Quotation of the Day…

by Don Boudreaux on November 6, 2011

in Creative destruction, Curious Task, Hubris and humility

… is from page 134 of Deirdre McCloskey’s 1990 book If You’re So Smart: The Narrative of Economic Expertise:

The expert as expert, a bookish sort consulting what is already known, cannot by his nature learn anything new, because then he wouldn’t be an expert.  He would be an entrepreneur, a statesman, or an Artist with a capital A.  The expert critic can make these non-expert entrepreneurs more wise, perhaps, by telling them about the past.  But he must settle for low wages.  Smartness of the expert’s sort cannot proceed to riches.

Economics teaches this.  What it teaches is the limit on social engineering.  It teaches that we can be wise and good but not foresighted in detail.  Economics has something to teach the humanities, if they happen to think they know the future of art.  It has a lot to teach experts, if they believe in magic.

Be Sociable, Share!

Comments

comments

62 comments    Share Share    Print    Email

{ 62 comments }

Moggio November 6, 2011 at 8:17 am

Is it a good book?

BTW, Alan Peacock and his co-author Ilde Rizzo, in their 2008 book on heritage economics, say on page 5: ‘As you are so smart, how come you are not rich?’ is the common jibe of businessmen to economists. The reply is: ‘being a ballistics expert does not turn one into a good tennis player.’

Jon Murphy November 6, 2011 at 8:19 am

Haha I am remembering that line!

Don Boudreaux November 6, 2011 at 8:25 am

McCloskey’s is a superb book.

Jon Murphy November 6, 2011 at 8:33 am

McCloskey is a great writer. Granted, all I’ve read of hers is Bourgeois Dignity, but still

Nikolai Luzhin, Eastern Promises November 6, 2011 at 10:12 am

Two sentences are offered as revealed truth: ‘Economics teaches this. What it teaches is the limit on social engineering.”

Don—you have never thought this through. If true, the implication is that anything in the world of finance or business that has an aspect of “social engineering” has limits, and, implicitly, because busting past those limits will have untoward consequences we need to regulate.

For example, all management of people is social engineering. Thus, limits on management are required (e.g., wage and hour laws, minimum wage laws, discrimination laws, vacation requirement laws, laws assuring payments of wages and commissions). IOW, you just affirmed the modern regulatory state.

Is the comp package for a CEO and senior management “social engineering.” If not, what is it?

Jon Murphy November 6, 2011 at 11:50 am

Wow…the absolute idiocracy of what you just said is unbelievable…I mean…I don’t even know where to begin. I mean, it’s so bad, I had to invent a new word for it (copyright pending on the word “Idiocracy”).

I’m guessing you only read those two sentences and skimmed over the rest. That’s the only conclusion I can come to

Invisible Backhand November 6, 2011 at 12:34 pm

A closely reasoned argument, Nik. Good work!

Furthermore, I’ll say this:

Since the regulatory state’s putting of limits on management’s managing of people is also social engineering, limits are required (e.g., laws preventing government from interfering in any way with a worker’s right to negotiate any sort of wage contract he pleases with a prospective employer, including a very low wage, long hours, little or no vacation, and few if any benefits).

The profound implication here is that anything in the world of government that has an aspect of “social engineering” has limits. IOW, you’ve just affirmed the ideal relationship between government and economy so ardently defended by classical liberals.

I’m glad we’re of one mind on this, buddy!

Invisible Backhand November 6, 2011 at 1:08 pm

Incisive as usual, Invisible Backhand. I think Andrea Fumagalli stated your goal on workers rights when she said:

Social governance, instead, is ensured on the basis of this double track: blackmail and consensus. Blackmail is founded on rendering life and income precarious as a result of the individualization of labor relations. Consensus, instead, is based on the illusion of “proprietary individualism.”

Regards,
IB

Greg Webb November 6, 2011 at 1:09 pm

I’m glad we’re of one mind on this, buddy!. (Irritable Bowel to Nikki)

LOL!

Invisible Backhand November 6, 2011 at 7:14 pm

My handlers at Anonymous and MoveOn.org have also instructed me to pass this list of demands on to those at Cafe Hayek:

We at Anonymous and MoveOn.org, who speak in the name of The People, demand the following:

Abolition of property in land and application of all rents of land to public purposes.

A heavy progressive or graduated income tax.

