Unreasonable Reason

If Hayek is right, then why study macroeconomics at all? It is beyond human comprehension.

To prove incorrect those who believe that they can manipulate things without consequence.

"To prove"

Something econometrician sans economic reasoning, is quite impervious to.

Interventional macroeconomics is an impossibility (for achieving DESIRABLE ends).

Descriptive macroeconomics without sound economic understanding, is nothing more than fodder for sophists to justify interventional macroeconomics.

I liken the economy to the weather - it is too complex to understand and difficult if not possible to control. Yet meteorologists measure many things and are able to make some reasonable predictions that not only help people plan their day but also save lives and property. Can macroeconomics reach a point of predicting economic behavior? The recent recession is the economic equivalent of category 4 hurricane making landfall on a major population center with no prior warning.

The economy is exactly like the weather, only more complex. Both are complex, self-organizing systems where patterns of behavior can be discerned -- from the outside -- and which can therefore be understood to a limited degree, and even predicted to a limited degree.

But imagine that we could control some aspects of the weather. Make it rain, for example. Which we can do to a limited extent with cloud seeding. But please note that the atmosphere has to provide the clouds in the first place. And, further, making it rain in one location means it won't rain in another. And the long-term consequences are unpredictable. We might, by making it rain in this one spot on this one day, cause a drought someplace in the world that kills millions of people. But we can't know that. So of course those who seeded the clouds get to take responsibility for the rain, but get to pretend they had nothing to do with the drought. Sound familiar?

Would you guys quit talking about the weather? Some politician is going to read this and decide it's a good idea to make a law requiring us to come in out of the rain!

There is information in descriptive macroeconomics. But the complexity makes cause and effect illusory without a high level conceptual framework. That leaves it forever open to all manner of sophistry, and error.

And it seems that the weather analogy is better than you thought. First we were plagued by the hubris of interventional macroeconomists. Now we're plagued by the hubris of interventional climatologists.

I liken the economy to the weather - it is too complex to understand and difficult if not possible to control.

Some would disagree and say that we need the government regulations to stop catastrophe (climate, economic, whatever)...

But that has nothing to do with the climate or the economy.
These people just want the government to control everything.
They won't admit it if asked directly, but the fact that they place no limits on government amounts to the same thing.

Because the politicians like to think of the economy as something that belongs to them (I disagree, but they have more guns than I do). Because they think the economy belongs to them, they must justify their manipulation and exploitation. Thus Macro, from the political perspective, is propaganda, and propaganda is always a subject which the political class finds worthy of study. And those who choose to oppose the propaganda find value in studying it as well.

One could perhaps say that Obama and his ilk have an irrational faith in the amount of knowledge/information it is possible for them to have. A rational mind with literally all the information in the universe could perhaps plan everything perfectly -- but seeing as they are not God (the only Being that meets such a definition), it is irrational for them to believe their reason can do what they think it can do.

And further, the function of the mind is to satisfy the will. Even if we can imagine a mind capable of storing and processing such knowledge, can we imagine a human will that would use it for "the good"? Okay, perhaps we can "imagine" such a will. Can we then imagine a human being with an infinite will? Because without an infinite will, the power must be passed on to another. In short, the problem of totalitarian authority is the same, regardless of the political structure.

How might the authors of this blog respond to this column by Krugman?

http://www.nytimes.com/2010/03/12/opinion/12kru...

I would hope they wouldn't have to in order for you personally to see and understand the typical disingenuous presentation by Krugman.

He points to the fact that government already has screwed up medicare and medicaid, as well as the employer based insurance portion of health care, and then claims that a total takeover will fix it? Umm, kinda of hard to swallow by a long time observer of government in action. No, it is total health care deform, nothing less.

Then he claims that total health care takeover, deform, will actually reduce the deficit (save money). Anyone naive enough to believe that you can use the same providers, the same facilities, and expect both to operate in quantity and quality to cover millions and millions of new insured and do so while saving money is a person who has lost touch with reality, the obvious state of Krugman when you understand he is one of the socialist faithful.

Lastly, where are tomorrow's doctors and nurses going to come from in sufficient quantity and quality when they see that the position of health care provider has been reduced to no more than a processor in a human meat mill, and no more financially rewarding to boot?

This health care deform of the loony left is a disaster.

If we could get government totally out of our business, our health care, the free market would be temporarily punishing for most as it would take time for that free market ship to stabilize. Once stabilized, good market priced health care would be available to those who take responsibility for themselves, which is as it should be in accordance with the freedom in natural law. This is a system in which a very minor few might suffer if charity can't be found, but from which the vast majority would benefit.

