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Quotation of the Day…

… is from page 73 of Deirdre McCloskey’s insight-packed 1994 book, Knowledge and Persuasion in Economics:

If a man offers advice on how to find a $20 bill on the sidewalk, for which he asks merely a nominal fee, the prudent adult declines the offer.  If there really were a $20 bill lying there the confidence man would pick it up himself….

Economics teaches this, the limit on social engineering.  It teaches that we can be wise and good, but not profitably foresighted in detail, even if we are economists.

This foundational economic insight (which, sadly, is lost on large numbers of professional economists) explains, for example, why assurances issued by professors, pundits, and politicians that employers of low-skilled workers have monopsony power in the market for low-skilled workers deserve no more respect than a prudent adult gives to the assurances of con men.

Talk and academic speculation are always fun and cheap; action is often tedious and dear.  People who do only the former while refusing to do the latter ought to be ignored whenever their talk and speculation imply the existence of profit opportunities for those who do have the gumption and skills to risk their own resources by taking actions in the real world.  That such talking-and-speculating-only people often have “Ph.D.” behind their names and impressive lists of academic publications on their resumés in no way lends the slightest bit of credibility to their talking-and-speculating-only advice.