“Economics without price theory is knowledge without wisdom. Any economist can analyze data to estimate how many lives you’d save by requiring car seats for toddlers on airplanes. It takes a price theorist to ask how many lives you’d lose when the resulting increase in airfares prompts families to drive—which is far more dangerous—instead of fly. Price theory breeds wiser policymakers and wiser voters. If we fail to teach it, that’s a tragedy.”
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Samizdata quote of the day – economics in academia editionAugust 4th, 2024 |
 14 comments to Samizdata quote of the day – economics in academia editionLeave a Reply |
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“What is seen and what is unseen” as Bastiat put it. The benefits of a government intervention are the seen – the costs, almost always much larger, are unseen.
But then we live in an age when not only such subtle things are ignored – but even basic supply and demand prices.
We live in a time when it is considered a rational thing to try and prevent rents rising by an an edict, and rational to “protect” tenants from being removed when their contract comes to an end – in which case why bother having a contract at all?
There is no understand that such interventions will make the housing shortage worse.
And it is also considered quite rational to try and improve wages or conditions of work by edicts – with no thought as to what this will do to unemployment.
It goes beyond economics.
I’ve been saying this for years… You have to look at the world around you and everyone else as a succession of never-ending Skinner Boxes, influencing your own and everyone else’s behavior.
Your interaction with the environment around you is conversation-like, and the impact of that conversation is habit and behavior.
If you do something, get a response, and the response is what you like…? You’ll do rather more of that “something”. The behavior will be on cue, because that’s how the human organism, and every other organism there is extant, works.
I have a dog that would absolutely love to chase cats; she’s never been allowed to do so, but the small-and-furry cue her inbred hunter’s genetic predilection for “pursuit”. That’s predisposition; in the conversation she’s had with the environment, she’s never been allowed to actually pursue her instincts, because I know it would likely end badly for the cat. She has, however, interacted with cats on several occasions, all of which have had benign outcomes. We once met a cat, in the forest, perched upon a large rock. This was unexpected, and a bit of a thrill for the dog… Every time we walked past that rock, for months after, she checked for a cat. Even after somewhat giving up on the idea, she still occasionally drags me over to “check for the kitty”.
In the long conversation she’s had with her environment, she has learned that while cats are an object of fascination, that rock won’t necessarily have one on top of it. She still checks, because that one experience imprinted itself on her.
The parallels between my dog, her desire for “cat”, and the usual human belief in things like “lucky shirts” remain as an exercise for the reader.
It’s not economics, entirely: Much is behavioral, and how the conversations go out where the organism meets the environment. I think a lot of economists discount “behavior” as a part of the whole; I would tend to wrap “behavior” around economics, rather than the other way around. People do strange and inexplicable things when you merely examine the surfaces of it all; were you to go deeper, and note the various environmental cues they receive and interact with? You might just learn a little more than you think.
The US FAA apparently did a study on requiring car seats for infants on airliners…and concluded that the lives lost by incentivizing much-more-dangerous car travel would exceed the number saved by airline safety improvements. I’m impressed that they did this, and would love to see the analysis that was done.
David Foster said:
I would submit that the real question ought to be “Who paid for it?”, and what were the biases incorporated into the assumptions and calculations?
I don’t trust any of this crap, TBH. You show me something “scientific”, these days? I’m looking at the numbers and the construction of the experiment, no matter who it is. If they won’t show their work, along with the financials for who paid for it all?
I flatly refuse to take it seriously.
The real questions in any of this are down to cost/benefit ratios, and if you’re calculating “human lives lost” on that basis, you might have questionable morals to begin with.
I can about guarantee you, however, that the entire idea of forcing “safe” child seating on aircraft is a bit of a stupidity, in that any aircraft “event” that results in those seats doing the slightest bit of good is pretty much going to result in the loss of the entire aircraft, and then you have the not-so-minor issue of “Would said child-safety seats impede evacuation of the aircraft to an appreciable degree…?”, and calculate, somehow, how many other lives you’ll lose to mandating those child-safety measures. I mean, picture someone trying to maneuver something like a car seat out of the aircraft doors… And, the impact that’s going to have on evacuation time.
I looked into it, once, and you’d be surprised at how they do the testing for aircraft evacuation: It’s all very blue-sky, with no accounting for things like infants, pets, and idiots trying to grab their bags…
Honestly? I’d be all for saying “infants shouldn’t fly”, and doing the same thing with aircraft that we do with carnival rides: “You must be this tall to ride this ride…”
As well, if you can’t get off the aircraft under your own power, needing a walker or something else? Honestly, if we were at all concerned with passenger flight safety, each and every aircraft takeoff would include an actual evacuation drill for the passengers. That’s what the military requires, and until you’ve done a water-evacuation drill in simulated sinking airframe, you’ve really got no perspective on how “wrong” things can easily go…
I mean, rationally? You really ought to just write off the entire planeload of passengers, unless you’re willing to take some truly draconian measures. Even with zero safety precautions taken, I’d wager you good money that the crash survival rate would probably be about the same.
Anyone who’s familiar with the injury rate for trained paratroopers vs. totally untrained neophytes thrown out of aircraft will grasp exactly what I’m getting at, here…
Outside of getting really stupid about safety drills and precautions? I don’t think there’s a good answer. And, sadly, the money would probably be better spent elsewhere, like in pilot training and maintenance.
There’s a reason air passengers are called self-loading cargo. And if they can’t self-load, there’s questions to be asked as to whether they and the transport option are mutually compatible.
There are currently complaints that people with mobility-scooter-sized wheelchairs can’t get into aeroplanes, and are demanding general purpose aeroplanes have extra-wide doors and extra-wide corridors.
