Economics, ethics, and Krugman

Reading Paul Krugman is like picking at a scab: You know you should probably just let it alone, but there’s pleasure in picking the Krugman rough redness. So you read. So you bleed. So you flick away the droplets and the clots.

I could hardly avoid his recent post, “Economics and Morality,” in part because the title mirrors an abiding interest of mine, and of many libertarians. There is a deep connection between economics and ethics. After all, one is the science of human action and transactions, the other is the art of prescribing for same. Frank Knight observed that the subject of economics was the same as that of Herbert Spencer’s Principles of Ethics: “acts adjusted to ends,” or, to put simply, Human Conduct.

Krugman offers no insights about the deep connections. Instead, he regurgitates old pabulum about the welfare state, and misunderstands the case for free markets. Again.

He begins with a concern: “[T]he right is winning economic debates because people believe, wrongly, that there’s something inherently moral about free-market outcomes.”

I don’t know if this is the case, in the real world. Perhaps I don’t follow enough “debates.” But, as I see it, market outcomes are not moral as such. It’s market processes that are. That is, non-fraudulent, non-coerced exchanges (trade) — no matter how much error there may be in them — are more moral processes than fraudulent and coerced processes. It’s the means that are important, here. Fixating on the ends leads you into traps like Krugman seems to rest his whole ideology upon.

Sure, I can imagine a coercive scheme that will reach ends I conceive of as good. (I tell you, you people out there, your tastes in music are generally pretty awful, and I could help you out a great deal. Just give me power, dammit!) Indeed, I can make sophisticated arguments for the ends I’d choose. I’d be a great philosopher king, I’m sure.

But you’d be a fool to let me become one, and I’d be a knave to accept any offer.

If you don’t see the reasons for this, then you’re not really a very trustworthy guide to policy of any kind.

That is, you may be like Krugman.

Of course, there’s so much wrong with Krugman’s thought and argumentation, it’s hard to know where to begin, or end. You could easily spend your whole career unraveling his errors and misjudgments. Here are just a few points, from his January 10th post:

Simplicity Sells

He says that “the right” is addicted to “simplicity.” His example? Boom-and-bust policy: “[G]oldbuggism is intellectually easy, Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it.”

This is a simple claim, and falls on the grounds of its own simplicity. “Goldbuggism” is not the alternative to Keynesianism. The Austrian Theory of the Business Cycle is. And since Krugman cannot even adequately relay what it is, I’d say that it’s hard, and Keynesianism is easy. Indeed, Keynesianism doesn’t have a theory of capital. It treats capital as a black box, and identifies it with a letter, k, which it manipulates with an astounding degree of simplicity. Austrian Business Cycle Theory, on the other hand, treats many factors as complex, as adjusting in non-uniform ways, and is actually a much more nuanced disequilibrium theory than is any version of Keynesianism, and certainly Krugman’s cheapjack version.

Left-Right Narrowmindedness

He talks about good liberals and bad conservatives. His map of ideology is almost always geared to a simple “left” and “right” construction. This helps him, because it allows him to not deal with libertarian ideas properly. He lumps them in with conservatism, and thus he can tar many ideas with a wide brush, and never address the salient differences.

This is a standard practice on the left, by the way. Generally, they want libertarians to be considered at one with conservatives because they know that it’s easy to dismiss many conservative notions without much effort, and thus it makes it look like they’ve won, even if they’ve usually accomplished nothing much at all but slap down a reactionary.

Shell Game Argumentation

This narrowed focus is especially obvious in his sad foray into income inequality:

These days, America is the advanced nation with the least social mobility (pdf), except possibly for Britain. Access to good schools, good health care, and job opportunities depends on lot on choosing the right parents.

So when you hear conservatives talk about how our goal should be equality of opportunity, not equality of outcomes, your first response should be that if they really believe in equality of opportunity, they must be in favor of radical changes in American society. For our society does not, in fact, produce anything like equal opportunity (in part because it produces such unequal outcomes). Tell me how you’re going to produce a huge improvement in the quality of public schools, how you’re going to provide universal health care (for parents as well as children, because parents in bad health affect childrens’ prospects), and then come back to me about the equal chances at the starting line thing.

Who is he arguing against here? What libertarian economist, for instance, doesn’t want radical changes to the current system? When we want freer markets and less bureaucracy and less regimentation, are we doing this because . . . why, Krugman, why? Could it be because we want more opportunity, not less? More social mobility, not less?

I cannot speak for conservatives, but a libertarian reading this passage begins to pull hair, not scabs. What utter bilge this is. The idea that social mobility and opportunity are increased, net, by the institutions of the welfare state may seem plausible to the unlearned, but from the get-go of welfare-state construction, the libertarian prediction was that these institutions would actually stultify social processes. And if America and Britain are experiencing lower rates of social mobility, maybe it is the result of the welfare state itself.

This is, in fact, what libertarians have argued. Indeed, American libertarians now argue that further government control of the medical industry will lower the rate of progress in medicine, will increase its cost, will lead to future problems of shortages and surpluses (that is, radical disequilbria in services) that people like Krugman will blame on markets and use as an excuse for yet further controls.

The truth, though, is that Krugman knows that libertarians argue like this. He ignores actual positions, pretending, instead, that opponents of extending the “liberal” welfare state advocate the status quo.

You may be tempted, at this point, to call Krugman an “idiot,” and let it go at that. Don’t. He’s not an idiot. He’s a very smart man.

“Liar,” on the other hand, might be about right. “Base rhetorician” is the nice way of saying it.

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