Abolition of all right of inheritance.

Confiscation of the property of all emigrants and rebels.

Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

Centralisation of the means of communication and transport in the hands of the State.

Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.

Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.

Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.

Free education for all children in public schools. Abolition of children’s factory labour in its present form and combination of education with industrial production.

Thank you for listening.

(H/T Karl Marx)

GAAPrulesIFRSdrools November 6, 2011 at 8:57 pm

“…glad we’re of one mind on this, buddy!”

Freudian Slip, perhaps?>

Shelby November 6, 2011 at 3:11 pm

Idiocracy. It’s the best new word I’ve heard in a long time.

As to Nikolai’s comment. A precursor to any meaningful economic analysis of our society starts with separating the apples from the oranges. The government and the market are two different critters. The market cannot engage in social engineering. People are free to buy or not buy what is offered by sellers. That’s pretty much the end of the market’s story.

On the other hand, government (i.e. politicians pushing their own agendas, including the most important one – getting re-elected) can certainly attempt social engineering by doing things like redistributing income and burdening job creators with laws and regulations that guarantee only a less productive society.

Jon Murphy November 6, 2011 at 3:14 pm

Or they can just be up front about it: outlaw and/or tax certain behavior. It’s what they’ve done for tobacco and now sugar.

And thanks Miss Shelby. Feel free to use that word whenever you want :)

Nikolai Luzhin, Eastern Promises November 6, 2011 at 8:50 pm

Shelby

markets are created by governments

Jon Murphy November 6, 2011 at 8:52 pm

Wow…That just confirmed you have absolutely no clue about economics at all. No economist, living or dead, would agree with you on that one. Nor historian, for that matter.

By that one statement, you have destroyed any and all credibility you may have had.

Wow

GAAPrulesIFRSdrools November 6, 2011 at 8:58 pm

Really? What government creates the market that trades sandwiches in first grade lunch rooms.

Jon Murphy November 6, 2011 at 9:06 pm

Wow…I read it again, and I still don’t believe it.

Let’s assume, for the moment, that governments do create markets.

If that is true, that a market could not exist without government regulation.

Therefore, the lack of regulation could not be an issue, as if no regulations existed, no markets exist.

Therefore, the argument that more regulation is needed is a non sequitur.

Furthermore, if markets fail, then it is a failure of the government that causes undesirable results, which begets the argument for less government regulation.

So, if that first assumption is true (which we all know it isn’t), then the arguments about markets are not important.

J. W. November 6, 2011 at 3:34 pm

“(copyright pending on the word “Idiocracy”)”

Sorry, it’s already the title of a Mike Judge movie:

http://www.imdb.com/title/tt0387808/

Jon Murphy November 6, 2011 at 3:56 pm

Really? Damn

Greg Webb November 7, 2011 at 6:26 am

Jon Murphy

You seem unable to grasp the very simple fact that markets are created by governments.

In the modern world, a market is a promise that is enforceable.; that is the human activity of economic consequence. If I sell you my dog for $10.00 and you pay the $10 and I give you the dog, when have market, only if 5 minutes later I am prohibited by a third party from taking my dog back and keeping your $10. That 3rd party is the gov’t. If the Gov’t says, you cannot sell dogs or cash, and enforces was it says, the market will pretty much disappear.

If you look at our economy, very little of it is face-to-face, for cash, and that grows smaller all the time.

If you are Macy’s, importing Christmas toys from China by the boat and container load, all that activity is in a market totally created by the Government. It would not happen but for the Gov’t. Thus, to talk about markets, for all practical purposes, is to talk about what the Gov’t does and does not permit.

This, my friend, is Positive Law. It is not pretty or attractive, but it is reality.

It is similarly true that all distribution of income is determined by the Gov’t, making distribution of income in a modern society entirely a political question. If you think not, ask yourself, why do the rich worry so about taxes? Because the gov’t can tax all your income and distribute such to me.

Darren November 6, 2011 at 3:55 pm

I think you are confusing ‘social engineering’ by a business with that of government. If by a business, it will either succeed or fail. If it succeeds it wlil presumably improve its business. Other businesses will then copy it’s ideas. If it fails, it will lose business and the ideas it tried will ge discarded. If by a government, one should remember that as the size of government increases that social engineering will affect much greate segment of society in general than any corporation would be able to. If it succeeds, and assuming the goal is benign, society can benefit. However, it it fails, it will likely put more resources into forcing that social engineering to succeed. It’s unlikely the ideas behind the social engineering will be discarded, but rather ‘refined’ in the expecation that it *will* succeed if only the project obtains enough resources and is implemented correctly.

