Arnold Kling  

Why I am not a Caplanian

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From Bryan's talk in Sweden.


With rational voters, policy-makers have to do whatever the public wants; they can't "make a difference." With irrational voters, in contrast, policy-makers may be able to give the public the policies that it needs, rather than the policies that it wants.

...When a principal fails to understand his own interests, an agent who objects or disobeys does him a favor.

It's a good talk, and there is much that I agree with. But I want to highlight the P-sounding elitism. Caplan's world is a "we-they" world in which wise (dare I say Progressive) economists know more than ordinary people. That may be true on issues like international trade, drug legalization, and legalization of the sale of kidneys.

But I think about all sorts of other issues. In the late 1960's, economists came up with the idea of price controls to deal with inflation. (The good news is that we learned from that experience.)

Economists mostly believe in what I call hydraulic macro. This macro is consistent with what Bryan calls "make-work bias," the erroneous belief that jobs are scarce. I try really hard not to talk about jobs being scarce. Instead, I talk about the economy's planner (the market) being in the middle of a great recalculation, during which it lets some workers stand around idle.

My point is that there are many issues where economists disagree, and on most of those issues Bryan and I would be in the minority. A regime in which Progressive economists had their way would be better than what we currently have on a few dimensions, but overall I think it would be substantially worse.

On health care, the irrational public--the ones that want government to keep its hands off their Medicare--is helping to fight the Progressives who want to impose a health plan that is based on what I see as a failed model--the Massachusetts plan. In Bryan's ideal world, wouldn't our health care system be run by the wise technocrats of the Obama Administration?

Bryan might argue that with better economic knowledge among the people and/or more slack given to policymakers, the elites could make better choice on health care policy. I certainly think that it is worth the effort to try to explain health care economics. Maybe some of the technocrats will listen. But I would rather see people less infatuated with technocrats.

I am not a Caplanian because I do not think of the world as "we" the economists vs. "they" the irrational public. I think of it as "we" the oddballs who reject the People's Romance vs. the elites who espouse and manipulate that romance.


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COMMENTS (9 to date)
John Alcorn writes:

Arnold, thanks for speaking up for us oddballs.

Philo writes:

Caplan does say the voters are ignorant, and that their votes are aimed more at signaling than at pursuing effective policies. But where does he say the world should be run by wise technocrat economists? I suppose that "Caplan's ideal world" is one in which everyone is perfectly virtuous; then we wouldn't need politics of the usual sort.

greenish writes:

Caplan's hypothesis can explain why experts might be right more often than lay-people, and it's not quite the obvious (and somewhat elitist) answer that they've studied more and so they know more: experts can't get away with false beliefs as much because the facts keep popping up in their faces. Lay-people can be ignorant and decide their political beliefs based on fancy, and don't have to worry about a reckoning. So, while subject to the same desire for irrationality, experts are forced to pay a higher price for it.

Except, this all depends greatly on what standards of evidence and logic the discipline in question is subject to. The problem of facts could just as well lead experts to concoct ever-more-complicated theories to stay ahead of falsifiability. Given the institutional distortions economists in politics are subject to experts could end up being worse, by a Caplanian analysis (draw an irrationality to cost graph, and notice that someone can easily be employed to be irrational, which means a negative cost.)

I'd be curious to see more information on what could have possessed economists to think price controls might be a good idea.

Unit writes:

The Caplanian prince mischievously tries to do good. I kind of like that.

Drewfuss writes:

"...When a principal fails to understand his own interests, an agent who objects or disobeys does him a favor."

Doesn't it depend on the agent being Robinson Crusoe, on the one hand, or part of a self-organizing network on the other?

Do ants need a paternalistic dictator to achieve their best interests?

Don't forget context, details and network affects, like those hydraulic Keynesians do.

Shayne Cook writes:

I've noticed something - a consistency - in reading this blog over the years. When I read Arnold Kling, I learn about economics. When I read Bryan Caplan, I learn about Bryan Caplan.

Floccina writes:

On health care, the irrational public--the ones that want government to keep its hands off their Medicare--is helping to fight the Progressives

On health care, the irrational public is on both sides of this fight. Many on the pro side seem to think money will cure many diseases that it will not. They seem to think that it would be good if insurers would pay every claim. They say that doctors should make all the decisions without regard to cost.

ad writes:

When a principal fails to understand his own interests, an
agent who objects or disobeys does him a favor.

I suspect that Caplan might have more accurately stated his views as "When a principal fails to understand his own interests, an
agent who objects or disobeys MAY be doing him a favor."

Kurbla writes:

Bryan as usually, drifting between misconception ("irrationality = systemic bias") and triviality (slack, experts know better etc.)

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