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Bonus Quotation of the Day…

Thursday, October 20, 2016 17:57
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(Before It's News)

(Don Boudreaux)

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… is from pages 121-122 of MIT Econ-PhD alum Arnold Kling’s  new book, Specialization and Trade: A Re-introduction to Economics – which, for all of its approximately 200 pages of text, is almost certainly one of the two or three best books, page for page, published in 2016 (original emphasis; link added):

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Mainstream economics in the MIT tradition can be very interventionist with regard to policy.  They look at markets as machines that generate predictable outcomes.  Policymakers can tinker with those machines to improve the outcomes.  The economist’s task is to advise the policymaker.

That approach makes two troubling assumptions.  One assumption is that the economist’s model is sufficiently powerful to justify overriding market prices.  The other assumption is that the political process is sufficiently clean to implement the policy correctly.  Instead, I would argue that, as Peter Boettke would have it, the economist’s task is to explain to the public how one might compare the institutional processes of market and of government.

Those of us who emphasize specialization see markets as trading networks that are constantly undergoing evolution.  Rather than look for particular interventions, we raise the question of which institutional mechanisms serve to support the process of specialization and enable it to continue to evolve in a favorable direction.

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