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OpEdNews Op Eds    H2'ed 6/12/14

Yes, Theoclassical "Economists [are] Basically Immoral"

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The Liberty Fund editors do not bury the lead. The first article they present is entitled: "Are Economists Basically Immoral?" It, unintentionally, refutes Heyne's thesis that theoclassical economics is basically moral and that theoclassical economists have strong predictive abilities. As someone who taught for years in a public policy school (the LBJ School of Public Affairs at UT Austin) and as a white-collar criminologist who studies elite corruption I found the two examples Heyne (and his editors) chose to present first of particular interest. Here is the first page of the article in its entirety.

"Whenever my wife and I have economists and their spouses over for dinner, I try to keep the conversation away from politics, because otherwise it almost always ends up in a somewhat rancorous dispute, not about candidates or policies, but about the democratic political process itself.

The division is always the same: all the economists insist that voters have no incentive to cast an informed ballot, while the non-economists protest that this is a cynical and immoral view of the world.

As another example, I recently gave my students a newspaper article that was headlined 'Food Aid from West Falls Prey to Corruption.' It began with this line: 'Western food aid to former Soviet Republics is being syphoned off to the black market or falling into the hands of corrupt local authorities.' I asked my students to tell me in writing what difference this makes and why donor nations should be concerned that their food is being stolen. I found that some of the students were appalled at my claim that stolen food was more likely to get to hungry people than food that had not been stolen. I hastened to add, I said, that I do not approve of theft. But the damage was done; the students were very upset. It was wrong to argue that thieves are usually more effective in getting food to hungry people than Red Cross officials are. But thieves have a more effective incentive: no sale, no profit."

Reprinted from Policy 9 (Autumn 1993): 33


Heyne's description of the "rancorous dispute" between economists and non-economists about voting is a non sequitur that demonstrates the poor predictive ability of economists. First, consider the multiple dimensions of falsity and intellectual dishonesty inherent in his description of the economists' position (and recall that he is one of those economists): "all the economists insist that voters have no incentive to cast an informed ballot." There is nothing in economics that could support that claim. Indeed, to an economist the fact that so many people do in fact vote should lead to the assumption that they have powerful incentives to vote. Even theoclassical economics recognizes that people have a vast range of incentives, not simply economic.

There is a significant literature in other disciplines about why people vote and what factors drive turnout. It is possible, of course, that the economists were blind to the research in other fields. Heyne's contempt for other social sciences and the humanities, if shared by the other economists at his table, was particularly likely to render them ignorant of why people choose to vote.

In any event, in his first example of the supposed superiority of economics he shows that economists are not simply wrong but dogmatically hold to their errors after centuries of experience prove that their views are false. Indeed, economists, in Heyne's telling, are such jerks that they engage in "rancorous disputes" with their own spouses because the economists insist on pushing claims that are false -- and that their spouses know to be false. In Heyne's telling of the tale, the economists are always wrong, but never willing to admit their errors. Instead, they attack even their spouses. Heyne's telling of the story makes it plain that he still claims that that there is "no incentive" to vote. Imagine what Heyne and his economic colleagues did to students who dared contest their long falsified dogmas in class.

Note also that Heyne adds the word "informed" before "ballot." The implication is that people may vote but their votes are not entitled to respect because they will not bother to inform themselves before they vote. Heyne is a big fan of Friedrich von Hayek, who consciously sought to discredit the legitimacy and efficacy of democratic government by making even more insulting insults about voters.

Second, notice the hidden issue of gender. The only folks invited to these dinners, as Heyne describes them, are economists (in this era, overwhelmingly male) and their spouses. So all the men engage in a "rancorous dispute" with all the women -- and the fight is frequently between spouses where each wife knows her husband's expertise in theoclassical economics -- and knows he's dead wrong and immoral in what he considers to be his core area of expertise.

Third, the "rancorous dispute" is in a non-economic field -- voting -- in which other disciplines have far greater expertise than economists. Several of the wives may well have had a far better understanding of voting than their economist-husbands because they studied political science, sociology, anthropology, or psychology.

Heyne was a Terrible Criminologist

Heyne's second example is even more revealing about theoclassical economists' immorality and incompetence. Heyne takes Stigler's distortion of Coase's work and amps it up to a classic (unintended) reductio ad absurdum. Coase's work on the critical role of transaction costs emphasizes that Stigler's formulation of the so-called "Coase Theorem" (which assumes transactions costs out of existence) has no application in the real world. In Heyne's extension of Coase (as distorted by Stigler) and Adam Smith it really does not matter if "property is theft" and if the "invisible hand" is boosting your wallet. Private sector theft is inherently superior in providing aid to poor than NGOs because private thieves have superior incentives to NGO volunteers. Heyne takes the twin myths that lie at the core of theoclassical economics -- that the "unintended consequences" of private sector actions are inherently desirable for society while the unintended consequences of NGO and governmental actions are inherently harmful to society -- and supercharges it with his ode to thieves and disdain for NGOs. Unintended consequences can be either positive or negative in any sector. An example of unintended negative consequences is the unintentional spread of infectious disease by private commerce, NGOs, and governments.

Heyne's story of private sector virtue through theft of food aid was obviously intended to shock his students. Note that Heyne's tale of the beneficent food relief thieves is premised on zero facts. Heyne assumes that the thieves' actions must prove beneficent because he assumes that the thieves' incentives are superior to the NGO volunteers' incentives. He presents no evidence that the thefts actually helped society and no evidence that NGO volunteers' incentives are inferior from a societal perspective to that of thieves of food relief. In short, he has invented a fictional "just so" myth with no supporting facts and presented it to his students as if it were indisputable truth.

Let us examine three examples of such thefts where we have facts. We will consider how a white-collar criminologist would evaluate Heyne's claim that the invisible hand turns thieves of relief aid into creative capitalists. He asserts that the thieves will act as if they were moral (afte r the theft) because they are subject to the mandate of the "invisible hand" to (unintentionally) maximize social utility due to their quest to maximize their wealth -- "thieves have a more effective incentive: no sale, no profit."

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William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
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