Saturday, February 10, 2018

The Applied Theory of Bossing People Around

By Don Boudreaux

Deirdre McCloskey’s March 2018 column in Reason is splendid.  (This column is not yet available on-line.)  In it, she expresses her well-grounded substantive objections to the conclusions that Nobelist Richard Thaler and other behavioral economists draw from their research.
Here’s a key paragraph, which comes after Deirdre sarcastically – but appropriately – noted that “According to the psychologists [who offer a long list of human perception and decision-making ‘biases’], it’s a miracle that you can get across the street”:
Like with the psychologist’s list of biases, though, nowhere has anyone shown that the imperfections in the market amount to much in damaging the economy overall.  People do get across the street.  Income per head since 1848 has increased by a factor of 20 or 30.  It is a scientifically bizarre oversight, as though a geologist offered an alternative theory of plate tectonics without showing that her ideas do a better job of explaining the shape of mountains or the alignment of the continents.
Reading Deirdre’s column – which is brilliantly titled “The Applied Theory of Bossing People Around” – prompted me to wonder why the case for
economic freedom is held to a much higher standard than is the case for other freedoms, such as freedom of the press and freedom of speech.
Clever theoreticians could describe (and perhaps in the bowels of some obscure academic journals actually have described) what a “perfect” system of freedom of the press or of freedom of speech looks like.  No doubt the features of such perfection would include the absence of any misunderstood written or spoken words, the absence of words written or spoken in haste or in anger and that are later regretted, and the absence of any conflicting communiqu├ęs.
Were such a description of “perfection” offered, would the case for freedom of the press or of freedom of speech then be held suspect if someone – say, a professor Thalitz or a Dr. Samuelof – pointed out that in the real world people often write and speak in ways that deviate from the ways that they are assumed to write and speak in the models of ‘perfect press’ and ‘perfect speech’?  Would revelations of inaccurate newspaper reports – or even fraudulent newspaper reports – prompt scholars to call for government to oversee newspaper reporting and to ‘correct’ press ‘failures’ whenever and wherever these ‘failures’ occur?  Would demonstrations that people sometimes fail to express themselves clearly or that listeners sometimes fail to interpret accurately the words that are spoken to them justify government interventions to ‘nudge’ people to speak more carefully, or taxes aimed at ‘correcting’ careless listening?
Despite the grotesque and self-caricaturing hostility to free speech that infects many college campuses today, I’m confident that people such as Joe Stiglitz, Richard Thaler, Robert Frank, and Cass Sunstein would not find that imperfections in press reports and in people’s speech give rise to a case for government superintendence of, and meddling with, the press and with speech.  If my confidence is justified, why do these scholars – and many others like them – leap from the uninteresting and utterly unsurprising discovery that real-world markets are not textbook perfect to the conclusion that, therefore, government must nudge, dictate, prohibit, tax, subsidize, or otherwise intervene into real-world markets in alleged efforts to move such markets closer to ‘perfection’?
The above originally appeared at Cafe Hayek.


  1. Milton Friedman said that 'free enterprise' had two major opponents. The first was businessmen. They wanted free enterprise for everyone else but socialism (i.e. a government protection or intervention) for themselves. The other foe were "intellectuals". They want socialism for everyone else but "free enterprise" for themselves (i.e. no restrictions on their free speech.)

    Friedman's dictum actually seems a bit obsolete. A growing faction of intellectuals apparently want socialism over intellectual and academic speech (safe spaces, deplatforming, web censorship.etc)

    At the same time "political freedom" (ie freedom to organise, rally, campaign for office) is regarded as a higher good than mere "economic freedom". Yet economic freedom plainly benefits more ordinary people more directly than political freedom - although the two are coupled.

    Maybe this is a clue to the question Robert raises.

    In classical Greece and Rome, traders merchants and mechanics were looked down on. Thinkers and Philosophers were on a higher plane and were not supposed to soil their hands with actual toil or barter. This prejudice informed the classical view of slavery which saw a natural born class of slaves as essentially so that civilised gentlemen scholars could rule.

    This is perhaps the oldest intelligence prejudice of the lot. At least in the west. It still runs about today. Intellectuals are not so blunt as to advocate a slave class today but they still need one. Hence to unequal treatment of "political freedom" versus mere "economic freedom".

  2. Robert,

    Here's the link to McCloskey's article in Reason:

  3. I figured out in 1973 at age 22 that "progressives" were obsessed with bossing people around. Without that insight, I probably would not have been open to Rothbard's ideas.

    IMHO, this why "progressives" and statist in general cannot fathom the "socialist calculation problem" or its modified cousin which examines how funny money and funny money loans distort the pricing process, the ABCT. The solution to the problems that exist is for the fuss-budgets to just leave average people alone so they can go about freely exchanging and producing honest pricing with sound money. However, THERE IS NO ROLE WHATSOEVER IN THIS PROCESS FOR THE "PROGRESSIVES" TO INSERT THEMSELVES, a situation they are not emotionally equipped to address. Thus, we have decades and decades where the "progressives" (of all parties) cannot and have not ever engaged basic Austrian School analysis.