Arnold Kling  

Subtle Wisdom

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If This is Polite Society, Wha... The S Word...

From Don Boudreaux.


The fact that each of us depends upon the efforts of millions of others does not mean that some "society" transcending individuals produces our prosperity. Rather, it means that the vast system of voluntary market exchange coordinates remarkably well the efforts of millions of individuals into a productive whole.

To many people, the fundamental conflict in the economy is between the behavior of individuals (selfish, irrational) and the greater good. Shifting power from markets to government represents a move toward the greater good.

The Masonomist grants the selfishness or irrationality of the individual as well as the prevalence of market failure. However, we see a shift in power from markets to government as adverse nonetheless. Individual political leaders have less knowledge than is aggregated by markets. They face perverse incentives. And they pervert the incentives of others. Witness today's economy, in which everyone is asking not how they can create wealth but how they can get their share of a bailout.


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CATEGORIES: Political Economy



COMMENTS (7 to date)
William H Rogers writes:

Arnold,

Based on your post I assume that Masonomists must also see a shift in power from the market to large bureaucratic corporations as adverse. Is it the case that Masonomists are concerned about police power abuse or clumsy bureaucracies or both?

Troy Camplin writes:

The economic system is an environment, as is the governmental system (each contain teleological organizations within them that partially make up the environment). Thus, to shift from the economy to the government is much like going from the terrestrial environment to the ocean environment. There are ecotones, like the shorelines, where sea lions and penguins do quite well, but the solution to rescuing the cheetah from extinction isn't to throw them all into the ocean.

Alex J. writes:

WHR,

Arnold has mentioned that the suits vs. geeks divide applied to Wall Street financial firms as well as to the GSEs and the Treasury.

Steven Myers writes:

Arnold,
Great post. I have used it in a comment on my blog. I think the Masonist position may be just what the current debate needs to hear.

http://learnecon.blogspot.com/2008/10/are-we-in-recession-or-is-capitalism.html

Les writes:

The Masonomist point of view is persuasive. But to make it yet more persuasive it seems to me that no matter how evil or unethical the motives of business may perhaps be, these bad motives are kept in check by competition. With competition, customers can desert businesses that take advantage of them, and go elsewhere.

But government is a monopolist, and disillusioned "customers" of government have no alternative to turn to.

Exhibit A is the U.S. Congress, with a current approval rating of about 10%. Despite an approval rating so dismally low, our Congress faces not the slightest competition from a rival legislative body.

William H Rogers writes:

Les,

Government is a broad term that describes many organizations but you seem to mean only the US Federal government. But if its just a question of competition then there is no difference (or little difference) between a private monopoly and a public monopoly. Why focus on government if you simply have a problem with monopoly power?

I bring this up only because I'm interested how Masonists view Coase's and Tiebout's contribution.

Troy Camplin writes:

He is concerned with it because there is little evidence that monopolies occur naturally, but rather are always government-created entities.

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