Bonus Quotation of the Day…

by Don Boudreaux on August 18, 2017

in Economics, Reality Is Not Optional, Work

… is from pages 14-15 of my late colleague Jim Buchanan‘s 1966 paper “Economics and Its Scientific Neighbors” as it is reprinted in Moral Science and Moral Order, Vol. 17 of The Collected Works of James M. Buchanan:

Law can modify the conditions under which human beings choose among alternatives; it cannot directly affect the behavior in choosing.  Economics seems to generate nonsensical statements by its critics, but none takes precedence over the discussion about the “repeal of the law of supply and demand.”  Intelligent and sophisticated men, who remain economic illiterates, talk as if human behavior in choice situations can be modified by legal restraints, as opposed to modifications in the conditions for choice.  And on the basis of such discussion laws are enacted and enforced which have the effect of preventing the attainment of the very objectives that they are designed to promote.

Minimum-wage laws provide perhaps the best single example.  Reasonable men support such legislation on the grounds that the poorer classes will be aided.  The effect is, of course, the opposite, as the simplest of economic principles must state.  By requiring the payment of a legal minimum wage, employers must choose fewer of the lowest paid workers rather than more.  Low-productivity workers must be unemployed, or must shift into employments not covered by the legal restriction.  The laws harm the poorer and less-productive workers.

Such examples could be multiplied.  The laws enacted in the ignorance of simple economic principles can do great damage, yet we observe little progress in the recognition of the limitations that economics should impose on legislation.  This is the continuing despair of economists who want to see their science applied in practice.

DBx: Buchanan wrote these words more than half-a-century ago.  While roughly the final quarter of the 20th century saw, perhaps, some greater respect shown for the economic way of thinking, that trend was mild and it has since disappeared.  Economic ignorance abounds today, on the left and on the right and in the middle.

(In the photo above, Jim Buchanan is talking with Gordon Tullock in the library of Carow Hall, home to the Center for Study of Public Choice on George Mason University’s Fairfax campus.  I suspect that the photo was taken sometime in the late-1990s.)


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