Quote of the Day: Blaming Bad Outcomes on Bad People rather than Bad Institutions

And yet: how often do you hear people saying that we need to vote the bums out and replace them with the wise, the virtuous, and the incorruptible? How often are people shocked (SHOCKED!) that politicians respond to incentives? How often do people treat systemic institutional failures as if they are individual moral failings by people who are of virtue insufficient for their office? How often do we blame bad outcomes on "bad people" rather than "bad institutions"?

This is from Professor Art Carden at the Econolog (Library of Economics and Liberty). 

The blaming “bad people” phenomenon represents what I call as “personality based” populist politics.

And related to this topic a suggested read is from The Freeman's debunking of one popular statist myth or the Clichés of Progressivism #17 – “All We Need Is the Right People to Run the Government”

Video: Should the Government Subsidize...Silly Walks?

At the Learn Liberty, Professor Art Carden talks about the essence of government subsidies

Quote of the Day: Market Failures Does Not Justify Government Interventions

Market failure is a tricky topic even for professional economists. And when non-economists raise the examples of market failure that we discussed here, matters become even trickier. Not only do all of these terms have technical meanings that often do not match what the non-economist thinks the terms mean, but most non-economists also are unaware of the various criticisms that have been raised in the literature on these topics. Most important, non-economist critics of the market are frequently unaware of the comparative institutional analysis that public choice theory has made a necessary part of thinking about the role of government in the economy. Pointing out imperfections in the market does not ipso facto justify government intervention, and the only certain way that market "failures" are "failures" is by comparison to an unreachable theoretical idea. Market imperfections are not magic wands that make market solutions and government imperfections disappear. Real understanding of comparative political economy begins rather than ends with the recognition that markets are not always perfect.

This is the conclusion of Professors Art Carden and Steve Horwitz at the Econolog in discussing why so-called market failures in the context of externalities, public goods, asymmetric information, and market power (or monopolies) represent as “necessary—but insufficient—conditions for intervention to be justified”.

Video: Art Carden on Government Intervention (The Story of Broke Response)

Professor Art Carden talks about the basics of government interventionism in the splendid educational video below.


From learnliberty

Prof. Art Carden responds to "The Story of Broke" (http://bit.ly/LLStoryOfBroke), a recent video by the creators of "The Story of Stuff." In "The Story of Broke," Annie Leonard claims that the government isn't actually broke. Rather, the government just wastes resources on the wrong things like subsidies to the dinosaur economy and war. She claims that the government should change its ways, and instead, subsidize firms that will bring us the future we really want.

Art Carden agrees with Leonard that war and subsidies are wasteful, but is skeptical of notion that there is one unified vision for the future. To Carden, everyone has a different vision for the future. Our path to the future, he argues, is determined by the interactions of billions of unique individuals pursuing their own objectives.

Additionally, Carden questions Leonard's distinction between bad subsidies and good subsidies. Every subsidy, deemed good or bad, must be allocated through the political process. Lobbyists and special interests exert a large degree of influence on political decisions, and they use this power to direct subsidies in their own favor at everyone else's expense.

Carden concludes that government spending won't buy a brighter future. A brighter future will emerge when people are allowed to spend money on things they care about. Put another way, positive change will come from billions of people cooperating freely and voluntarily with one another, not from pushing trillions of dollars through a broken political process.

Video: Economic and Political Roles of Chain Stores

LearnLiberty.org presents another great educational video. Professor Art Carden explains the economic and political roles of chain stores to our society.

From Learn Liberty,

Are chain stores good or bad? According to prof. Art Carden, there are reasons to both like and dislike chain stores. The reasons to like chain stores include their ability to lower prices, increase variety, and reduce uncertainty. However, chain stores also do things to dislike such as pursuing special government privileges like subsidies and eminent domain.

Essentially, when chain stores respond to the incentives of the market, they create wealth for society. On the other hand, when chains stores respond to the incentives of the political process, they often produce detrimental effects for society.

With the Philippines hosting 3 of the top 10 largest malls in the world (2009), the above discussion seem quite apropos

Video: How Wealth Is Derived From Mutually Beneficial Free Trade

Trade is human action: we do this everyday with the aim at attaining better life and live past self sufficiency which characterized the lives of our primitive ancestors.

Trade today is mostly voluntary, it is done by individuals at the community level or provincial or regional or at the national level. The difference in the trading environment depends on the degree of trade freedom, which are mostly shaped by the governing political policies.

Because trade appears as a mundane activity, its manifold benefits seem as hardly sentiently appreciated by the public. In short, the benefits of trade are frequently underappreciated.

And when trade is framed as an aggregate, i.e. substituted with statistics and accounting figures, trade becomes subject to waffling political talking points, and importantly, loses its human touch. Trade, then, becomes subject to acrimonious disputes, many of which results to perverse laws that curtails trade--and prosperity.

The following video, from LearnLiberty.org, presents Professor Art Carden who discusses the basics of free trade from the perspective of the LAW OF COMPARATIVE ADVANTAGE (also known as the law of comparative costs) and how free trade leads to prosperity.

Comparative advantage deals with achieving efficiency out of relative opportunity costs or according to wikipedia,

In economics, the law of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party. It is the ability to produce a product with the highest relative efficiency given all the other products that could be produced.

9 Principles of Economics

At the Mises Blog, Art Carden lays out the 9 foundations of economics:

1. People Act.

2. Every Action Has a Cost.

3. People Respond to Incentives.

4. People make decisions at the margin.

5. Trade makes people better off.

6. People are Rational.

7. Using markets is costly, but using government can be costlier still.

8. Profits tell businesses that they are helping others, while losses tell businesses that they are wasting resources.

9. We shouldn’t ignore the long-term and unintended consequences of policies and actions.

Read Mr. Carden's explanations here.