Robin Hanson wrote: You sound like someone who likes Japanese food complaining that there are too many Chinese restaurants in your area. Maybe you are really just unhappy with the preferences of the consumers around you.
This is exactly the response that George Stigler had to Milton Friedman about the "market" for regulation and government intervention --- see his Economist as Preacher and Other Essays and his last essay Law or Economics. The logic of the position that you present is in the end one which says that whatever is, is efficient because if a lower cost alternative could be offered it would have already been offered. In other words, your version of the $20 lying on the sidewalk. But while I think the logic of economics tends to push us in this direction and in fact that this style of thought does a lot to advance clear thinking over alternative theories, in the end I side with Milton Friedman (and others) who believe that one of the most important roles of the economists is to point out paths for improvement in arrangements. Given that you write on the topic of improving the arrangements in activities, I am surprised to see you making an argument in favor of the presumption of efficiency. For example, why don't we see many of the sort of improvements you suggest on a wide-scale if they are indeed improvements in the arrangement of affairs? I don't believe we get the government we deserve ---- I would argue that there is a chasm between preferences and outcomes that is caused by institutional restrictions which don't discipline opportunistic behavior in political affairs. There is, in short, a principal/agent problem in politics and the institutions to discipline this are restricted in arising to correct it. Similarly, I don't believe we get the economics we deserve --- the reason again is that there are institutional restrictions which distort preferences and fail to accurately communicate those preferences to producers. So I don't think my argument simply turns on a preference issue -- I prefer verbal economics and historical argument and others prefer models and measurement. Instead, I would argue that there is a great demand for clear headed economics and illuminating economic history by other scholars, and an interested lay and policy community, but that the institutions of our profession tend to mute this demand and exault the demand for another type of economics --- what McCloskey calls Kelly Green Golf Shoes. In fact, I think McCloskey's essay -- Kelly Green Golf Shoes and the Intellectual Range for M to N --- is one of the best descriptions of what our profession is all about. I recently wrote a review of McCloskey's book How to Be Human, Though an Economist and I am attaching for those of you interested.
McCloskey.doc
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