Nikolai Luzhin, Eastern Promises November 6, 2011 at 8:51 pm

Darren

Social engineering is social engineering, regardless of whom performs the act

GAAPrulesIFRSdrools November 6, 2011 at 12:15 pm

The number of conceptual, definitional and logical errors in your posts are as always, legion. This one really betrays your ignorance and derangement.

As analogy, your leaps always remind me of John Belushi exhorting his “colleagues” to a final act of mayhem with the injunction “was it over when the Germans bombed Pearl Harbor?”.

After accepting the premise that there are limits on “social engineering”, which would be binding dictates on all of society (based on a presumption of advanced, superior knowledge) you then skip merrily along to assert that businesses engage in social engineering by using the nebulous phrase “have an aspect” and ignore the fact that that is like being a little bit pregnant. You can’t engage in social engineering if you can’t compel people to accept your dictates.

All “management” of people is not social engineering. The limits on managers are far greater than a perpetually insulated from its ranks hack would imagine. In spite of Hollyweird portrayals of bosses as having absolute power, it’s not that way in the real world. There’s supervisory review, the threat of departure or noncooperation, subtle and not so subtle acts of disobedience, high turnover, HR complaints, legal action.

You like minimum wage laws? Great. You might nudge up the wages of some employees at McDonald’s, but as long as you aren’t willing to pay $10 for Big Mac, well there will be hidden consequences. Reduced hours, benefits, foregone hiring, all because economic morons can’t think through the “then what”: to see the silent evidence that doesn’t register on their limited powers of reason.

But you put your faith in government, the government whose superior financial prudence has given us an estimated $16T in debt, who’s failed to see every “crisis”, etc etc. I say estimated because the feds routinely have weaknesses in their financial statements that make then suspect.

The great thing about business is that if they charge too much or provide to little, you go elsewhere, if not now, eventually. Ford tried to dictate black and people flocked to GM. If the feds want more money, they take it and short of expatriation, you have no alternative. Oh but you don’t care because you don’t really pay taxes-you have no skin in the game.

Interestingly, while your crowd seems incensed by a $5 ATM fee, they don’t seem to be even remotely aware of how much is spent by banks on ineffective regulatory compliance and how that translates into these fees.

How about questioning Elizabeth Warren’s earnings for once.

Jon Murphy November 6, 2011 at 1:33 pm

So, if you other guys (IB, Nik, etc) think there are no limits to social engineering, then you must believe that anything can be sold if it is marketed enough?

So, how would you explain New Coke? Or the Netflix Disaster? Or Windows Vista? Or Pets.com?

Or, for that matter, how do you explain the Arab Spring? The fall of Communism? The Resistance inside and outside Germany in WWII?

For that matter, free will?

I mean, if these aren’t supreme examples of the limits of social engineering, what are?

Invisible Backhand November 6, 2011 at 2:19 pm

how would you explain New Coke?

I’m not interested in the social engineering argument (it seems everyone has their own private definition of it) but I heard new Coke was to cover up the switch from sugar to high fructose corn syrup. New Coke was meant to clear get the old stocks off the shelves so people wouldn’t notice the different taste when they brought ‘classic’ Coke back.

Jon Murphy November 6, 2011 at 2:33 pm

Man, you just buy any bullshit someone hands you, don’t you?

While we’re at it, the Pyramids were built by aliens, the government faked the moon landing, 9/11 was Bush’s idea, FDR bombed Pearl Harbor, and LBJ assassinated JFK.

Jon Murphy November 6, 2011 at 4:38 pm

Although I do think that the conspiracy that the government caused 9/11 is itself a government conspiracy.

Invisible Backhand November 6, 2011 at 7:20 pm

the Pyramids were built by aliens, the government faked the moon landing, 9/11 was Bush’s idea, FDR bombed Pearl Harbor, and LBJ assassinated JFK.

I believe all those things. You mean, you don’t?

You’re so naive.

