Spinning The Wheels

Russ Roberts of Cafe Hayek discovers the rationalization hamster of economists

We get the economics that’s in demand, the economics that people want. It’s the reverse of the Keynes argument about the influence of defunct economists. Keynes saw economics ideas influencing policy. But maybe it is policy that influences economics. So as the world becomes more interventionist, the economists respond by finding arguments that rationalize that policy.

…In this view, economists are not truth-seekers. They are producers of ideas who respond to market demand. So when the financial crisis comes in 2008 and everyone wants something to be done about it, suddenly, Keynesianism is obviously the right intellectual choice for hundreds of academics and bloggers who hadn’t given it much thought or if they had, they had rejected it previously.

Our product, the less interventionist, liberty product, is in demand but not nearly as popular. People generally don’t want to trust unseen, spontaneous order-based solutions that rely on invisible hand processes. They don’t trust solutions without top-down control–they are not as reassuring. Most people are eager to trust a person who says they care about them than they do a process they are unlikely to fully understand.

Perhaps we could name this pet hamster “Maynard.”

About nightskyradio

Random signals from nowhere in particular.

Posted on January 28, 2013, in Economic$ and tagged . Bookmark the permalink. 2 Comments.

  1. Maynard! Always good on economics.

  2. Keynesian multipliers and aggregates always ignore the alligators, much to the detriment of the shoe industry for playas.

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