But, the loonies are not going to let that stabilization happen, they are going to keep piling excess cargo(baggage) on top of the already overloaded ship until it capsizes. In doing so they ensure that the suffering of deprivation is felt by all but the elites, the czars, the commissars administering the social system.

Contrast those two paragraphs.

In the first one suggesting free market, only a very small minority will suffer some deprivation, the vast majority will have what they need.

In the second suggesting total takeover, deform, the vast majority will suffer the deprivation, and the very small minority will have what they need (and deserve because of their elite skills at administering.).

In terms of human compassion, I firmly believe government should butt out of markets, let we the people suffer the temporary turmoil, in order to get to stability in the short term.

I was thinking earlier this morning that the social ideal that the left claims can be instilled by politically enforced collectivism is actually thwarted by such attempts.

Any sort of coerced collectivism actually isolates individuals from each other as they are forced to give show as interchangeable units of a contrived social order.

In forced collectivism, individuals must conceal some portion of their true selves from each other out of fear, so when they look at each other, they may no longer see possible friends, but rather potential enemies.

Sam: I almost always appreciate your comments. They are enlightening and entertaining, and sometimes I stand up and applaud at something you've written. I think to myself "this is someone who gets it." This comment is a prime example.

However you've made a claim that I've seen be made by countless other people on this board, and I would like to ask you about it. You have laid the blame for coerced collectivism squarely at the feet of the "left."

Well, actually I have more than one question. First, what is your definition of the left? The right? Is the right responsible for any advocacy of coercive collectivism? When in power does the right enact any coercive collectivism? Do you make your comments about the left as a committed libertarian? Or do you consider yourself more of a conservative? I'd really like to know. You seem like an intriguing guy.

Well, I think the basic trend of the country has been basically leftward.

The so-called right has proven ineffectual against this trend and has basically capitulated to the leftward trend.

I think the right has historically touted a cultural collectivism, but its day has passed in this regard.

I don't consider myself a conservative.

I'd like to kill these labels, but they seem to be useful in discussion.

I guess the main strategy of the right was to resist change, but mere resistance isn't enough and much of the right didn't have a comprehension of liberty sufficient to enable them to defend it. I'm supposing that I have the sense the the "right" is on its way out and the battle is between libertarians and the left/right amalgam that is the bipartisan consensus that people must be ruled.

At some point, the imposition sows the seed of it's own destruction. Human being, I'd argue, inherently want to be free in one sense or another.
Initially they might want to be free of wants or free from fear, as the actions taken by Government to provide those types of "freedoms," and I use the term loosely, grow in intensity, Human grow ever weary of the loss of other and natural freedoms (freedom of property, speech etc) that necessarily has to diminish due to Government action.
People like me, and I'd assume the majority of the readers of Cafe Hayek, have their level of distrust in Government grow with every attempt from Government to provide a freedom of wants (which is oxymorronic in my view anyway)
Or to use the Star Wars parable, "The more you tighten your grip, Tarkin, the more star systems will slip through your fingers."

The justification for one imposition can, and will be, used for further impositions. Eventually, imposition becomes the norm.

But as it grows in intensity, the opposition also grows. Newton's law applies here as well.

They used to laugh at us, now they attack us.

Imposition is the norm, and has been for such a long time that those of us who resist it are looked at as kooks and weirdos who just aren't willing to go along to get along, troublemakers don't you know.

"It used to be the boast of free men that, so long as they kept within the bounds of the known law, there was no need to ask anybody's permission or to obey anybody's orders. It is doubtful whether any of us can make this claim today." - F. A. Hayek

Smart guy that Hayek.

Be sure things have gotten much worse since he wrote that.

Here we are in the real world.

"What individualism teaches us is that society is greater than the individual only in so far as it is free."

Statists see the benefits of a free society and think that it is somehow the same thing when under their control. Kind of like the keynesiacs manipulating their aggregate metrics (like GDP), thinking that those metrics measure the same thing when they are manipulated as they do when observed in a free people.

I'll never quite understand how some people think they know best.
Think about all the economic knowledge that we as a human race have learned since Marx. While most of it is still hottly debated, no one can argue that we haven't learned more. To the people that think they know best, they never realize the amount of knowledge that is beyond them.

As I said to Dan, who will be posting shortly I'm sure, we could very well be arguing for a Heliocentric solar system and not even know it. There are so many unanswered questions out there, it's beyond reason to think we can control anything with the limited amount of knowledge we have now.
We can't even fathom dark matter, which i think occupies 60%? of the universe, what makes us think we can control and reshape human nature.

Charles Rowley has a post on Sowell, which applies to this one.

