Many of my favorite economists - including Arnold and Tyler - recoil from "villains-and-victims" stories. After a recent lunch, similarly, Robin Hanson panned the movie Blood Diamond in large part because of it is a villains-and-victims story. It's a safe bet that these economists are also jaded about stories with heroes. Tyler probably speaks for most economists when he writes things like:
[F]inancial markets rarely fit into simple moral narratives, and much as these stories may comfort many of us, they are not a good guide to understanding financial policy.
Personally, I think the real lesson of economics is not that most stories have no villains, but that we're often deeply mistaken about who the villains are. When we capture the villain and pull off his mask, Scooby-Doo style, he usually turns out to be the demagogue rather than the speculator. (Though if we pull on the demagogue's face one more time, we may discover another mask; the true villain is the economic illiteracy of the median voter!)
What do you think? Are villain-victim-hero stories really over-used, or just misapplied? To focus your thoughts, perhaps you'd like to take up the same challenge I gave Robin after a recent lunch:
Name the most important issues where you think a villain-victim-hero story is true.
Bonus points: How do you think Robin answered? (Here's a hint).