Jim Devine writes:
>> David B. Shemano wrote:
>> > Are you saying that if a theory leads to a practice you dislike, you
>> > should reject the
>> theory? The appropriate approach is to define the practice you like, then
>> figure out a
>> theory to justify it? If practice precedes theory, how do you justify the
>> practice?<
>>
>> No. that would be silly. All I was saying that whether they are valid
>> or not, the Chicago school and the "Austrians" at GMU are basically
>> allies, brethren and cistern under the skin. Perhaps they may hate
>> each other or at a minimum distance try to themselves from each other,
>> but it's like small groups of left- or religious sectarians who
>> basically share the same goals and principles but differ vehemently
>> about one or two tenets of their programs, while holding grudges from
>> past sectarian disputes. ("You always hate the ones closest to your
>> politics" is the old joking slogan ("jogan"?) "The only people we hate
>> more than the Romans are the fucking Judean People's Front," as the
>> leader of the People's Front of Judea says in the LIFE OF BRIAN.)
>>
>> Ideally, practice should precede theory -- but theory should also
>> precede practice, so that they are in sync. Of course, in reality,
>> that harmony seldom happens.
I interpreted your previous statement to mean that even if the GMU economists
had a convincing theory, even a theory that you agreed with, you would dismiss
what they had to say because they advocate policies you disagree with. If I
misinterpreted you, so be it.
This whole discussion started with a post about behavioral economics and the
implications for N/C economics and its assumptions of perfect competition, etc.
I then pointed out the GMU view (which is essentially Austrian) which also
rejects the N/C assumptions, is fascinated with behavioral economics, etc., but
also advocates free-market, anti-socialist policies.
To get to the point, and I think your response proves my point, you (and I
assume most people on this list), don't really give a crap about methodology or
theory. You don't reallly care about whether N/C assumptions are right or
wrong, good or bad, useful or nonuseful. You only care about such assumptions
to the extent they favor or disfavor policies you support.
>> > Of course, if the government passes laws that restrict the ability to
>> > ration credit,
>> redline, discriminate, we get a housing bubble. <
>>
>> No, you don't seem to have studied the issue. The housing bubble was
>> driven more by (1) cheap credit (cf. Greenspan) and (2) deregulation
>> -- either in law or in practice -- of financial practices (cf.
>> Greenspan). The bankers' ability to ration credit, red-line, and
>> discrimination in loaning has not been reduced in recent years.
The real estate bubble is a combination of a whole lot of things. However, one
contributing factor was the separation of loan origination from loan
collection. The originators had little interest in whether or not the loan was
ultimately repaid. Therefore, those who were critical of the "discriminating"
nature of the mortgage banker got their wish.
>> Even if the Public Choice (PC) critique of democracy were valid, it
>> denies the fact that _we are forced by the circumstances we live in to
>> engage in collective activities_. That is, the real world cannot be
>> broken into bite-size pieces so that individual choices can deal with
>> all issues. If the world that we live in is inherently collective, how
>> are we going to make decisions about matters that affect us all?? The
>> PC folks want to us markets to make the decision, so that those with
>> the most money rule the roost. I don't think so.
PC does not deny that we engage in collective activities. For goodness sake,
Mancur Olson entiled his book "The Logic of Collective Action." PC argues that
there is no basis for the assumption that collective decision-making through
government will be more benevolent, beneficial or less self-interested than
collective decision-making through markets, and that the constitution of
government decision-making should keep that in mind.
David Shemano
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