So just quickly, these (here and here) posts by Steven Horwitz and David Kramer respectively got me thinking about the incentives economists face.
Now, I don’t really feel like getting into this, but, most libertarians tend to make the assumption that economics and other scientists (especially those working in the social sciences) respond to the incentives that are created by government monopolization of higher education by shifting their views, specifically, in favour of government.
Just quickly, I don’t think this is true and where it is true I don’t think it’s the whole story. Empirically it doesn’t really deal very well with the fact that economists tend to be the more liberal than most other scientists (social or natural scientists).
And the evidence seems to bear this out, in academia, Keynesian macroeconomics seems to have been replaced in academia by neoclassical economics. The latter, whilst not entirely relevant is far more logically rigorous than the former. In the political sphere where rationality is not so highly valued, Keynesian economics and otherwise discredited ideas seem to be far more prevelant.
So, if intellectual dishonesty doesn’t explain why neoclassical economics is prevelant, I think the following answer to the puzzle is far more tenable:
Now, this large introduction is sort of a long tangent. Clearly there are some cases in which economists have responded to the incentives they face and favoured the policies of their (potential) employers (think Greenspan).
The point is that presumably Austrian economists should also be responding to incentives. Unless one considers Austrian economists as acting “irrationally” and ignoring the incentives, this shouldn’t really be ignored. Now, some economists within this tradition will face incentives largely the same as those faced by mainstream economists and here I’m thinking of the scholars who interact with the larger economic community (Lachmann, Hayek, Mises, Kirzner, Klein, Boettke, Horwitz et al).
On the other hand, there are some who clearly conduct themselves in a different manner to almost all other scholars. In the case of Kramer this is fairly easy to understand, he’s not a scholar he isn’t under the same pressure to produce reliable, unbiased information. On the other hand, somebody like Hoppe should, on its face, face the same incentives.
Taking Hoppe as an example (since he’s probably the most extreme case, there are others). I think we can explain a lot. Most of the demand for mainstream economics comes from educated, intelligent scientists who demand the work to enrich their knowledge. On the other hand, people who demand the work of scholars who work outside the mainstream are often less educated and have less of an interest in science and demand the work for largely political purposes (think of a lot of socialist economics that is just really poor stuff). I’m guessing that in no small part the utility derived from consuming such works comes from the reinforcement it provides for already held beliefs.
Now, back to Hoppe, when he make statements such as “Gary Becker is an intellectual criminal” or “Don Lavoie is on LSD” or “Hayek is a [social democrat/ positivist/ statist/ sloppy thinker]”, and when he puts forth poor but appealing (to some) arguments for libertarianism he’s really just filling a niche. People read the work of Hoppe because he’s allegedly “radical”. When he (or any other libertarian) makes such comments they’re showing that they’re willing to incur large costs (marginalization) in order to reach what the consumers of his products consider to be “the truth”. In other words, he’s pandering to their irrational biases.
As a final note, if you can’t control your emotions or want to start slinging mud don’t post here.
Edit: I realize there’s nothing really new here, I just want to emphasis the point that the assumption people here make about libertarians being morally and intellectually superior isn’t very realistic.
secondly, its easy to make bold claims when you paint in broad brushstrokes.
now, there are plenty of private scientists who are Researching and Developing, whose discoveries and inventions make $$ the truer and more practical they are. and then there are public ‘scientists’ who are rewarded if politicians like what they hear.
As a final note, if you want to seem arrogant and actually provoke immaturity : - write final notes.
Huh… these observations strike me as true but I don’t know how they square with my take on the typical MO of mainstream intellectuals.
It seems that politicians generally figure out what they want to do first and then figure out a “plausible” reason to do so. A famous example is Dick Cheney’s claim that there was no way we should invade iraq during gulf war 1, and then saying the exact opposite during gulf war 2. To continue with the gulf war 2 example, we started dropping bombs in the mideast first because of Al Qeada, then because saddam might have WMDs, then because Al Qeada/Taliban again, then because of democracy, and now because of the taliban again.
Obviously none of these are the real reason why. Its just something the mainstream latches on to for a few months to justify things.
I mean the emergence of keynesian economics kind of came with this new depression. During the bush years, while economics wasn’t talked about as frequently, I believe monetarism was more the norm. Keynesianism just kind of fits with what the gov wants to do now, which is to spend a lot of money etc etc. Reagan preached free market economics but obviously didn’t follow through on it; it was just smoke to give credence to what he was really doing.
Anyway, I guess my main clash with this post is that it seems to assume the long term co-development of the mainstream intellectuals and political agendas. I think that there is no development of the mainstream intellectual scene, since they seem to usually make it up as they go along, borrowing from schools that may have little or nothing to do with what is actually going on.
