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Quotation of the Day…

… is from page 9 of Robert Higgs’s indispensable – and now more relevant than ever – 1987 book, Crisis and Leviathan (footnote deleted; link added; emphasis original to Yeager):

Some economists doubt that government can or will deal successfully with externalities. As Leland Yeager said, government is itself “the prototypical sector in which decision makers do not take accurate account of all the costs as well as all the benefits of each activity.”

DBx: A case can be made that government officials are likely, under various circumstances, to more fully account for costs and benefits than are non-government actors. Given the nature of collective decision-making, however, this case is surprisingly difficult and has only limited practical application. (“Surprisingly”, that is, to individuals who first explore in a serious way collective decision-making. Once the reality of collective decision-making is so explored, its many perverse and poor incentives become obvious.)

But amazingly – or, actually, not – those who advocate greater government control over markets and other private-sector activities almost never bother to take even the first baby step toward exploring just how collective decision-making in reality works compared to the private-sector decision-making that the collective decision-making is proposed to replace.

This utter failure to ask how politicians and government administrators are likely actually to get the information they will need to intervene productively, and what are the incentives of these officials to use their information to promote the public welfare, mars the actions not just of second-rate journalists and of associate professors of cultural studies. This failure mars the actions even of many well-known economists.

It seems too obvious for words to explain that making a credible case for government intervention requires more than identifying real-world problems; such a case requires also a credible explanation of how real-world government officials might actually improve matters. How will these officials get the necessary information? What are their incentives? But the asking of these questions is shockingly rare. I conclude that most intellectuals believe in god, just one with a different name, provenance, and liturgy than those which are associated with the god believed in by most other people.


The photo above is of the late Leland Yeager, taken in November 1962 in Rouss Hall at the University of Virginia. To Leland’s immediate right is Gordon Tullock.


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