But Bryan, “we’re not talking reality, we’re talking theory!”
Incentives matter. Concentrated interests shape policy for private benefit, not public good. Stigler understood this 60 years ago. I am pretty sure that Stigler would conclude that modern academia is as captured as the regulators he wrote about in the 60s and 70s. Academia is now a regulated industry captured by its regulators and funders in the government - research is acquired by its funders. The content of “scholarship” reflects the interests of those who pay for it. Cui bono?
What most economists call CBA, I call accounting based on unreasonable and counter factual assumptions. For about a decade, I specialized in conducting one or another forms of CBA analysis with RTI international on behalf of three different federal agencies, USDA, FDA, and EPA. I speak, therefore, from first-hand knowledge of the entire lay of the land.
Public choice economics focuses our attention on several states of reality that most economists simply ignore, are ignorant of, or worse still, dispute because it suits their political and philosophical proclivities. To wit,
value is subjective;
value is psychic satisfaction that resides in individual minds;
there is no such thing as a social mind;
so-called market prices do not and cannot measure value;
benefit is value received;
cost is value foregone;
individuals always choose and act in a way they believe will maximize their personal net benefit;
the Hayekian knowledge problem is dispositive;
government operatives are not magical or benevolent or malelvolent, they are just individual persons;
Pigovian taxation is no solution at all, because no one has enough knowledge to know anything at all about where they would or could be set to cause MSB to equal MSC;
MC, MB, MSB and MSC are wonderful concepts, but are impossible to measure, precisely because value cannot be added, subtracted, multiplied, and certainly not compared between two individuals;
I could go on, but what would be the point? Cut to the chase; CBA is impossible, which is unusually inconvenient for most economists. Pretending that CBA is possible just gives government operatives an open door, through which they are more than willing to walk.
The insights of James Buchanan and Gordon Tullock and Mancur Olson and Tyler Cowen are persuasive and compelling for me. In the end, humans cannot do better than voluntary exchange and interaction. For me, that proposition is the top, the bottom, and both sides of the issue.
"This so-called “bias,” however, is simply well-justified pessimism. If actual governments abuse the power to tax, subsidize, and regulate, then it makes cost-benefit sense to put the officials who set tax, subsidy, and regulatory policies in a few chains. Or a lot of chains. Or a solid block of concrete."
This is where your logic was and is poor, and where your professor was kind. I will be less kind.
The flaw in this logic is that there is no logical reason to stop with 'government.' After all, 'government' is just what we call government; when we were ruled by empires, Empire was government, when we were ruled by monarchs and aristocrats, they were government.
So if we have locked everything we have decided to call 'government' up in concrete-- then who has the power, and who makes decisions? Are they not then, functionally, as much 'government' as the the kings and queens we abolished, as the Empires we tore down? There is not a utopia where power and decision making authority will not accumulate. If you have locked elective government in concrete-- you have not locked them up with the power, and the decision making authority. That will accumulate elsewhere.
Likely, in our current economy-- that ends with corporate control. Have we not seen corporations abuse power, not just the power to tax, but to set extractive prices and rents? Where, again, does the term "Banana Republic" come from? Have we not seen the ability of corporations to subsidize (Hey Uber! Thanks for the meal!) or regulate (Try publishing an iPhone app!) Should we not then also put the corporations in a few chains-- a lot of chains, or a solid block of concrete?
And who then will hold power, who will have decision making authority? Who will be the new government in function, if not in name? And how will they be immune to corruption and misuse of their accumulated power?
In fact, if we are to ask the history question, we must ask: When has there EVER been a time when those with power and decision making authority have not been guilty of some form of corruption, of some abuse of power? When has such a wonderful utopia ever existed on the face of the planet?
If we are to function-- decisions must be made, we cannot all wait around and debate about what should be done endlessly, until we have perfect unanimous consent, with perfect transparency that those executing the decision will do so 100% virtuously. Mankind has never been 100% virtuous, we cannot then expect that some iteration of the future will then feature a 100% virtuous mankind.
The more constructive question still is: how do we manage a system of laws and rights wherein we continuously improve at managing this disparity of perfect virtue? With flawed tools, how can we strive to be better?
This is really like-- Philosophy of Government 101 stuff. No wonder your professor didn't want to waste the time of other students correcting a grad student who should have had these questions answered freshman year of college.
A totalarian government might occasionally make the correct choices. However, a democracy ultimately reflects the choices of those who have cried the longest......and the loudest.
But Bryan, “we’re not talking reality, we’re talking theory!”
