I either had never learned, or I have completely forgotten, that in 2007 Nobel laureate economist Joseph Stiglitz predicted that Hugo Chavez’s brand of socialism in Venezuela would succeed.
(I thank the indispensable Yevdokiya Zagumenova for alerting me to Stiglitz’s 2007 positive assessment of Chavez’s economic policies.)
That Stiglitz said (quoting the above-report’s summary of his opinion) that “relatively high inflation isn’t necessarily harmful to the economy” is bad enough. What’s worse is Stiglitz’s obliviousness to the inevitable ill-effects of the centralization of economic decision-making authority in state officials and its resulting insecurity of property rights.
F.A. Hayek or Milton Friedman or Ludwig von Mises or Adam Smith or Edwin Cannan or Deirdre McCloskey or Armen Alchian or Bill Allen or Elinor Ostrom or Harold Demsetz or Israel Kirzner or Bob Higgs or Russ Roberts or Steve Landsburg or Don Lavoie or Julian Simon or Warren Nutter or George Stigler or Gary Becker or Ronald Coase or Bruce Yandle or Roger Meiners or Andy Morriss or Hugh Macaulay or Randy Holcombe or Steve Pejovich or Dwight Lee or Vernon Smith or Larry White or James Buchanan or Gordon Tullock or Walter Williams or Thomas Sowell or Leland Yeager or Roger Garrison or Bob Tollison or Bob Ekelund or Mario Rizzo or Dan Klein or Roger Koppl or George Selgin or Sandy Ikeda or Steve Horwitz or Pete Boettke or Jim Gwartney or Dick Wagner or Bill Easterly or Ken Elzinga or Chris Coyne or Bryan Caplan or David Henderson or Arnold Kling or John Cochrane or John Taylor or Alex Tabarrok or David Friedman or Bob Murphy or Liya Palagashvili or Abby Hall Blanco or… (wow, the list can be extended much longer) would have predicted without hesitation in 2007 that Chavez’s highly interventionist policies would impoverish Venezuela’s masses regardless of how many goodies the Venezuelan state managed at first to bestow upon those masses
Indeed, a GMU economics major with a GPA higher than 1.9 would have predicted the same.
Good economists understand that while a wealthy, market-oriented society such as the United States can tolerate a bit of forced ‘redistribution’ and can mask the relatively small amounts of wealth and opportunities that are destroyed by the likes of a bit of occupational licensing, some government wage-setting, a dash of export subsidies, and comparatively modest tariffs, these policies over time nevertheless make most people poorer, not richer, than they would be in the absence of these policies.
Good economists are ever-attentive to unintended consequences as well as to the sound incentives generated by private-property-based free markets and the unsound incentives created by the ability to impose decisions by force. Good economists understand the prudential case for not only having good rules (such as those of a system of private property rights) but also that rules become meaningless – they cease to exist – when they can be easily violated. Good economists understand that the expression of excellent intentions is not remotely sufficient to achieve excellent results. Good economists understand that sustainable economic prosperity can only emerge through the spontaneous-ordering forces of the market; there is no way that attempts to create prosperity by any different means will result in any outcome other than impoverishment of the masses and tyranny by government officials. Joseph Stiglitz seems to be oblivious to these realities.