Godwin’s vision could not have been further distant from that of Adam Smith. According to Godwin, man was a perfectible creature, capable of intentionally creating social benefits. The desire to benefit others, indeed, is the essence of a man’s virtue, and the road to a man’s happiness. Godwin’s vision is without question the unconstrained vision of the nature of man. Man is capable of directly feeling the needs of others as being more important than his own, and of acting on those feelings even directly against his own and his family’s interest. Godwin referred to “men as they hereafter may be made”:

http://charlesrowley.wordpress.com/2010/03/08/a...

People like Obama think they can "nudge" everyone into being "a perfectible creature, capable of intentionally creating social benefits." I say there is something wrong with that line of reasoning, if it requires a nudge. The Great Terror was an attempt at nudging man into a state of perfection, how did that turn out?
I'd say that there is tendency for people from academia in general to accept the nudge philosophy or unconstrained vision. You can see examples from Sunstein to Krugman. They all have the notion in their heads that they alone or in collusion know best for everyone else, if they can only get the unwashed masses to listen to them.
Hey you know what makes people listen, GUNS!

Maybe we've learned a lot, but this quote from Cicero (~55 BC) makes me wonder:
"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

We learned more of the details, but lose the big picture in the process. Well not everyone lost sight of the big picture, just those that think they can perfect it.

That's true, and I mainly agree with your post - it just amazes me how much things are the same now. Plus, that's just a great quote from ~2065 years ago so I couldn't resist.

"I'll never quite understand how some people think they know best."

It's always possible you're misattributing such a thought to them because the vast difference of opinion. I understand the feeling. If Don and Russ were elected president and VP and put their program into place I'd probably feel imposed upon too. But it doesn't mean I'm right to say they think they know best or that they can design society.

For once your wrote something with which I am in full agreement! The obvious conclusion to your comment is that NOBODY should be in charge. And if nobody should be in charge then it stands to reason that there shouldn't be anything to be in charge of. Oh, rejoice! Another anarchist on the board!

Of course it's possible. But aren't you doing the same? There is one key difference; Don, Russ and My side isn't talking about mandating through the threat of fines that anyone buy anything, Democrats are. Personally, I'd like to see all the negative government incentives go away and let the market work it out for itself, that doesn't mean I'm imposing my will, I'm letting Millions upon Millions of other self-interested people sort it out for THEMSELVES.

My comment wasn't about you, just used our convo from the other day as an example, unless of course you consider yourself like Obama and the Dems, in that you think people need to be nudged to doing certain things for their own good? Do you Dan?

"But aren't you doing the same? There is one key difference; Don, Russ and My side isn't talking about mandating through the threat of fines that anyone buy anything"

Slow down there - when did I ever advocate that? When did I ever side with people who want to mandate you to buy something?

"My comment wasn't about you... Do you Dan?"

Aha - I see. I suppose it depends on what you consider a "nudge". I think we can fill out Census forms, for example, which according to Mommsen is suspect because it leaves us vulnerable to Nazi invasion. But no, I've always adamamently opposed the mandate here on Cafe Hayek. I suppose anything else depends on what you consider "nudged to doing certain things".

Wow, more trolling. Nice.

"When did I ever side with people who want to mandate you to buy something?"

That's why I asked in the next paragraph.

"If Don and Russ were elected president and VP and put their program into place I'd probably feel imposed upon too."

You wouldn't. I know that because you don't currently feel imposed upon by Mark Q. Gruttering holding your head under water. Of course if he was holding your head under water, and then he stopped and disappeared back into nonexistence, you'd claim to feel imposed upon by his program of not holding your head.

Imposition and lack thereof, are not the same thing, and only a very unimpressive mind uses the same label for both.

But it doesn't mean I'm right to say they think they know best or that they can design society.

I think the entire point of Hayek, Don and Russ is that it is folly to attempt to design society.
Why do you imply that it is something that they would even consider?
Have you learned nothing in the years you've been participating in this blog?

Oh I understand - I agree with Hayek on that. And my whole point is that I don't think they would consider it. Wasn't that what my concluding sentence said?

That's not how I read it either, sorry Dan.

"Wasn't that what my concluding sentence said?

Not the way I read it, or I wouldn't have made my last comment.

I'm not sure how else one could read that sentence, but rest assured that's what I meant.

If Don and Russ were elected president and VP and put their program into place I'd probably feel imposed upon too.

Please elaborate.
From what I understand of Don and Russ they are against the imposition of force, and any program that they would put into place would be one of dismantling existing impositions.

How would you take that as being imposed upon?

Yep. I've never understood the argument that the elimination of exploitation is a form of exploitation, though I hear it all the time. I guess I understand the emotion of it. If I've been granted an entitlement I will probably "feel" that said entitlement is property, and that the removal of what I have come to think of as property is an injustice, exploitation, etc.

