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Quotation of the Day…

… is from page 296 of Deirdre McCloskey’s 2019 volume, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All:

The central duty of an academic economist is to give the news that such and such a policy beloved of politicians and journalists is bad, when it is.

DBx: Yes. And so the sound economist in practice spends much time insisting on fundamental points, three of the most important of which are these:

First, as Thomas Sowell often reminds us, reality isn’t optional. (For example, the cost of building a bulldozer isn’t zero simply because the rate of interest on funds used to finance the building of the bulldozer is driven by the central bank to zero.)

Second, economic reality is far more complex, nuanced, and changing than are the words that we use to describe this reality. (For example, “the” steel industry isn’t an objective thing in the way that the planet Mercury is an objective thing.)

Third, nearly all economic reality is invisible to the naked eye; it can be seen – although seldom in much detail – only with the use of sound economic theory. (For example, the terms of labor contracts even for low-skilled hourly wage workers include many more terms and conditions – nearly all implicit, and able to be altered – than are visible.)

The economist’s task is indeed a curious one.