The level of discourse in policy-oriented economics papers is shockingly low. My pet policy issue is spectrum management (allocation of radio frequency ranges). Its a subject that lends itself to "neat" economic arguments. Ronald Coase wrote an instrumental paper in 1959 suggesting we should propertize spectrum and allow trading, which would lead to efficient allocations. It saddens me how many policy papers I see from "think tanks" that completely ignore the second part of that paper, as well as Coase's earlier work: the efficient allocation assumes that trading spectrum has negligible transaction costs. This works for say big TV stations in a city, not so much for say allocating spectrum for personal wireless devices. In my research for a seminar paper, I came across people who really should know better who ignored crucial features of the problem domain, ignored transaction costs, ignored considerations of lock-in, etc.
I'm tremendously skeptical of economics-based policy papers. A biologist works on a paper for years, and concludes that this kind of gene expression might be linked to this kind of nutrient deficiency. An economist at a "think tank" works on a paper for a fraction of that time and gives advice on how to structure a tens of billions of $ industry...
The basic problem is here in my perspective, that Think Tanks almost always subscribe to a specific line of thought and exist to promote this cause. While on the other hand less political motivated researchers are too much in love with constructing models, that nobody outside of their peer group understands and often come with questionable value for real life implications.
Possibly. I read some absolute drek as well in a U of Chicago symposium on the subject...
Re: think tanks, isn't it something that even in supposedly less rigorous fields like, oh English literature, such upfront results-orientation would be considered the badge of unserious scholarship?
No.In general you can expect such "results-orientation" from all sorts of researchers, both in think tanks and universities. You just accept it and apply appropriate skepticism.
And it's important to note that "appropriate skepticism" != "ignore everything they say". Just because a person is an advocate of a position doesn't mean their facts are wrong or their arguments are incorrect.
Most university researchers aren't so results oriented they take a job with an organization that has the explicit purpose of pushing a single agenda.
And yes, I generally ignore what people at think tanks say. Life is too short, and I prioritize the views of people whose credibility isn't compromised from step 1.
> Re: think tanks, isn't it something that even in supposedly less rigorous fields like, oh English literature, such upfront results-orientation would be considered the badge of unserious scholarship?
Nowhere near as fishy as how think tanks work, but how scientists and academics think about hypotheses is actually very complex and you'd be surprised at how often unserious scholarship is tolerated.
E.g. it's not uncommon to first write a paper and then tag on a hypothesis that just happens to agree with your conclusion, to change the hypothesis when your own research proves it to be wrong (it's hard to get research published about things that didn't work), or to try everything you can to prove a hypothesis, rather than to try and falsify it.
Surely you would need further experimentation to prove your new hypothesis, right? It doesn't seem very rigorous to just shrug your shoulders and publish a hypothesis that fits the data.
I like the saying, the economy does not need economist, just like evolution does not need biologists.
The things we talk about today are not really that diffrent from what Adam Smith argued for/against a couple hundert years ago. Today you have people like Stigliz arguing against markets with much more sophisticated models then the people that argued against Adam Smith. The people that argue against Stigliz use much better models too. So where does that leave us?
I conclude that we should let the market be the market and not try to influence it, its a far more complex thing then economist understand. Trying to influence in to one direction will probebly just cause ten more things that are unexpected. The market is not perfect, not even close, read Stigliz as a good example of this but I highly doute that the goverment can improve the end result in most cases. If you look at the pridictions of TOP economist at every time X, the are almost always wrong and you get some other people that get it right, these people are then wrong the next time.
I barly trust the goverment to do the easy things write, tweek a huge economy is far from easy.
I agree we shouldn't try to tweek the economy with government, but the corrolary to this is that we shouldn't then raise up economic arguments to keep the government from solving real problems.
Also, the knee-jerk cynicism about the effectiveness of government is misplaced. E.g. government funds about 1/3 of all R&D in this country (and it was as high as 2/3 in 1964). It is definitely not the least productive third of the R&D expenditures. We crow about all these advances in medical technology, etc, but many of those advances are the direct result of enormous NIH funding. Our world-leading universities get well over half their R&D funding from the government.
but the corrolary [sic] to this is that we shouldn't then raise up economic arguments to keep the government from solving real problems.
I disagree: The economic argument against price controls is a very good one, and it's completely valid and useful to raise against the idea when governments try to use them to "solve real problems".
