Today’s Quote of the Day…

…comes from pages 86-87 of Bruno Leoni’s 1961 work Freedom and the Law (3rd Edition, emphasis added):

Common citizens were the real actors in this respect [the formation of common law], just as they still are the real actors in the formation of the language and, at least partially, in economic transactions in the countries of the West.  The grammarians who epitomize the rules of a language or the statisticians who make records of prices or of quantities of goods exchanged in the market of a country could better be described as simple spectators of what is happening around them than as rulers of their fellow citizens as far as language or the economy is concerned.

JMM: The economist as a scientist is one who observes, records, and explains phenomena.  Our models and metrics work best when they are describing these outcomes.  To use them to be prescriptive fundamentally changes the nature of the being.  For example, to try to manipulate the price system to get higher wages (eg, a minimum wage) causes distortions: less labor is purchased, overall wages may drop, etc.  Tariffs, as a means to produce more profit for firms, lead to overall poverty.  It’s easy to boost some metric merely by monkeying about with its components.  But do not fall into the mistake of thinking that now higher metric is comparable to the metric one observed before.  GDP manipulated is not the same as GDP arisen from market transactions even though they superficially look the same.

The good economist, like the good jurist or the good grammarian or the good scientist, observes the world.  He does not try to impose his own viewpoints onto the data.  He is a discoverer of economic relations (or legal relations or grammatical relations etc), not a creator of one.

Somewhere along the line, this simple fact was lost.  Economists are all about “policy recommendations” now.  Optimal tariff this and carbon tax that.  They have ceased being economists and have become applied mathematicians.  Likewise, judges, lawyers, and legislators have ceased trying to discover the law (that the law is) and have moved toward telling us what the law should be.  As such, they have ceased being judges, lawyers, and legislators and moved into being commanders of humanity.  What they do can no longer be called law; it is a farce wearing the guise of law.

8 thoughts on “Today’s Quote of the Day…

  1. I think you are overreaching in this post Jon. Yes, economists should try to use methods that are as scientific as possible and try to be as clear as possible about what is data and what is theory. But let’s not forget that making any sense out of data at all requires a theoretical framework.

    A decision that government shouldn’t do something is every bit as much a policy decision as a decision that government should do something. Even when it’s the right thing to do.

    As for economists not making policy recommendations, you couldn’t even get through your first paragraph in this post without making two very controversial and very specific policy recommendations. You are opposed to minimum wage laws and tariffs. Now don’t get me wrong. I happen to agree with your policy recommendations on both those issues. But you can’t tell me those aren’t policy recommendations.

    I can’t think of a single famous economist anywhere on the political spectrum who didn’t have strong views on policy that he that he thought were based on economic data. The best approach is to openly state your policy views and be appropriately cautious and specific about what the data can support. I think Russ Roberts is a great example of how it is possible to combine passionate policy views that are out of the mainstream with a good faith effort to be as scientific as possible in viewing the data.

    Liked by 1 person

    • Greg

      Jon is interpreting and channeling Bruno Leoni here, someone who is far too Austrian and libertarian for your taste. It’s no surprise, then, that his smooth transition to disparaging the common remedies of populists and Keynesians is understandably upsetting to you. 🙂

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      • Ron,

        I’ve taken some deep breaths and I think I’m recovering from this upsetting experience. Especially helpful to speeding this recovery was the fact that I agree with disparaging tariffs and with disparaging raising the minimum wage.

        I’m having a little more trouble recovering from the idea that all this “disparaging” did not betray a clear policy advocacy. Don’t make me build a Venn Diagram here. You know I could do it.

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        • Yes, I believe we are all Populist Policy Disparagers. (PPD) now. And I suppose one could claim that disagreeing with a policy is sort of a policy in itself. A policy of not making policy so to speak.

          I thought Jon’s final paragraph, other than the ‘tariffs and carbon tax’ sentence, came pretty close to disparaging Keynesian economists who are, as we know, obsessed with numbers , charts, graphs and models (applied mathematicians), and who – in the aggregate – can’t resist trying to meddle in other people’s lives. Understandably, even a hint of such disparagement would make you bristle.

          If I did have a policy prescription for promoting economic harmony, it would be something like the following:

          “Don’t do that! Mind your own business! Leave people alone to manage their own lives!” (slaps overreaching hand)

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          • Ron,

            Careful now, someone is likely to consider that hand slapping a form of aggression. Keep your hand slapping hands to yourself. The real trick to minimizing coercion and violence is having the best method for settling disputes among people who disagree on such things.

            Apparently I am more tolerant of “hint(s) of disparagement” than you expected. You almost seem disappointed. I’ll try and make a better effort next time to muster the expected levels of upset and bristling.

            Yes, I think it’s entirely obvious that a decision to say we shouldn’t take some public policy action is a perfectly clear “policy recommendation.” I predict that when Jon completes his longer form piece on these matters he will make a competent defense of very limited state action. But will he really want to argue that is not a policy recommendation? I predict that’s not going to be the point he really cares about or even wants to defend after giving it more thought.

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      • Greg

        I suppose a casual observer could misconstrue what they had seen, but as we know, defensive hand slapping is a perfectly legitimate course of action within most framework of moral behavior, and is specifically excluded as a form of aggressive force in definitions of the NAP.

        Yes, I am somewhat disappointed. I took your accusation of Jon’s supposed “overreach” to be a form of bristling. I suspect if he continues to cite Bruno Leoni in his posts we will see more such “bristling” from you.

        You’re probably right about Jon’s longer paper, and I for one am looking forward to reading it.

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  2. In practice, I’m not sure the two functions (analysis and action) are separated often. As a marketer I can do a terrific job of analyzing why and how people do what they do, but if I don’t devise ways of using that information to make the company more profitable, I wouldn’t be doing my job.

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