(I used “mainstream intellectual” for want of a better term. Obviously this is an oxymoron)
I’m studying to be a petroleum engineer at UT Austin. The department has received a 500 million USD grant from the federalis to do research on carbon sequestration, which is basically taking carbon dioxide from the air and injecting into the ground. The consensus among the professors working on this is that this will never be cost effective… but I guess the idea of getting rid of the CO2 forever is really what the politicians like to hear.
The primary reason is that scientists usually sell practical results that only someone tuned into the real world can produce. If a scientist disregards unpleasant evidence or scientific principles, his customers have the incentive to go elsewhere to get the practical results they want.
This is most likely true for scientists whose employment depends on the direct market response to their work, i.e. research personnel in chemical companies.
But this is not the group of people that libertarians criticize. Libertarians are concerned about people whose only market is the state, e.g. social scientists whose main “trading partner” might be social engineers, or tenured scientists who can pretty much teach their preferred ideology on the taxpayers’ dime. In my opinion, Caplan is dangerously oversimplifying the kind of incentive structures that scientists face.
Most of the demand for mainstream economics comes from educated, intelligent scientists who demand the work to enrich their knowledge.
And that’s an issue since an academic profession that largely exists for its own merit and whose customers are largely tax-financed members of that same profession will lack a proper feedback mechanism.
How do you evaluate the validity of a social scientist’s research when it can hardly be applied in the “real world”? Scientific journals. But what if the editors of this journal have preconceived opinions about the world which are never proven wrong due to the tenured, “stress-free” nature of their public research work?
In the political sphere where rationality is not so highly valued, Keynesian economics and otherwise discredited ideas seem to be far more prevelant.
Well, it seems that stock market investors and many financial experts trust anticyclical policies quite a lot. And these are the very people who are said to be concerned about rationality and the sound foundations of a scientific theory because they have money to lose.
Yet despite the repeated failure of Keynesianism in the real world, the “makers” have a tendency to get elated about announcements of stimulus packages and bailouts.
And while you could counter that investors pay to have their irrationality reinforced, that wouldn’t make the situation any better. In fact, it would mean that the group of people that has the most to lose is not inclined towards sound science either. So, politicians who face a bad incentive structure, public scientists who face a mixed incentive structure as well as businessmen who should face a good incentive structure can’t get it right. Whom are we to trust, then?
MBAs . Most of these folks are college educated, and as it has been pointed out that colleges don’t teach “rational” economic theories. Certainly not in the business school anyway. hah.
The unsound fiscal policies that the stock market should have been wary of were in fact feeding the stock market through cheap credit… so I think they had some reasons to just sit around being positive and making money while the party lasted.
Yes, but, there’s still some recoure to both the empirical record in economics and social science is general. Whilst there may be some difficulties of intepretation, the empirical record is pretty unambiguous. There was the 70s stagflation which helped discredit Keynesian thought, the fall of the USSR that in no small part brought socialism into disrepute and the unrivalled failure of foreign aid in Africa and the rest of the developing world.
So clearly there is some recourse to empirical evidence that puts a limit on what academics can say.
Ultimately, one’s reputation is a part of one’s “production function” in academia. If I’m persistently intellectual dishonest, I’m only going to damage myself. So yes, even in the social sciences Caplan’s point stands.
As he says:
There is a price to pay for irrationality even in the social sciences, so his point remains.
The fact that you posted it betrays the fact that you do.
Rather, that–without your strawman–they will tend to tell the government official who pay their salary what they want to hear in order to retain the salary. It’s called “knowing which side your bread is buttered–and where the butter comes from”.
I once heard a fascinating podcast from a Scientific American that was about evolution. During this podcast, the experts they had speaking on it stated very specifically how a science that seemingly has nothing to do with politics or social studies of any kind is influence by both.
Basically, scientists are limited by what they can say by the social ramifications of the information they wish to give: i.e., people of African descent are better at this type of work…
They can’t say anything along those lines, even if they have strong evidence backing it up. Only because of the moral impact that would occur because of saying that one people are in any way way better than another people. In this way, politics affects call sciences. Look at the environmental movement. The scientists funded by Al Gore always come up with results that show how catastrophic man’s impact is on the environment… but that doesn’t stop other researchers from finding ways to debunk him.
As an extension, an incentive to reach a certain conclusion could subjectively determine the results of studies or scientific research. A good friend of mine is a science nut, and is absolutely PO’ed about this particular subject.
I don’t know if this helps at all… it’s late… I should probably go to bed. LoL