Deirdre McCloskey’s March 2018 column in Reason is splendid. (This column is now available on-line.) In it, she expresses her well-grounded substantive objections to the conclusions that Nobelist Richard Thaler and other behavioral economists draw from their research.
Here’s a key paragraph, which comes after Deirdre sarcastically – but appropriately – noted that “According to the psychologists [who offer a long list of human perception and decision-making ‘biases’], it’s a miracle that you can get across the street”:
Like with the psychologist’s list of biases, though, nowhere has anyone shown that the imperfections in the market amount to much in damaging the economy overall. People do get across the street. Income per head since 1848 has increased by a factor of 20 or 30. It is a scientifically bizarre oversight, as though a geologist offered an alternative theory of plate tectonics without showing that her ideas do a better job of explaining the shape of mountains or the alignment of the continents.
Reading Deirdre’s column – which is brilliantly titled “The Applied Theory of Bossing People Around” – prompted me to wonder why the case for economic freedom is held to a much higher standard than is the case for other freedoms, such as freedom of the press and freedom of speech.
Clever theoreticians could describe (and perhaps in the bowels of some obscure academic journals actually have described) what a “perfect” system of freedom of the press or of freedom of speech looks like. No doubt the features of such perfection would include the absence of any misunderstood written or spoken words, the absence of words written or spoken in haste or in anger and that are later regretted, and the absence of any conflicting communiqués.
Were such a description of “perfection” offered, would the case for freedom of the press or of freedom of speech then be held suspect if someone – say, a Professor Thalitz or a Dr. Samuelof – pointed out that in the real world people often write and speak in ways that deviate from the ways that they are assumed to write and speak in the models of ‘perfect press’ and ‘perfect speech’? Would revelations of inaccurate newspaper reports – or even fraudulent newspaper reports – prompt scholars to call for government to oversee newspaper reporting and to ‘correct’ press ‘failures’ whenever and wherever these ‘failures’ occur? Would demonstrations that people sometimes fail to express themselves clearly or that listeners sometimes fail to interpret accurately the words that are spoken to them justify government interventions to ‘nudge’ people to speak more carefully, or taxes aimed at ‘correcting’ careless listening (or perhaps subsidies to encourage more-careful listening)?
Despite the grotesque and self-caricaturing hostility to free speech that infects many college campuses today, I’m confident that people such as Joe Stiglitz, Richard Thaler, Robert Frank, and Cass Sunstein would not find that imperfections in press reports and in people’s speech give rise to a case for government superintendence of, and meddling with, the press and with speech. If my confidence is justified, why do these scholars – and many others like them – leap from the uninteresting and utterly unsurprising discovery that real-world markets are not textbook perfect to the conclusion that, therefore, government must nudge, dictate, prohibit, tax, subsidize, or otherwise intervene into real-world markets in alleged efforts to move such markets closer to ‘perfection’?