Its kind of funny how even the few say 99% of economist agree on get disregared in politics. Sure price controls are not that common anymore but once a storm comes they are back. Ifs funny as economist would argue that, especially in situation like that a flexible price system is imprtend.
Seams to me the goverment does what it does and if the can find economist that agree with them then they are just happe they can clame that 'economist' agree with what there doing. They are not actually listening to them.
I agree that goverment funding things can be effective.
I have more of a problem with direct muddling like saving firm A or B, implementing ristrictions on trade, telling people what they can buy and what they cant buy. These things do not have to be discarded because of econmic reasing, these things have to be discard since the are plainly just goverment helping some people on the cost of others or just restring what people would want to do and are rational enougth to do.
I have some things I want to add to what you said. First and most importend is that you dont know what would have been devloped if people where taxed X% less instead of the goverment investing it. Second I think meassure what R&D is in a economy is very hard to say. Many thing just get evolutionarly better and that does not have to happen in R&D.
Third I would say that goverment funding universitys and things like that is something diffrent from a goverment burocracy. The universitys have other insentive to prudce good results, so do the comanys competing for grants. So I do think that goverment spending on reasearch is one of the best things goverments does.
> Third I would say that goverment funding universitys and things like that is something diffrent from a goverment burocracy.
Most of the size and scope of at least the federal government is things like this, not bureaucracy. The federal civilian payroll has held steady at 1.8-2.2 million since 1960, and payroll expenses account for less than 5% of the budget.
This argument applies equally well to most things.
Defending a country is a hugely complicated mess, and moving battleships over here is going to have ramifications over there. Policing society is difficult and complicated - we try to cut down on crime by targeting something over here, and it causes problems over there.
Clearly, we should call the whole thing off, and allow international affairs and society take care of themselves - all the way through invasions and murder?
Evolution doesn't need biologists, but people who need to make decisions dealing with the consequences of evolution on epidemiology sure do!
> This argument applies equally well to most things.
Well you uncoverd the reason to why I belive, what I belive.
> Evolution doesn't need biologists, but people who need to make decisions dealing with the consequences of evolution on epidemiology sure do!
I agree but the question is not if we plan and make dicisions, the question is who makes the plan and dicisions for who.
> Defending a country is a hugely complicated mess, and moving battleships over here is going to have ramifications over there. Policing society is difficult and complicated - we try to cut down on crime by targeting something over here, and it causes problems over there.
> Clearly, we should call the whole thing off, and allow international affairs and society take care of themselves - all the way through invasions and murder?
Well I actually agree that we should let society take care of that (Not trolling I actually agree).
The most broken down version of such a, for a advanced economy would be this (20 min video):
How to provide law and police without state: https://www.youtube.com/watch?v=jTYkdEU_B4o
Stats of Anarchy (or self goverments) or something close to it is one of the hot subjects in development economics. About half of the world stats are failed or almost failed states, these are states that do not have the power to efficently do what a policy and law system would do in a first world country. So there most be something else going on, why do the work as well as they do and people are not killing each other all the time.
This paper was quite influential:
"Assume Anarchy? Why an Orthodox Economic Model May Not Be the Best Guide for Policy." Raghuram Rajan (Director of the IMF’s Research Department)
Im not saying that I can prove that the institutonal structure discribed in the videos above (and the reaseach of all the people) would work they way I would want it to but I do think it has potential to improve on democracy.
Im happy when people dont laught when you tell them about it. Somebody beeing 'more than a bit skeptical' is quite a step up.
I would point you to everything by David Friedman and Peter Lesson. I think they have done the best work in that area.
Edit: If you have questions, the reddit Anarcho Capitalist Subreddit is quite civil as far as reddit goes. So if you have questions you might want to ask there, r/anarcho_Capitalism.
I suspect, just like spectrum allocation, the issues regarding peering/routing agreements between telcos/ISPs are also not new and it's probably been proven from a number of angles that everyone is better off if they find a way to cooperate.
Nah, Comcast is better off not cooperating. The cost for a consumer oriented site of being cut off from 19M customers in the US is huge, so they have a very strong bargaining position.
I'm tremendously skeptical of economics-based policy papers. A biologist works on a paper for years, and concludes that this kind of gene expression might be linked to this kind of nutrient deficiency. An economist at a "think tank" works on a paper for a fraction of that time and gives advice on how to structure a tens of billions of $ industry...