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July 3, 2005

Economics -- Science vs Ideology

-- by Dave Johnson

In the post Are you experienced? Dare to use what you know, Liberal Street Fighter's shirah writes about the gap between right-wing economic theory, and what people actually do.

The econ-talk reigns supreme despite the fact that we now have an abundance of evidence that fundamental parts of the theory do not work out in reality. The laboratory that has tested some economic experiments has been whole countries. Others are being tested at the most minute levels. Al Roth at Harvard has been a leader in testing economic theory.

Many of these experiments show that a basic tenet of economics - selfishness - does not explain behavior and choices, even economic ones. They find that humans - and some primates (our relatives) - act based on kindness, fairness, reciprocity, and community needs.

Finding that people are motivated by fairness, reciprocity, and communal needs is not surprising. We see people behave altruistically all the time - the fire fighers who rushed into the Twin Towers on 9-11 are not an aberration. So in this case our experience should at least push us to challenge what econ-talk tells us.

(Those paragraphs were full of links and you have to go to shirah's post to click them.)

I like to say that science is supposed to DEscribe what happens, while ideology says, "if only people would do so-and-so, such-and-such would happen." Some of my favorite examples are the idea that lowering taxes causes the economy to grow. But history shows the opposite! Clinton, for example, raised taxes and the economy soared. Reagan cut taxes and the economy plunged into recession. Then, when taxes were increased because of the increasing deficits, the economy picked back up.

Which reminds me. Did you see what Doonesury had to say about bloggers today? Apparently "If the market really valued what you have to say, wouldn't someone pay you for it?" Well, I hope "the market" doesn't like what I have to say, because I don't have good things to say about reducing humanity, personality, intellect, spirituality, culture and values to "markets" -- one-dollar-one-vote systems that reduce people to economic cogs and values them according to what goods they produce or consume, and how much they can do to make a few rich fucks richer.

Posted by Dave Johnson at July 3, 2005 3:30 PM

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Comments

Bless you for this post!

I often feel the REAL divide in society is between those who have an attitude of inclusion, cooperation, and sharing, and those who have an attitude of "me first before everyone else", much more than between Progressives and Conservatives. While it is probably true that more Democrats than Republicans have an inclusive attitude, there are certainly plenty of sharing-oriented Republicans, and self-serving Democrats.

Unfortunately the "me first" crowd seems to take every opportunity to manipulate and divide, to gain further power. While many of us, after Sept. 11th, sensed an incredible opportunity for the whole world to draw closer together, finally, some in Washington saw it as an opportunity to advance their own self-centered interests.

It seems to me the human race is painting itself into a corner, where business as usual is going to become increasingly impossible. Then we will have to collectively decide whether people will help each other get through it all, or whether the strong will bury the weak.

Posted by: stvwlf at July 3, 2005 6:29 PM

I could say exactly the same thing about left-economics (socialism) and that would be an understatement. Socialism is the God that failed, and took over 100 million non-combatants in it's wake, but you guys are still pushing the same ol' thing.

And the science you cite is not describing, it is data (and remember one of the central tenets of science is falsification of theories, even ones that have popular acceptance [see lysenkoism]), it may come in the future that this study is false or is flawed in some way (like it only applies to small groups of primates, not humanity as a whole)

Posted by: Pericles at July 4, 2005 12:43 AM

Selfishness is not a tenet of classical economic theory, but rather individual rationality. Rationality and cooperation are not mutually exclusive and 100% rationality isn’t needed for economic analysis to yield insight into issues. The extent of cooperation orconsideration of self-interest depends on context.

Posted by: astralcars at July 4, 2005 4:14 AM

What astralcars said. Everyone hear should pick up Adam Smith "The Wealth of Nations" and really read what Classical Liberal economics means. It means that society works best when people are primarily guided by the rational self-interest; but rational self-interest does not exclude seeing to community needs, in fact in some ways it necessitates it. Think about it, if I am a newspaper editor I want to have a large pool of talented educated talent, so I do not have to settle on someone who happens to be lucky enough to be literate, and can pick the absolute best candidate. To this end, I will support an education system, not out a sense of "sharing" but out of rational self interest. But, these community considerations are not far-ranging but are limited.

Posted by: scottm at July 4, 2005 4:29 PM

Bradblog has the comic here:

http://www.bradblog.com/archives/00001516.htm

What happens when we don't use a little socialism in the free market is that the free market can't even pay companies to do business with it:

http://www.cbc.ca/cp/business/050630/b0630102.html

Other places invest in their people. That helps business.

Our country only pays off business. Business takes our money and hires people who have been invested is elsewhere.

Posted by: grannyinsanity at July 5, 2005 10:52 AM

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