Incentives matter. Concentrated interests shape policy for private benefit, not public good. Stigler understood this 60 years ago. I am pretty sure that Stigler would conclude that modern academia is as captured as the regulators he wrote about in the 60s and 70s. Academia is now a regulated industry captured by its regulators and funders in the government - research is acquired by its funders. The content of “scholarship” reflects the interests of those who pay for it. Cui bono?
What most economists call CBA, I call accounting based on unreasonable and counter factual assumptions. For about a decade, I specialized in conducting one or another forms of CBA analysis with RTI international on behalf of three different federal agencies, USDA, FDA, and EPA. I speak, therefore, from first-hand knowledge of the entire lay of the land.
Public choice economics focuses our attention on several states of reality that most economists simply ignore, are ignorant of, or worse still, dispute because it suits their political and philosophical proclivities. To wit,
value is subjective;
value is psychic satisfaction that resides in individual minds;
there is no such thing as a social mind;
so-called market prices do not and cannot measure value;
benefit is value received;
cost is value foregone;
individuals always choose and act in a way they believe will maximize their personal net benefit;
the Hayekian knowledge problem is dispositive;
government operatives are not magical or benevolent or malelvolent, they are just individual persons;
Pigovian taxation is no solution at all, because no one has enough knowledge to know anything at all about where they would or could be set to cause MSB to equal MSC;
MC, MB, MSB and MSC are wonderful concepts, but are impossible to measure, precisely because value cannot be added, subtracted, multiplied, and certainly not compared between two individuals;
I could go on, but what would be the point? Cut to the chase; CBA is impossible, which is unusually inconvenient for most economists. Pretending that CBA is possible just gives government operatives an open door, through which they are more than willing to walk.
The insights of James Buchanan and Gordon Tullock and Mancur Olson and Tyler Cowen are persuasive and compelling for me. In the end, humans cannot do better than voluntary exchange and interaction. For me, that proposition is the top, the bottom, and both sides of the issue.
"This so-called “bias,” however, is simply well-justified pessimism. If actual governments abuse the power to tax, subsidize, and regulate, then it makes cost-benefit sense to put the officials who set tax, subsidy, and regulatory policies in a few chains. Or a lot of chains. Or a solid block of concrete."
This is where your logic was and is poor, and where your professor was kind. I will be less kind.
The flaw in this logic is that there is no logical reason to stop with 'government.' After all, 'government' is just what we call government; when we were ruled by empires, Empire was government, when we were ruled by monarchs and aristocrats, they were government.
So if we have locked everything we have decided to call 'government' up in concrete-- then who has the power, and who makes decisions? Are they not then, functionally, as much 'government' as the the kings and queens we abolished, as the Empires we tore down? There is not a utopia where power and decision making authority will not accumulate. If you have locked elective government in concrete-- you have not locked them up with the power, and the decision making authority. That will accumulate elsewhere.
Likely, in our current economy-- that ends with corporate control. Have we not seen corporations abuse power, not just the power to tax, but to set extractive prices and rents? Where, again, does the term "Banana Republic" come from? Have we not seen the ability of corporations to subsidize (Hey Uber! Thanks for the meal!) or regulate (Try publishing an iPhone app!) Should we not then also put the corporations in a few chains-- a lot of chains, or a solid block of concrete?
And who then will hold power, who will have decision making authority? Who will be the new government in function, if not in name? And how will they be immune to corruption and misuse of their accumulated power?
In fact, if we are to ask the history question, we must ask: When has there EVER been a time when those with power and decision making authority have not been guilty of some form of corruption, of some abuse of power? When has such a wonderful utopia ever existed on the face of the planet?
If we are to function-- decisions must be made, we cannot all wait around and debate about what should be done endlessly, until we have perfect unanimous consent, with perfect transparency that those executing the decision will do so 100% virtuously. Mankind has never been 100% virtuous, we cannot then expect that some iteration of the future will then feature a 100% virtuous mankind.
The more constructive question still is: how do we manage a system of laws and rights wherein we continuously improve at managing this disparity of perfect virtue? With flawed tools, how can we strive to be better?
This is really like-- Philosophy of Government 101 stuff. No wonder your professor didn't want to waste the time of other students correcting a grad student who should have had these questions answered freshman year of college.
So your point is that we must embrace government because it’s all we have?
A totalarian government might occasionally make the correct choices. However, a democracy ultimately reflects the choices of those who have cried the longest......and the loudest.
Spot on. The ones who support government intervention or heavy taxation are generally those that stand to directly benefit from such action.