Saturday, October 9, 2010

DeLong on Wilkinson and Economic Realism

This is very good - Brad DeLong responds to Will Wilkinson with a dose of what I would call economic realism. He quotes from Keynes's The End of Laissez-Faire, which is one of my all time favorite books. If you had to be picky about what of Keynes you end up reading, I would strongly suggest you read this and pick up Keynesian economics from blogs or textbooks or from Hicks (Hicksian Keynesianism is probably scientifically better than Keynesian Keynesianism anyway).

DeLong talks about a naturally evolving economy that is not that best of all possible worlds, that occassionally runs into trouble and that can be plausible improved upon. DeLong says that economies have a tendency to "run themselves into the ground" - I would object to that phrasing - I would say that economies are naturally erratic and can grow at a sub-optimal rate. "Run themselves into the ground" makes it sound like the economy would be helpless without government, which I don't think is true at all and I would guess DeLong doesn't even necessarily mean.

This is what DeLong cites from Keynes, which I think meshes well with my Dewian contractarianism:

"Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive ‘natural liberty’ in their economic activities. There is no ‘compact’ conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately. We cannot therefore settle on abstract grounds, but must handle on its merits in detail what Burke termed: "one of the finest problems in legislation, namely, to determine what the State ought to take upon itself to direct by the public wisdom, and what it ought to leave, with as little interference as possible, to individual exertion...""

1 comment:

  1. "It is not true that individuals possess a prescriptive ‘natural liberty’ in their economic activities."

    This sort of thinking is exactly what is wrong with modern liberalism/progressivism/socialism (they are largely the same thing). No wonder Dewey was such an early fan of Stalin.

    The notion that one does not have a right to make a living is so stupid that it is difficult to muster the words to describe its stupidity, yet Dewey stands there and writes such. Worse is of course that Dewey's idea invites the sort rent seeking that harm the folks he presumably wishes to aid the most.


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