A sense of entitlement is a deep animal instinct. The feeling that possession of something of value arouses becomes a sense entitlement regardless of how it was required.

Any criminal, upon taking something that belongs to someone else, will immediately feel entitled to said possession.

I imagine they would dismantle programs that free Americans legitimately and constitutionally built for themselves over the course of decades. I have the right to confer with my fellow citizens and decide on a revenue collection mechanism to provide for our general welfare. The fact that you all go nuts whenever anyone uses the first person plural doesn't change the fact that I have that right. Now, if Don and Russ could muster the votes of course the actual imposition wouldn't really be much of an imposition at all - but as I said, I'd probably "feel" like I was being imposed upon, just like you "feel" imposed upon now, even though you largely aren't.

One of the major drawbacks of government as opposed to markets is that it takes far longer to be rid of institutions which are either no longer useful, to revamp inefficient institutions, and to bring substantive change to the institutional framework of government. This sort of thing happens all the time in the market, and not very often in government. Now there are benefits and costs to this, but merely because some sub-set of the population (and that is all that it ever is - the other problem with government is that it is largely a zero-sum game) agreed to something at some time in the past is no justification for it now. Your argument is thus fundamentally flawed.

"...even though you largely aren't."

Your theory would have some teeth to it if I and others could easily exit a country and end our relationship with it with little difficulty. Since that is not the case then your theory is not terribly convincing.

So are you under the presumption that all the myriad of laws on the books were explicitly put their by the sole will of the people and not by special interests bribing both parties to get the government to favor them against their competitors?

Or take Welfare, I'm sure you think it is a necessary thing that the government provide for the down trodden. I would agree with you 100%, with the idea that there should be a safety net. I just abhor the fact that the Government takes my money to pay for programs that aren't effective, subject to abuse and to causes that I whole heartedly reject.
But there is a voluntary method to caring for the down trodden, it's called charity. It works quite well, now and before the government got into the charity business. Sure there are abuses, but no one is forced to give to those organizations. I personally hate United Way. Even though my company forces everyone to "participate," I don't have to give them anything. In fact I'm the one pulling up their financials and posting it on the bulletin board so everyone can see how much money they spend on Administrative Expenses and Salaries.
The point is, it's completely voluntary, where as the government is not, unless you want to go to jail.

Just because some laws were voted into place doesn't make them morally defensible. They passed a law banning same sex couples from adopting. Whether or not you agree with their lifestyle choices, out right banning any activity based solely on sexual orientation is not justifiable.

"Or take Welfare, I'm sure you think it is a necessary thing that the government provide for the down trodden. I would agree with you 100%, with the idea that there should be a safety net. I just abhor the fact that the Government takes my money to pay for programs that aren't effective, subject to abuse and to causes that I whole heartedly reject."

I am fascinated when I get to learn what people think I think on here.

No, actually, I wouldn't mind seeing welfare completely done away with, providing federal income support through the EITC only. Granted - I don't exactly lose sleep over welfare, particularly since it's been scaled back. But I don't think "it's a necessary thing".

"just like you "feel" imposed upon now, even though you largely aren't."

How would you prove that I am largely not imposed upon? I can easily prove that the political class is taking a large cut out of every dollar I earn and every dollar I spend. How would you prove that this is not an imposition?

programs that free Americans legitimately and constitutionally built for themselves over the course of decades

Right. We've already covered the rarity of a true majority agreeing to effect some policy in a world where there are few true majorities on many policy issues.

Agreeing to policies that are ill informed, by people who were ill informed hardly constitutes free citizens in unanimous or even majoritarian consent.

That many programs, over time, become the default does not suppose that, were they to be offered now to a well informed citizenry might well reject them, also detracts from the notion of self government.

Collectivist economics is totalitarian, regardless of the political process which determines which elites get to manage such a system.

"legitimately . . . built for themselves"

I can see how it would be legitimate for "free Americans" to build something for themselves, but to put it that way is misleading, because those who built it didn't just build it for themselves.

I see.
The dismantling of programs that allow one group to forcibly take from another, to do things that if they were to do as individuals would constitute a criminal act, that would be an imposition.
That you think you have a right to do something as a group that you would not have the right to do as an individual is very telling.

Daniel is an admitted conscriptor.

He only argues over where the line should be drawn.

Not doing that song and dance with you today - I know your views on it, but thanks for resummarizing.

I'll never quite understand how some people think they know best.

That's easy. Contempt.

Dr. Roberts, please please please have Dr. Sowell on econtalk again soon. I'd love to hear you and him go at in on Hayek and Intellectuals and on the Unconstrained vision.

Very good.