Mark D. White

In a recent op-ed piece in The Wall Street Journal, Barry C. Sheck of the Innocence Project detailed the wrongful execution in Texas of convicted murderer Claude Jones after then-Governor George W. Bush was not informed of Jones' request for a last-minute DNA test on the one piece of physical evidence tying him to his alleged murder. Only recently, after six yeatrs of litigation and a decade after the execution, the DNA test was performed, and the physical evidence--a single hair--was discovered to belong to the victim, not Mr. Jones.

Mr. Scheck uses this harrowing story to argue in support of a bipartisan, federal bill now in the House, established a National Criminal Justice Reform Commission which would mandate improved practices to lessen the incidence of such travesties. But I do not feel that would go far enough, and neither does Thom Brooks of Newcastle University, who argues in his "Retribution and Capital Punishment," a chapter in my forthcoming edited volume Retributivism: Essays on Theory and Policy (Oxford, 2011), that the irreversibility and impossibility of post-reversal compensation provides a retributivist argument against capital punishment.

Unlike other scholars who argue (explicitly or implicitly) that all punishment should be eliminated because of the chance of wrongful conviction, Brooks argues that it is the unique nature--the finality--of capital punishment that should trouble us. If convictions with lesser punishments are reversed, then the penalties can be wholly or partially "refunded": fines can be paid back, and time in prison could be compensated for (imperfectly, of course, but to some extent). Stigma and harm to reputation are more difficult to repair, but steps can be taken along those lines as well. But once a person is executed, obviously he or she--nor the surviving family members--can never be "made whole." This, in Brooks' opinion (and mine), should make even a hardened retributivist question the balance of justice inherent in capital punishment given even the slightest possibility of human error in the criminal justice system. Given that possibility of error, retributivists (all of whom are steadfastly against punishing the innocent, regardless of their views on punishing the guilty) should not support a punishment that cannot be even partially reversed if the conviction is later found to be faulty.

Speaking for myself, one of those hardened retributivists, I firmly believe a murderer, absent any extenuating circumstances, deserves to be executed, but only if we know with 100% certainty that he or she is guilty. But since we can never know any person's guilt with absolute certainty, we should not impose an absolute sentence like death. (Furthermore, my libertarian nature makes me very wary to grant the state the power to execute its own citizens, but that's a different argument for a different day.)

Mark D. White

Today's news about a new study showing most military personnel do not oppose open service of gays and lesbians leads to mixed feelings. On the one hand, it should speak against those who argue that open homosexuals in the military will reduce morale, especially given the reported correlation between those who have served alongside (believed) homosexuals and acceptance of repeal of DADT. If this study is of use in achieving repeal--and it very well may, if early reports of its impact are any guide--all the better.

But at the same time, I find the study irrelevant in the more general, less political sense. As much as I respect, admire, and am grateful to our men and women in service, I don't think their opinions regarding who can or cannot serve alongside them should matter. That is the same "tyranny of the majority" that we see in calls for legislation dealing same sex marriage, wherein the majority would be granted improper influence over the essential rights of the minority (even if those rights are voted for). Homosexuals should be allowed to serve their country without hiding an important part of their identities, regardless of how active personnel, or anybody else, feel about it.

I fear that elation over this study, as politically efficacious as it may turn out to be, may lead people to forget the real nature of the wrong to the dignity of gay and lesbians perpetuated by DADT.

Mark D. White

This item may be of some interest: Frequent commenter Patrick O'Donnell and I have been discussing the market in the comments to a post at Legal Ethics Forum that mentioned Jonathan's earlier post here regarding Inside Job and the idea of a code of ethics for economists.

Mark D. White

There's a fantastic article in The Wall Street Journal today by Mark Whitehouse (!) explaining how, given the current crisis, more economists are finally starting to doubt the efficacy of mathematical modeling to predict movements in the economy. Of course, some want to build even bigger models, but others, such as Roman Frydman and Michael Goldberg, emphasize the impossibility of dependably precise and accurate forecasting, and through their "imperfect knowledge economics" recommend common-sense policy action that, rather than calculated to attain precise policy effects, is based on rules of thumb to push the economy in the right direction. (I must admit I was ignorant of this new work, not being a macro person, but I say the same things to my macro students every time I teach it, so I was very gratified to read this.)

