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Vulgarnomics

Posted By Don Boudreaux On November 13, 2011 @ 1:54 pm In Economics,Seen and Unseen | Comments Disabled

David Henderson, over at EconLog [1], recently asked ‘Who is today’s Bastiat?’  (I take the question to mean who among still-living writers is today’s Bastiat.)  Here’s the bulk of what I wrote in the comments to David post:

Without question, there are only four serious candidates among the living for this distinct honor – and an honor it unquestionably is: Steve Landsburg, Russ Roberts, Thomas Sowell, and Walter Williams. (I exclude David Henderson only because he is the author of the post to which we are all responding.)

Because Bastiat was a genuine liberal, that fact helps us narrow – if we must – the list of candidates down to Steve and Russ, who are a bit more liberal (in modern language, libertarian) than are Sowell and Walter. Bastiat was fiercely on guard against government’s official justifications for going to war.

Steve is more in-your-face than is Russ. But, at the end of the day, I must give the honor to both: Steve and Russ share that honor.
…..
As for the claim [made by Karl Smith] that Krugman is a modern-day Bastiat, I must strongly disagree. Yes, like Bastiat, Krugman is passionate in pressing his position. But Bastiat was above all a (classical) liberal – and one ever-attuned to the unseen. Krugman fails magnificently on both counts. Moreover, unlike Bastiat, Krugman spends far too much effort fronting for a particular political party.

I want here to defend my exclusion of the post-2000 Krugman from such an honor.  (Krugman pre-2000 was much better, although I’m still not sure that he was so good as to qualify as today’s Bastiat.)

I begin by saying that Bastiat’s (genuine, classical) liberalism is relevant to this discussion only because it is inseparable from his economics.  Bastiat championed liberalism at least in part – and unmistakably – because he believed that free markets (which are a critical feature of a genuinely liberal society) are far superior to other economic arrangements at unleashing for the common good the forces of entrepreneurial competition and in coordinating the plans of consumers and producers.

Whether or not Bastiat was correct on this front is not here the issue.  What is the issue is that, for Bastiat, explaining the coordinating forces of the market – and, perhaps above all, clearing away the jungle of commonplace misperceptions that prevent people from seeing as clearly as possible just how markets work – was the very essence of what Bastiat was about.

Bastiat’s essence, therefore, was not that he wrote clearly, for audiences of non-economists, about economics.  It was not that he used humor frequently and effectively.  It was not that he was a master stylist.  No.  Bastiat’s distinguishing feature was his tireless effort to defend the case for free markets and free trade from the many vulgar misperceptions that prevent people from seeing the full play of market forces – and, likewise, that prevent them from seeing the full play of political interventions into market.

For this reason post-2000 Krugman is not close to being today’s Bastiat.

Krugman spends the bulk of his time today, when writing for the general public, assuring the general public that its economically untutored instincts are correct.

The general public, for example, naturally “sees” the beneficial effects of more government spending.  While Bastiat specialized in showing the general public that what it sees is only part of the picture, Krugman – vocal advocate of “stimulus” spending that he famously is – specializes in assuring the general public that the part of the picture that it naturally sees is, in fact, the full (or at least the most important part) of the picture.

Another example: The general public naturally “sees” that a low-priced Chinese renminbi makes Chinese goods more attractive to American consumers and, hence, reduces the demand for some American-made outputs.  Bastiat would have pointed out the unseen – the fact that many of these low-priced Chinese goods, used as inputs in America, allow some American producers to profitably expand their output; the fact that monies American consumers save because of lower-priced Chinese goods can be spent buying other goods and services, some of which are ‘made in America,’ that would otherwise be out of reach; the fact that that if Beijing truly is keeping the value of the renminbi too low the result will be inflation in China – which will eventually raise the prices Americans must pay for imports from China; and, most importantly, the fact that there’s very little difference from the perspective of Americans in China’s government subsidizing our consumption of Chinese-made goods and some natural source (say, a technological breakthrough) that lowers our cost of buying Chinese-made goods.

Krugman, in contrast, argues that Americans are harmed by the allegedly low-valued renminbi, and suggests that it would be wise policy for Uncle Sam to protect Americans from this harm.  Krugman today writes only what the ordinary, say, cab driver or restaurateur, unfamiliar with economics, would write about such matters (although he does so with more eloquence).  It’s what so many of them actually do write about such matters when their letters-to-the-editor appear in newspapers and magazines.

In these, and other, cases, Krugman remains content today to lend his name and professional creds to what might accurately be called “vulgarnomics” – economics as popularly understood by the economically untutored.  Government policies that forcibly raise the prices Americans pay for goods from China; policies that restrict Chinese investment in America; the need to rebuild following the 9/11 terrorist attacks; government regulation that strips businesses and consumers of a large range of mutually agreeable ways to contract with each other; deficit spending by government – these are examples of policies and circumstances that Krugman now routinely applauds and that the typical person untutored in economics naturally celebrates as good for the American economy.

This is economics from the perspective of the producer, as well as from the perspective of people who have difficulty comprehending the notion of spontaneous order (“economic creationists,” we might accurately name them).

It is an economics that Bastiat was familiar with – for vulgarnomics was, of course, on the loose in his day as in ours – and to which he devoted himself to destroying.  Krugman today, in direct contrast, is vulgarnomics’s premier peddler.

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