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Bonus Quotation of the Day…

… is from page 138 of my late Nobel-laureate colleague Jim Buchanan’s important 1976 paper “Taxation in Fiscal Exchange,” as this paper is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty (1999):

It is clearly wasteful to devote intellectual resources proffering advice to a nonexistent decision-maker. No “social welfare function” exists independently of the mutual adjustment process itself. Regardless of how these may be defined, “equity” and “efficiency” will characterize observed results only as they are embodied in the choices made by individual participants.

DBx: Yes. Clearly so.

Yet it remains a common practice for economists (and others) to propose government interventions on the implicit assumption that these proposals will be heard, and carried out faithfully, by wielders of power possessing superhuman intelligence, information, wisdom, and benevolence.

Routinely, people observe (or fancy that they observe) ways in which reality falls short of some imagined ideal, and then conclude that all that must be done to bring reality into closer alignment with the imagined ideal is to transfer more power and resources to government officials – or, at least, to the right government officials (which are those aligned with the angels and not with the devils).

Such a manner of thinking reflects the worst sort of superstition to which the human mind falls prey. And professional economists only ratchet the superstition up when – immediately after performing the child’s-play achievement of proving that markets can fail to optimize social welfare (all the relevant details of which are wholly imaginary) – they call on the state to ‘correct’ the paper-proven ‘market failure.’

The correlation is positive and high among economists who ostentatiously think themselves to be true, objective scientists and those who believe in earthly angels that perform miracles. Far too many economists waste time proffering advice to these imaginary sprites.