… is from page 50 of Arnold Kling’s excellent new book, Specialization and Trade: A Re-introduction to Economics (original emphasis):
What we should be comparing is not the existing market configuration with an ideal based on a simple model but the market process of error correction with the political process of error correction.
If the above sounds trivially true, it is – in a sense. But in another sense it’s not trivially true, because many economists – including Nobel laureates such as Joseph Stiglitz, George Akerlof, Paul Krugman, and Robert Shiller – routinely compare grainy snapshots of real-world market situations with portraits of idealized, imagined political outcomes. These economists then conclude that the market has failed and that, as a result, more power and resources must be turned over to state officials who will then apolitically and reliably transform those grainy snapshots into the beautiful, colorful, pleasing portraits imagined by these economists.