Darren November 6, 2011 at 4:01 pm

A much more probable explanation was that Coke screwed up. I’d be surprised they would be willing to lose that much money just to change from sugar to corn syrup.

GAAPrulesIFRSdrools November 6, 2011 at 4:25 pm

When in doubt, resort to conspiracy theories.

Only problem: HFCE is largely a reaction to government interference in the sugar market.

Greg Webb November 7, 2011 at 6:27 am

Niki’s argument is that there are limits to social engineering.

Nikolai Luzhin, Eastern Promises November 6, 2011 at 2:01 pm

Oh, isn’t this fun. Two sentences are considered and all the logical flaws in libertarian-ism are revealed. Seriously people, you need to re-think is Nikolai can wipe you out in one simple post during the midst of Sunday morning’s talk shows.

Or course, the correct answer is that people are people and human nature doesn’t change. Regardless of whether we are talking about private or public actors (a meaningless distinction in the grand scheme) we need limits. We also need freedom.

The unending challenge is how to design and apply limits and how to assure freedom, all at the same time. This, being the hard problem, is constantly avoided here; this crowd is nothing but nattering nabobs of negativism.

We have great men who has shown us the Path (Franklin, Washington, Madison, Hamilton, Lincoln, FDR, Truman) and even lesser ones (Reagan and Clinton) but do we ever learn from their lives and experiences? No. We get quotes from people jealous because Keynes will forever dominate their calling. Grow up

Greg Webb November 6, 2011 at 2:21 pm

LOL, Little Nikki! You really do think a lot of yourself.

Conclusory, self congratulating, statement alert!

Jon Murphy November 6, 2011 at 2:34 pm

I like how he bashes us by talking about how great he is.

Nikolai Luzhin, Eastern Promises November 6, 2011 at 2:43 pm

Jon

My posting here is a sad task. I don’t like having to do such. Unfortunately, I agree Keynes —Hayek’s ideas are dangerous.

You won’t find anyone who dislikes the Federal Government more than I do when it comes to its many abuses.

My solutions are just substantially different–we need democracy and transparency. That puts us on a collision path. You think you are elite enough to say to everyone you cannot use Government as a solution. Me, I am a populist. I say, let the people decide.

Jon Murphy November 6, 2011 at 2:51 pm

“I say, let the people decide.”

But only if they agree with you, apparently.

Jon Murphy November 6, 2011 at 2:55 pm

Just out of idle curiosity, do you really have nothing better to do with your life than go on a blatantly pro-free market blog and try to correct everyone’s POV? I mean, don’t you go out? Meet people? Work? Go to concerts?

I mean, it’s one thing for Don or Russ, where economics is their livelihood, to run a blog supporting arguments for their school of thought. But if your task in life is to argue with them and us on this blog, then I suggest you get a hobby. I got me a gecko. They’re good pets.

Greg Webb November 6, 2011 at 3:01 pm

Jon, Little Nikki thinks geckos are creatures exploited by an insurance company.

Jon Murphy November 6, 2011 at 3:03 pm

Well, mine sleeps all day and gets hand fed crickets at night. if anyone’s getting exploited, it’s me :-P

Jon Murphy November 6, 2011 at 3:03 pm

And his name is Gordon :-P

Nikolai Luzhin, Eastern Promises November 6, 2011 at 3:17 pm

Jon

I don’t think that Don and Russ should be in the economics business. Haven’t you figured that out.

I think they are false prophets. They write and say stuff that they no more believe than that there is now a man on the moon.

Notice all the links I put to economics being dominated by people who are little better than PR flacks. It is why I keep pointing out that Hayek wanted to be a flack for the Kochs—that is what his entire life was about. It is hard enough to make sense of events when we having nothing but disinformation agents filling most of the air waves. It wastes everyone’s time.

Someday soon I really grow bored and leave, but someone else will take my place.

We have serious problems in this Country, problems which ignorance will not solve. T

he NYTtimes has a great column on meritocracy and its flaws and ignorance and its flaws, today.

Look it up; its by Ross Douthat: Our Reckless Meritocracy

The fellow writing the piece makes excellent points

Jon Murphy November 6, 2011 at 3:20 pm

Koch reference! Take a shot!

Shelby November 6, 2011 at 3:29 pm

Nikolai -
Here is more breaking news -
not everyone believes that the New York Times is the word of God.

