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Quotation of the Day…

… is from Jacob Viner, as quoted on page 90 of Razeen Sally’s 1998 book, Classical Liberalism and International Economic Order:

The idea, for instance, of being able to determine the optimal level of a tariff by a relatively simple geometry on the face invites the type of incredulity that, in another context, led Coleridge to ask ‘What should we think of one who said that his love of his wife was North-West-by-West of his passion for roast beef?’.

DBx: The possibilities that can be described in textbooks and academic papers are practically infinite. Yet, of course, nearly all of these possibilities have no realistic prospect of ever occurring in reality. One reason careless economists (and those who encounter their works) fail to distinguish between that which is possible and that which is plausible is that too many theories and models are constructed using artifactual, aggregate categories – such as “the global market for steel” – that mask all-important details and complexities.

I do not oppose the use of simplified theories and models to assist us in our thinking. Quite the opposite; I am certain that such theories and models are indispensable. But they must be used with care. Such theories and models are not actual descriptions of reality. They are analytical tools that, when used wisely, prompt us to ask probing questions and to take notice of plausibilities and probabilities that might otherwise remain hidden.