Of course, the greater ethical question is why spend resources forecasting the economy anyway, but I'll expand more on this later...

Jonathan B. Wight

 You don’t have to wait to get Deirdre McCloskey’s new book, Bourgeois Dignity (2010) to get a strong taste of what’s inside. 

 Found here is a short summary that McCloskey provided last month for Cato Unbound.  The key message is one Keynes would find understandable: namely, that ideas and beliefs are the most important commodities of value, and explain economic success or stagnation.

 While markets give rise to a higher material standard of living, McCloskey attacks economists for adopting a materialist viewpoint.  In the Cato Unbound post, McCloskey calls for the creation of a new science of humanistic economics:

We will need to abandon the materialist premise that reshuffling and efficiency, or an exploitation of the poor, made the modern world. And we will need to make a new science of history and the economy, a humanistic one that acknowledges number and word, interest and rhetoric, behavior and meaning.

 Deirdre’s use of “humanistic” is likely to arouse ire, since “humanistic” economics is associated with E F Schumacher’s Buddhist economics of limited wants (Small is Beautiful: Economics as if People Mattered).  It also is a title by Mark Lutz and Kenneth Lux, Challenge of Humanistic Economics (1979) that develops somewhat similar ideas to McCloskey on the role of a non-materialist approach to economics.

 I think that McCloskey has it exactly right:  to defend capitalism we need to see competitive markets as providing an opportunity for humanistic development in its broadest sense—for self expression, for personal growth, for meaning, and for community connectivity.  The fact that markets also generate higher material standards is quite amazing—but an exclusive focus on this aspect can lead to unfortunate dead ends. 

 What drives entrepreneurship—and what supports its existence among the populace—is something far grander and ennobling than economic efficiency: it is dreams of discovery and the desire for beauty in order.  Not surprisingly(!), this topic is covered by Adam Smith in TMS (IV 1). 

Mark D. White

As we approach the climactic finish of our chapter-by-chapter preview of Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems (now available), we come to Chapter 7 by Deirdre McCloskey titled "Life in the Market Is Good for You." (You can use the following links to find previews of the chapters by White, Meadowcroft, Gwartney and Connors, Baker, Blevins, Ramirez and Wight, and Garnett, as well as the book's preface.)

Adapted from her landmark book The Bourgeois Virtues, McCloskey's chapter discusses common misperceptions about the propriety of market work, in particular trade but also "menial" labor, and how intellectuals throughout the ages have dismissed its importance to the good life. Of course, throughout the chapter she references literature, poetry, theatre and film, as well as economists, philosophers, theologians, and more.

It is difficult to pick out a passage to quote, but here's one of my favorites:

Chaplin’s 1936 movie Modern Times or the opening scenes of Sillitoe’s angry-young-man novel The Loneliness of the Long Distance Runner (1959; movie 1962) say that many factory jobs are monotonous. Granted. I have not worked in a factory. But the monotony is of course pretty common in nonindustrial society, too. Planting rice is never fun. The idiocy of rural life is not always better for the soul than the idiocy of urban life. I have worked as a farm laborer. Ironically, only since Romanticism and the rise of prosperous, healthy cities—London stopped killing more people than it bred by the end of the eighteenth century—have Europeans looked fondly back on their village roots. (p. 160)

(And I'll always thank her for teaching me, in The Bourgeois Virtues, how to pronounce Mihaly Csikszentmihalyi, the author of Flow: The Psychology of Optimal Experience, another highly recommended book - see p. 156 for that!)

And I would be remiss if I didn't mention McCloskey's new book, published this month by Chicago, titled Bourgeois Dignity: Why Economics Can't Explain the Modern World. I expect it to be as rewarding and deeply pelasurable as was The Bourgois Virtues, and I hope discussion of it will be forthcoming on this blog (hint, hint).

Jonathan B. Wight

 Inside Job (2010) is a new documentary that exposes the seamy underside of the financial bubble and its bust.

