Ilya Shapiro at the CATO Institute brings yet more tragic news of eminent domain abuse in his latest CATO @ Liberty blog post - please read it, and make sure to read his earlier material on eminent domain linked in the piece.
Despite what the Supreme Court decided in Kelo, this cannot what eminent domain was intended to do. As Justice O'Connor said in her Kelo dissent:
Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. (p. 2677)
This is the danger of enshrining Kaldor-Hicks efficiency (raw cost-benefit analysis), with no consideration of rights or dignity, as the sole basis for public policy, as I discuss in chapter 4 of Kantian Ethics and Economics.
(For more on Kelo, I recommend the following papers: Ilya Somin, “Controlling the Grasping Hand: Economic Development Takings After Kelo,” Supreme Court Economic Review 15 (2007): 183–271, and Richard Epstein, “Public Use in a Post-Kelo World,” Supreme Court Economic Review 17 (2009), 151–71.)
Preferences are the central notion in mainstream economic theory, yet economists say little about what preferences are. This article argues that preferences in mainstream positive economics are comparative evaluations with respect to everything relevant to value or choice, and it argues against three mistaken views of preferences: (1) that they are matters of taste, concerning which rational assessment is inappropriate, (2) that preferences coincide with judgments of expected self-interested benefit, and (3) that preferences can be defined in terms of choices.
I'm not sure exactly what he means by (1), but I certainly agree with (2) and (3). Perhaps I'll have more to say after I manage to get my hands on a copy... I read it (noting that Professor Hausman graciously sent me a copy).
Ed Glaeser's Economix/New York Times blog post from yesterday, "The Moral Heart of Economics," argues that a belief in the value of freedom is "at the core of our discipline." While I appreciate that someone of Glaeser's stature and influence is highlighting the role of ethics in economics, I find his claim regarding the universal economic belief in freedom to be weak, simply because he opens the door for so many interpretations of it:
Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.
But that is certainly not the meaning of freedom that many classical liberals (or any libertarians, for that matter) would endorse--which is not an argument against it, of course, but merely points out that proposing freedom as a uniting value among economists does not carry much water if the definition of freedom is allowed to vary so widely.
In college you got the claim that Greed is Good, and anyway people are Max U sociopaths, regardless of what all the scientific evidence gathered on the point says to the contrary. I would advise them, of course, to read my book How to Be Human*: *Though an Economist, which is advice to young economists about maintaining morale and integrity — and getting the scientific task done while retaining common sense. Beyond that, Educate thyself. Read widely, having acquired somewhere a deep knowledge of an economics of some sort. We have enough amoral idiot savants in the study of the economy. We need some fully educated humans. We need a humanomics, not more freakonomics.
It is well known that classical mechanics played a significant role in the thought of several major economists in the neoclassical tradition from the 1860s to the 1910s. Less well studied are the particular parts or features of mechanics that exercised this influence, or the depth and extent of the impact. After outlining the main traditions of mechanics and the calculus, and describing types of analogy between theories in general, I review some main pertinent features of the work of eight neoclassical economists from the 1830s to the 1910s. I argue that the influence took various forms but that in practice it was modest. Then I briefly describe a fresh set of possible influences with the development of dynamical systems in the period 1920–1950, where again the role of mechanics was limited. I end by raising a large question: does economics need some mathematics designed for its own purposes rather than that traditionally obtained by analogizing from mechanics and physics?
Do you remember what it felt like when you learned that there was no Santa Claus? Or when you began to suspect that pro wrestling was rigged? Loss of innocence can be both joyful as well as painful.
Recently I asked my economic development student to reflect on moments of “loss of innocence.” Going in, many students held the delightfully-naïve Santa Claus model of economic development: a rich and benevolent uncle from the north has capital and technology and can bestow presents in the form of gifts, loans, or investments that will magically transform a poor relative into a middle class citizen.
Or, there is the equally naïve notion that economists in Washington or Cambridge can derive blackboard policies that will work as well in Bangladesh as in Bulgaria. Dani Rodrik convincingly demolishes that quaint notion, because development is always context-dependent.
Here are a few other “loss-of-innocence” moments:
1. International aid (whether monetary or donation of goods) does not necessarily increase economic well-being in a poor country. A person's definition of well-being depends a lot on his/her culture.
2. Economic development is not a mechanical process amenable to stable abstract models. Development is an organic process, much more like biology, in which novelty-by-combination is the norm. Hence, while biologists and economists may be able to explain past evolutionary transformations, we certainly cannot predict future ones.
3. Not all reform policies should be implemented at the same time. Sequencing matters, because economic development is deeply disruptive.
4. Economic evolution is not necessarily efficient, but it is always adaptive to the needs of those who have the power to bring change. For a perceptive discussion, see Raghuram G. Rajan and Luigi Zingales, Saving Capitalism from the Capitalists (Princeton 2004).
And the endorsements are superlative (with one glaring exception, of course):
"This book is witty and wise, and a delight to read. It will enlighten economists – both students and teachers – and will encourage non-economists skeptical of the subject's ability to contribute to human welfare to think again." Wendy Carlin, Professor of Economics, University College London
"As more people are starting to realize, economics without ethics is dangerous, and ethics without economics is foolish. This very timely book explains why these two perspectives can and must be combined." Mark D. White, Professor in Political Science, Economics, and Philosophy, College of Staten Island/CUNY & author of Kantian Ethics and Economics: Autonomy, Dignity, and Character
"Wifred Beckerman's Economics as Applied Ethics: Value Judgements in Welfare Economics elucidates many of the important ethical questions that are almost always suppressed in both mainstream economics teaching texts and advanced scholarship. The book provides a productive blending of abstract theoretical discussion with applications that focus on contemporary policy debates. It should therefore appeal both to students who are excited by and seek deeper understanding of abstract ideas, and those who are impatient with abstract debate and want to see just how these ideas matter concretely in policy making." George DeMartino, Professor and Co-director of the MA program in Global Finance, Trade and Economic Integration, University of Denver