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Quotation of the Day…

… is from page 441 of Abba Lerner’s October 1957 article in the Journal of Political Economy, “The Backward-leaning Approach to Controls” (original emphasis):

The free-trade doctrines are valid as general rules whose general use is generally beneficial. As with all general rules, there are particular cases where, if one knew all the attendant circumstances and the full effects in all their ramifications, it would be better for the rule not to be applied. But that does not make the rule a bad rule or give reason for not applying the rule where, as is normally the case, one does not know all the ramifications that would make the case a desirable exception. It is a good rule for me to grade my students according to the work they do in my class. If I knew that giving a certain student an A instead of a B would encourage him to become an economist and that he would then become a great economist instead of a bad sociologist, I might stretch a point. But, in general, I cannot know this, and so the rule remains a good rule. In the same way the more simple-minded rules for the freeing of trade wherever possible are good rules to which exceptions should be granted only when there is enough evidence to overcome the general presumptions in favor of the rules. Too easy a granting of exceptions can undermine the rule.

DBx: Describing situations in which violating a sound rule will make the world a better place is surprisingly easy. The reason for this ease is that the very purpose of rules – “the reason of rules” – is that they are tools to better enable us always-imperfectly informed human beings to successfully navigate a world filled with uncertainty. All that such descriptions require is the assumption that we human beings know more than we know.

An omniscient being would be foolish to bind itself to rules.

When we adopt a rule, we wisely admit our ignorance. For a clever assistant professor or ambitious politician to then describe situations in which violating this or that rule will make the world a better place is to achieve absolutely nothing. Although such descriptions often appear to be ingenious discoveries of means for improving the human condition, such descriptions are nearly always nothing but trite demonstrations that if we knew what we do not and cannot know, then acting in disregard of the rule would bring about a state of affairs better than the state of affairs that would be brought about by following the rule.

Well duh.

As a rule, whenever you encounter someone peddling a scheme for improving the world by giving the state discretion to act in violation of well-established rules – for example, to make workers better off by blocking the operation of the price system with minimum wages, or to enrich residents of the domestic economy by substituting free trade with “strategic trade policies” or “optimal tariffs” – recognize that these scheme peddlers arrogantly assume that they or those who will carry out their schemes possess knowledge and information that human beings, as a rule, do not and cannot possibly ever possess.