 What’s different here from other revelations of skullduggery is that academic economists take a lot of the heat—and a sharp jab is aimed at the alleged ethical misconduct of economists.  Aside from the usual suspect—the ubiquitous Larry Summers—this movie also castigates two big names:  Fred Mishkin and Glenn Hubbard, both at Columbia’s Business School (where Hubbard is Dean). 

 These are both highly admired economists who have served their country—Mishkin as a Fed governor and Hubbard as Council of Economic Advisors leader.  And both men could have made a lot more money on Wall Street had they desired.  Both did take consulting assignments from financial markets—and that’s where the movie kicks in. 

 According to the movie, Mishkin took over $100,000 in consulting fees to write a glowing report about the financial market takeoff in Iceland, including a statement about how well the banks were regulated.  Of course, in hindsight, we know that Iceland’s three major banks were grossly over-leveraged and took very big risky and soon came crashing down.  When confronted on screen, Mishkin had a completely lame answer: he said he simply “trusted” the central bank of Iceland.  He stammered horribly when he was asked why the information that he’d been paid by the government of Iceland was never disclosed in his report, so as to warn of potential conflicts of interest.

 In a similar vein, Hubbard was slowly roasted.  He took great offense at his personal integrity being questioned.  Indeed, it appears the movie producers hijacked the interview, hitting Hubbard with personal financial questions without forewarning.  I did feel sorry for these individuals, who as far as I know are, and have been, upstanding citizens.  But Hubbard has also lent his name and been paid in the hundreds of thousands of dollars to companies seeking help with financial deregulation. 

 The point raised in the movie is compelling:  have academic economists sold out?  Is there too much money to be made peddling the ideology of laissez-faire?  Are there adequate ethical ground rules in place?

 John Campbell, Harvard’s Chair of the Department of Economics, also stumbled badly when asked if there were any conflict of interest regulations regarding outside consulting fees and full disclosure. If a doctor were being paid hundreds of thousands of dollars by a drug company, should that information be disclosed to patients when the doctor prescribes that drug?  Hubbard was adamant about NOT disclosing his private consulting gigs, even when they are financial market related and he was an architect of Bush’s financial deregulation team. 

 Inside Game is beautifully filmed and raises troubling questions about the big elephant in the room: namely, should economists ascribe to an ethical code of conduct?

Mark D. White

Today The Wall Street Journal printed my letter in response to a recent piece by Tim Wu (linked below), in which I reiterate an argument from my paper providing a Kantian critique of antitrust (from the Journal of Private Enterprise):

A Free Market Means That It's Free for All

Tim Wu, in his Nov. 13 Review commentary "In the Grip of the New Monopolists," expresses surprise that free markets would lead to monopolies rather than vigorous competition. But that would imply that the word "free" in free markets refers to a result (of textbook-style "perfect competition") rather than a process (of voluntary exchanges between buyers and sellers). Understood correctly, the free market may result in a dizzying array of outcomes, but all of them derive from an institution that respects the free choices of all participants in the market—even if those choices are in support of (transitory) monopolists such as Google or Facebook.

(For more on transitory monopolies, see Liebowitz and Margolis' excellent book, Winners, Losers & Microsoft.)

Mark D. White

In the December issue of The New York Review of Books, Ronald Dworkin discusses (alongside Mark Lilla, David Bromwich, and Jonathan Raban) the recent midterm elections in the U.S. that saw the Republican party reclaim the House of Representatives and shrink the Democratic Party's majority in the Senate. (The piece appeared earlier this month on the NYRBlog.) While I won't get into the politics of his essay, I want to address his introductory comments (emphasis mine), reminiscient in spirit of Thomas Frank's book What's the Matter with Kansas?:

The results of Tuesday’s election are savagely depressing, wholly expected, yet deeply puzzling. Why do so many Americans insist on voting against their own best interests? Why do they shout hatred for a health care plan that gives them better protection against calamity than they have ever had? Or stimulus spending that has prevented a bad economic climate from being much worse for them? Or tax proposals that lower their own taxes by raising taxes on people much richer than they will ever be? Why do they vote in such numbers for the party favored by the bankers and traders who brought on the economic catastrophe?