If your requirements require specialist provisions, you shouldn’t really be expecting general-purpose facilities to provide those specialist provisions.
I’ve just dug a book out of my library. In The Interests Of Safety, The Absurd Rules That Blight Our Lives And How We Can Change Them. By Tracey Brown and Michael Hanlon. It is a fair while since I read it but I recall that the theme is that health and safety rules are being thought up and imposed by people who have no kind of foresight, no clue how things happen in the real world and inevitably cause harm and no good. A case that I remember was the imposition of an adult to child ratio of, I think, 2:1 that was imposed at a swimming pool. This was in order to address the pool’s horrific safety record of zero incidents of any kind whatsoever. The actual result was that many parents with more than two kids could no longer take them swimming and the kids’ water confidence and swimming ability being set back as a consequence. In this case no research was carried out at all, the rule was just imposed on a whim with no thought about what the actual result would be.
Crushing taxes, wild government spending, endless regulations, production controlled by government and allied bodies (read “corporations and professional associations” – what the Romans called “collegia”) and an intelligence service (really a secret police) whose main concern was NOT watching external “barbarians” – but, rather, finding dissent among the citizens and eliminating dissent.
All introduced into the Roman world by the Emperor Diocletian (who the lying academics claim “ended the crises of the third century” and “saved Roman civilisation” – truly academics are the bastard children of Plato and his “noble” lies) – we have all of the above in the modern West, so we might as well have the Emperor Diocletian’s price controls as well.
The state, and “partner organisations”, deciding what the prices of goods and services is.
I would submit that the real question ought to be “Who paid for it?”, and what were the biases incorporated into the assumptions and calculations?
Exactly. Economists will prove any proposition you pay them to prove. As will “consultants” of any type.
By the way: the safest activity is staying at home and going nowhere.
I re-read the chapter on swimming pools and I had remembered it mostly correctly. There were several municipal pools involved. The rules applied to children of eight years old and under. The numbers on drowning incidents tended to vary very little from year to year. Incidents at public swimming pools were usually around three annually and all involved kids between 14 and 19 years of age, no kids 8 and under had drowned. It was interesting to see how quickly those responsible doubled down and started lying when challenged.
There is a real body of knowledge that is economics – but most academic “economists” are not really interested in its logical principles.
And remember – the greatest economist of the 20th century, Ludwig Von Mises, never had an official tenured position at any university.
As for the United States – Richard Ely, the creator of the American Economics Association (and adviser of both “Teddy” Roosevelt and Woodrow Wilson), flung his toys out of the pram when the AEA refused to persecute the old economist A.L. Perry.
The “crime” of A.L. Perry was to be a real economist – to be interested in logical principles, rather than be an apologist for state interventionism which is what the “economist” Richard Ely was – just as the German “Historical School” (who denied the very existence of laws of economics) were.
The greatest American economist of the 19th century was A.L. Perry – and the greatest American economist of the early 20th century (although he started his work in the 19th century) was Frank Fetter (who finally refuted the errors of David Ricardo – most notably on LAND).
What proportion of modern American “economists” have even heard of these two economists?
On the other hand they have all heard of J.M. Keynes (1883-1946) who made no real contributions to economics what-so-ever.
Even basic economics, for example that government backed “Collective Bargaining” leads to UNEMPLOYMENT (see W.H. Hutt’s “The Strike Threat System” for how the Classical economists always knew this, is disregarded. And not just by socialists
After all it was Disraeli (a Conservative Party Prime Minister) who established it (including such paramilitary tactics as “picketing”) in 1875 – and President Trump and J.D. Vance go out of their way to say nice things about unions.
Minimum wage laws, subsidies (as if people did not know that subsidies always inflate costs – see the history of “Student Loans” in the United States, how they have caused tuition fees to explode, or how Medicare and Medicaid have helped explode medical charges), rent controls, government backed “Collective Bargaining” (on no, said the Liberal Party Government in 1906, our new Trade Union Bill will not increase unemployment, which they knew damn well it WOULD – which is why they introduced “labour exchanges” to make it appear they were doing something about the unemployment), and all the rest of what Ludwig Von Mises called “Destructionism” in the last section of his work “Socialism”.
Paul: The University of Kansas library has several books by Fetter, but nothing by Perry. Nor does Wikipedia have an entry for him. Can you provide a little more information about him? I’ve never seen him mentioned, not even by libertarian economists.
William H. Stoddard – the last time I looked Wikipedia did have an article on A.L. (Arthur Latham) Perry – but it could have gone.
His work on Political Economy was pretty much the standard text in the United States till the very late 19th century, although his pro Free Trade stance annoyed a lot of people.
The late Murray Newton Rothbard (a good historian of economic thought – although a terrible historian on everything else) has a good account of Perry, in his (Rothbard’s) history of economics – Volume Two (as far as I know Rothbard never completed Volume Three), Perry was really more in line with the 19th century French Liberal (which then meant pro freedom) economics – Bastiat, the Say family, and so on, rather than the English economists – who tended to be more confused, less systematic (less concerned with logical principles) than the 19th century French Liberal School.
The Third Republic in France came under the control if interventionists – so it set up the subject of “Public Administration” to bypass the pro liberty economists.
This sort of interventionism is still taught – but they have the cheek to call it economics now.
Thank you, Paul. Wikipedia does still have that article. And it turns out that Project Gutenberg has his textbook on political economy.
I think that Say is badly underrated, largely thanks to Keynes’s fraudulent takedown of him, which started out from a statement of his law that is no better than a grotesque caricature of it. If you actually understand Say’s Law it shows that Keynes’s diagnosis of the problem was specious, and therefore his alleged solution was misdirected—so I suppose it’s no wonder that Keynes made such an effort to misunderstand him.