… is from page 53 of Deirdre McCloskey’s newly published 2022 volume, Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics:
If industrial policy and other central planning were good ideas, the economists could have made private fortunes exploiting the imperfection justifying them, and centrally planned economies would have been sterling triumphs rather than miserable failures.
DBx: Yes. Yes. Yes.
The world overflows with professors, pundits, and politicians who claim to have identified this or that way that markets ‘fail’ or feature ‘imperfections’ that can be ‘solved’ by government intervention. Yet most such ‘failures’ and ‘imperfections,’ if they really exist and are significant enough to matter, are opportunities for personal profit for the professors, pundits, or politicians who claim to be certain of the reality of these ‘failures’ or ‘imperfections.’
Yet I’ve never encountered any such failure-finding or imperfection-identifying professor, pundit, or politician who’s willing to put his or her own money where his or her mouth or keyboard is. The only money such persons are willing to put at risk is money belonging to other people – namely, to taxpayers and consumers. Why are such professors, pundits, and politicians taken seriously? It’s a genuine mystery.
If Jones tells me that he believes that Acme Corp. stock is underpriced but he himself refuses to invest his money in purchases of Acme Corp. stock, I conclude – with much confidence – that Jones doesn’t believe his assertion about this particular market failure. I’m certainly not going to be led by Jones’s claim to invest my money in Acme Corp., and I would oppose any effort by Jones to seize my money against my will in order to invest it in shares of Acme.
Whether the professor, pundit, or politician is asserting the existence of monopsony power in labor markets, monopoly power in output markets, unwarranted racial or sexual discrimination in this, that, or many markets, or inattentiveness of markets to this or that worker or consumer preference, chances are very high that the alleged ‘failure’ or ‘imperfection’ is one that, were it real, is pregnant with profits for anyone who successfully ‘solves’ the ‘failure’ or diminishes the ‘imperfection.’ The fact that the professors, pundits, and politicians who frequently allege the existence of market ‘failures’ or ‘imperfections’ as reasons for government interventions never put their own money and effort where their mouths are is proof as good as proof in human affairs gets that these people’s economic assessments are untrustworthy.