Putting aside the validity of Dworkin's assertions regarding the past and future effects of the policies of the previous two years, I'll answer the bolded question with a question (or two) of my own: Why do so many intellectuals assume to know what voters' best interests are? Why not, instead, give voters the benefit of the doubt and understand their electoral choices as reflecting their actual interests, which may in fact be more complex, subtle, and nuanced than the ones assumed for them?

Readers of my previous posts and published work on "libertarian paternalism" may recognize a familiar thread in this, as the idea of "nudges" similarly reflects a disregard for the actual interests of persons and substitutes outsiders' own judgments for them. But furthermore, entire classes of interests are often summarily dismissed--namely, noneconomic ones.

For instance, in the above passage Dworkin only mentions economic factors that he feels "should have" led voters to choose Democratic candidates over Republican ones. But even if voters agreed with the Deomcratic candidates (or party) on economic issues, they may have disagreed with them on the war in Afghanistan, same-sex marriage, abortion, gun control, or any number of issues that don't directly impact their pocketbooks, but which may nonetheless be of great importance to them.

Does Dworkin really want to look down on voters because they didn't hue to what (he assumes) to be in their narrow, economic self-interest? Is that what he (and similarly-minded people) would actually rather have voters do? Of course, many voters presumably disagreed that the policies of the last two years are actually in their economic interests, and arguments along those lines will continue into perpetuity, with reasonable people on both sides. But more broadly, I'd like to think that not all voters make their choices at the ballot box purely according to the effects of policies on their personal finances, and that some are willing to sacrifice some financial well-being to support policies that (whether I agree with them or not) they think are right for the country.

Mark D. White

Continuing our chapter-by-chapter preview of Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems (which is now available), we come to Chapter 6 by Robert F. Garnett Jr., entitled "Philanthropy and the Invisible Hand: Hayek, Boulding, and Beyond." (If you missed them, here are links to the previews of the chapters by White, Meadowcroft, Gwartney and Connors, Baker, and Blevins, Ramirez and Wight, as well as the book's preface.)

Garnett's chapter discusses the dismissive approach that economics has taken to philanthropic giving, which he links to the "Adam Smith Problem":

The pervasive neglect of philanthropy in economic theories of commercial society is the mark of an enduring “Adam Smith Problem” (ASP), both in the classical sense described by Oncken and the modernist version of the ASP that took root after World War II. Professional economists in the 1940s, 1950s, and 1960s, inspired by the rise of national income accounting and general equilibrium theory, embraced a modernist image of the market economy (or the mixed economy of markets and government) as a machine-like system. ... Economists came to regard markets and commerce as the generative core of economic life (potent, efficient, systemic), in contradistinction to charity and other forms of philanthropic giving, which were seen as outmoded, inefficient, and ad hoc. (pp. 111-2)

Garnett brings two of the most important economists of the 20th century to bear on addressing this problem:

To better understand the contours and significance of the aforementioned Adam Smith Problem, this chapter examines its treatment by two pioneering economists of the post–World War II period: F.A. Hayek and Kenneth Boulding. Notwithstanding their philosophical differences, I find that Hayek and Boulding share a similarly dualistic view of the commerce/philanthropy relationship. In other words, both partake of the modern ASP. At the same time, their respective approaches offer valuable tools and suggestions that can assist us in seeking to extend the reach of Smith’s invisible hand to include philanthropic motives, actions, affiliations, and processes. The final section outlines a strategy for mobilizing the resources of Boulding, Hayek, and other post-Walrasian economists to reintegrate philanthropy into the economic conversation of commercial society. (p. 113)

Among Garnett's many insights is this one (which in particular speaks to me; emphasis mine):

To overcome the dysfunctional separation of philanthropy from the invisible hand, we must recognize that their fraught relationship stems from a lingering Adam Smith Problem and continue to actively rethink the monist notions of self and economy that gave rise to this ASP in the first place. Stated positively, we must develop cogent, pluralistic conceptions of economic life, particularly the plurality of human motivations and institutional processes that characterize every real-world economy. (pp. 125-6)