM and Sam that the absence of the price mechanism introduces serious issues (which is why I've been saying over and over you can't have unwavering faith in the government). You want proof that their assertions that government can't deal with these issues goes a little overboard? Just flip on C-Span. There are smart people in government – very smart people. You guys are deluding yourselves if you think they're somehow ignorant of this stuff.

And as I said earlier – proving that government isn't always the answer is very different from proving that government is never the answer. That position requires you to assume that markets will always hit on the most efficient outcome. If you actually think that, that's fine – but you're definitely in the minority of economists who spend their lives studying this stuff.

John Dewey March 31, 2009 at 2:30 pm

daniel kuehn: "When people do advocate intervention, it's always very context specific."

Of course it is context specific. No socialist or fascist is stupid enough to admit to the public their goal is socialism or fascism. Those who do not desire socialism or fascism likewise will not admit to themselves that's where they're headed.

Hayek showed that all forms of central planning lead to tyranny. Freedom will not be lost through military coup, but through gradual erosion of liberty. Like frogs in a slowly heating pot of water, many such as Daniel won't perceive the danger until it is too late.

Oil Shock March 31, 2009 at 2:30 pm

What do you do, inject html or something?

If you just want to add links, this page will help you

Oil Shock March 31, 2009 at 2:33 pm
John Dewey March 31, 2009 at 2:42 pm

daniel kuehn: "very different from proving that government is never the answer. That position requires you to assume that markets will always hit on the most efficient outcome."

What on earth requires me to make that assumption? That free markets are not 100% efficient is not in any way a justification for even one case of government intervention in markets.

Do you not understand that it is liberty we are trying desperately to preserve? Collectivists – and I suspect you to be a closet collectivist – have long argued that market inefficiencies and inequities justify government intervention. Leaving aside for a moment that free markets have proven to be more efficient and have lifted billions more out of poverty, what about liberty? Has it no meaning to you, Mr. Kuehn?

Methinks March 31, 2009 at 2:58 pm

Proving that top-down government control isn't always the answer does nothing to prove that top-down government control is never the answer. Does that make my position on the relevance of this whole debate a little clearer?

It has never been before, so my best guess is it won't be in the future. Just because neither you nor the government understand that bailouts must have an underlying belief that government can solve complex problems that it doesn't even have enough information to solve doesn't mean it isn't true.

Either a single market participant (which is what government is) can know more than all other participants combined or it can't. If it can't, it's the worst of all participants to try to "fix" things because it is subject to politics and is unaccountable to anyone (please don't bother bringing up the voter because the last time I checked the average voter didn't support the bailouts). You routinely support government intervention while flogging it at the same time. Refusing to engage in inane hairsplitting over which interventionism will be theoretically more beneficial (as measured by politically motivated economists), is not ear-plugging, it's sanity-saving.

I'd wager that NO ONE has that underlying belief. It's a ridiculous belief,…

Of course it is. And that's why despite wholly subscribing to it, you will never get anyone in America to ADMIT to that belief. Especially not politicians since they do so inadvertently as they are too shallow and stupid to dig that deep into their own psyche. The economists are not much better.

Daniel Kuehn March 31, 2009 at 3:00 pm

John Dewey –
RE: "Hayek showed that all forms of central planning lead to tyranny. "

Well, not quite. Hayek wrote that all forms of central planning lead to tyranny. It's a sort of linear determinism that you also get reading Marx. I don't like it much, personally.

RE: "What on earth requires me to make that assumption? That free markets are not 100% efficient is not in any way a justification for even one case of government intervention in markets."

Quite right – that logic makes very good sense. I'll concede that. However, I'm still maintaining that proving that government isn't always the solution isn't the same as proving that government is never the solution. Well between that, and the point that you just proved me wrong on, I think we're still left with the fact that we need to pay attention to context when we discuss these questions.

RE: "Collectivists – and I suspect you to be a closet collectivist – have long argued that market inefficiencies and inequities justify government intervention."

Broad, vague, wrong. How can you make a statement that broad? It almost doesn't make sense it's so broad.

RE: "Leaving aside for a moment that free markets have proven to be more efficient and have lifted billions more out of poverty, what about liberty? Has it no meaning to you, Mr. Kuehn?"

No, don't leave that aside. Free markets have proven more efficient in most cases and have lifted billions out of poverty. That's exactly why I care deeply about liberty and freedom. It's exactly why I love economics and I think it's such an important tool for understanding the world. I probably agree with you on nine out of ten occassions of government intervention (or whatever – I don't know – at least on a lot of potential interventions). And from that you feel the need to ask me if liberty has any meaning to me??? Just because the market isn't a totem for me doesn't mean I don't like it or that I'm not trying to preserve liberty.

John March 31, 2009 at 3:07 pm

Thinking of these government "solutions" as a list of evils and choosing the least is kinda like being ordered to shoot yourself in the foot and being given a choice of firearms.

Why must there always be a government "solution"?

Daniel Kuehn March 31, 2009 at 3:08 pm

Methinks -
RE: "Just because neither you nor the government understand that bailouts must have an underlying belief that government can solve complex problems "

Ah ha! This wasn't what I or you were arguing initially. Yes, it does imply that they "can" solve problems. I think there are some problems that they can solve or at least do a decent job at. The initial assertion, though, was that if you support any bailout you have faith that government is always the answer. And of course that kind of faith is ludicrous, and I don't think anyone has that belief.

RE: "You routinely support government intervention while flogging it at the same time."

Again… a situation where a little context might be nice. I doubt I've simultaneously supported and flogged the same intervention. That's kind of my point, isn't it? That you don't have to be all in or all out?

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