Shelby November 6, 2011 at 3:31 pm

That goes double for NPR.

Jon Murphy November 6, 2011 at 3:32 pm

Also, Nik proves my point. Everyone is allowed to chose their fate, he says. Except those who disagree with him. They are not worthy of an opinion and, therefore, do not speak.

To quote Jim Croce: Let him live in freedom if he lives like me.

Greg Webb November 6, 2011 at 2:57 pm

Little Nikki, silly personal attacks and self-congratulating conclusory statements are not persuasive arguments. You live in an Orwellian world of double think and newspeak, where freedom is slavery and government control is liberty.

Nikolai Luzhin, Eastern Promises November 6, 2011 at 3:18 pm

but government control is liberty for many Gregg, for truth, like art, is in the eye of the beholder

Greg Webb November 6, 2011 at 3:56 pm

but government control is liberty for many Gregg, for truth, like art, is in the eye of the beholder

Nikki, that is disturbingly idiotic.

Darren November 6, 2011 at 4:04 pm

Hayek’s ideas are dangerous.

Dangerous to who? If you mean power-hungry politicians and corporations, I agree. Keynes’ ideas have proven to be much more amenable to their ambitions.

GAAPrulesIFRSdrools November 6, 2011 at 4:33 pm

Truth is in the eye of the beholder, until it disputes Nikki’s version. Then its an absolute.

Hayek isn’t dangerous to anybody except statists and their sycophants.

Greg Webb November 6, 2011 at 4:04 pm

Nikki, you said, “You won’t find anyone who dislikes the Federal Government more than I do when it comes to its many abuses.” Yet, you advocate for more government.

Double Think: Noun. Thought marked by the acceptance of gross contradictions and falsehoods, especially when used as a technique of self-indoctrination: “Doublethink . . . is a vast system of mental cheating” (George Orwell). American Heritage Dictionary.

Oh, I get it now. You are just self-indoctrinating.

Jon Murphy November 6, 2011 at 4:06 pm

Nineteen Eighty-Four really was a brilliant piece of writing, no?

Greg Webb November 6, 2011 at 4:45 pm

Yes, Jon. It was. Orwell had a lot of knowledge about how socialists think.

Greg G November 7, 2011 at 7:38 am

Orwell was a socialist.

GAAPrulesIFRSdrools November 6, 2011 at 4:27 pm

Your sentence should read:

“My posting here is sad”

No, its absymal, tedious, disjointed and psychotic.

Nikolai Luzhin, Eastern Promises November 6, 2011 at 7:31 pm

We have great men who has shown us the Path (Franklin, Washington, Madison, Hamilton, Lincoln, FDR, Truman) and even lesser ones (Reagan and Clinton)

I forgot to mention these other great names who has shown us the Path, and to who we should be eternally grateful:

Genghis Khan
Napoleon
Hitler
Mussolini
Stalin
Pol Pot
Chavez
Castro
Kim Jong-Il

Do we study their thoughts, their lives, their experiences? No. Do we try to learn from their achievements, to apply their methods of limiting the kinds of social engineering that man uses against his fellow man? No. We get quotes from people jealous because Keynes will forever dominate their calling. Grow up.

Greg Webb November 6, 2011 at 8:57 pm

Niki

Why are you so fearful that we are going to switch sides?

Nikolai Luzhin, Eastern Promises November 6, 2011 at 3:24 pm

Breaking news!!!!!!!!!!!!!

De Wrong admits he was wrong. Writes long, “I am sorry” blog.

http://delong.typepad.com/

Jon Murphy November 6, 2011 at 3:31 pm

I’m not really sure you can classify something as “Breaking News” if it happened 4 months ago.

GAAPrulesIFRSdrools November 6, 2011 at 4:29 pm

Nikki lives in a “reality distortion field”. Its like a blackhole, the ordinary rules don’t apply. Instead of concentrating mass to infinite density, concentrate ignorance to an infinite density.

Darren November 6, 2011 at 3:43 pm

To be an expert, you just have to know more than the other guys. You don’t have to know everything and of course you continue to learn, othewise someone else becomes the expert.

GAAPrulesIFRSdrools November 6, 2011 at 4:30 pm

Sort of like two guys attempting to escape a pursuing bear. Neither will outrun the bear, but one will outrun the other.

Previous post:

Next post: