David Shemano wrote: > No. You are entirely missing the point. The issue is what conclusion do we > draw from the fact that so many academic economists (and industry economists) > mispredicted the events of 2008. My conclusion is that if academic economists > got it wrong with their institutional incentives, how could we ever expect > political actors, with their instiutional incentives, to make better > predictions and decisions than the academic economists. <
IMHO, I answered this already, but let's give another answer. The question is about the ability of the "political actors" [such as Reagan or Schwarzenegger ;-) ] to "make better predictions and decisions than the academic economists." I have three points: 1) I can almost guarantee that after the fact, it will turn out that the political actors will often make the wrong decisions, not just for the nation as a whole but even for their own political-economic careers. This is not just because of the incompleteness of information, the uncertainty of the future, the complexity of the reality they face, and their personal incompetence, but also due to old-fashioned venality. 2) Unfortunately, we have no choice. The interconnectedness of our socioeconomic system makes decision-making for the collectivity (such as the nation as a whole) not only absolutely necessary but also unavoidable: the decision not to do anything is just as much a decision to do something. So even if we see politicians make the ever-fashionable "let business [especially campaign contributors] decide what we should do" decision, it's still a collective decision and (following point 1) most likely to be wrong. 3) These conclusions also apply to so-called microeconomic actors such as individual businesses, because they make decisions that affect our collective fate, whether they know it or not. A business follows the profit motive to mine coal and sell it to us to burn. This has a collective impact in encouraging global warming with all its accompanying disasters. Businessfolks are just as much politicians as are the officially-recognized political actors. And in fact, they spend a lot of time and money politicking (e.g., to convince people that clean coal can exist and that it's okay to take the tops off mountains). This is not just due to externalities (such as pollution & mountain destruction) but due to the fact that the work processes they organize involve miniature versions of the coercive state for those people they hire. Feminists used to say (and still should say) that "the personal is political." We should also say that business is political. Politics is not just something that happens in specific institutions in society (the state) but also something that occurs whenever there exist potential and actual conflicts between people. Except in the totally isolated and individualized lives of the hermits, politics happens in all institutions in society. me: >>> It's more than groupthink. That's a social-psychological phenomenon, >>> usually occurring with a bunch of peers. What inflicts economists is a >>> guild-like hierarchy of punishment and reward that fits well with the >>> capitalist system. David: > If true, even more so for political incentives and institutions, whether > liberal, socialist, etc.< Unlike group-think, the _imposition_ of consensus involves hierarchy (as in academia and corporate business). Socialism, at last as I see it, involves democratic rule from below. One wag summarized the nature of socialism as being "the right to fire your boss." This undermines and ultimately destroys the top-down imposition of consensus. With this kind of socialism, we'd likely see a lot of group-think, but not the same kind of top-down imposition of consensus. But once the problem of group-think (among peers) is recognized, however, it turns out that there are democratic ways to oppose it. David: >>>>In fact, it is amazing that every academic on this list is consistently >>>>wrong on every important issue.<<<< me: >>> That's a very bold statement. I'm an academic economist: please, name one important issue upon which I am "consistently wrong." <<< David: > Economics. Politics. > > C'mon, take a joke. Oh, I'm sorry. Even though humor is my middle name, I always forget how e-mail strips away the subtle signs of emotional content, so that jokes are missed if not highlighted by smileys. In addition, there's the amazing fact that every lawyer on this list is consistently poor at communicating. me: >>> I, for one, doubt that political actors face better incentives to >>> reach disinterested truth-seeking conclusions than academics are. In >>> fact, I don't think anyone thinks that political actors face these. >>> Who are you talking about, David, who has this opinion? > Anybody who believes that because economists got it wrong in 2008 because of > institutional incentives, that demonstrates that economic decisionmaking > should be more centralized in political actors. J'accuse! < As I said above (point 2), centralized economic decision-making cannot be avoided when we're talking about an interconnected socioeconomic system. It may easily be wrong and often is so (point 1). The key thing is to hold the political decision-makers (including the businesses) responsible to the populace (the principle of democratic sovereignty). We the people may of course make a lot of mistakes even when we actually have democratic control over the government and other political institutions (including businesses). But we can learn from our mistakes, especially if we don't have politicians (who elevate themselves above us and try to avoid responsibility) to blame. (It's a bit like the relationship between the US government and the Fed. The President and Congress _like_ the independence of the Fed from their command, because if things go wrong, they can blame the Fed for it. If the Fed were actually held accountable, the government would have to accept the blame. I think they should control the Fed and take the blame. This is especially necessary to counteract (or at least to acknowledge) the unsavory influence of Wall Street and the banks on Fed policy.) me: >>> The case of politicians is like that of businesspeople, who also face >>> bad incentives when it comes to disinterested truth-seeking >>> conclusions. Since businesscritters seek profit at all cost and don't >>> face the same urge to reach collective compromises, they're probably >>> worse than politicians. But of course, the overlap between those two >>> sets is gigantic in a business society like the US. There are a lot of >>> people like Blagojevich who carry business ethics to their logical >>> conclusion in politics. David: > Based upon this statement, I must believe you have never been involved in a > business in you life. In your attempt to treat businesspeople and > politicions as equivalent in incentives and behavior, I truly believe you are > caricaturing (on average) businesspeople and idealizing (on average) > politicians. Stop reading Marx and do some fieldwork.< Gee, I don't read Marx very often (though when I do, I find his stuff highly illuminating). But despite the tag in my signature below, I hardly ever quote the dude. I don't like appeals to authority (among other things, I see them as unscientific). It's true however, that I haven't been involved in running a business (except the business of living). I _have_ been an employee and know a thing or two about how businesses are run from that perspective. But your barb reminds me of the standard political hack's claim that his or her opponent has never "made a payroll" or "run a business" -- as if government would be run better if it followed "business principles."[*] Bush and Blagojevich have proven that to be a silly and wrong criterion for judging politicians. In any event, such personal barbs seem irrelevant to the issues at hand. Since I teach and study economics, I know all about the official party line about how businesses are run. You assume that I don't pay any attention to the large number of economists and other social scientists who disagree with me. But I don't. (I'm no Dubya, shutting off inconvenient information.) In fact, I'm the one who repeats himself too often to say that we should never reject everything said by some academic dim-bulb (say Milton Friedman) or other famous right-winger, since "a stopped clock is right twice a day." My attitude toward studying business has always been empirical, instead of accepting the dominant opinion. [*] When they say this kind of thing, they always seem to ignore the issues of business ethics. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
