Monday, October 24, 2005

The Angry Economist & me

The Angry Economist enjoys applying the iron fist of economic sense to a plethora of issues, with the chief aim of undermining the "leftist strategies [that] are the cause of our current problems".

However, his expositions of contemporary conservatism are extremely well argued and typify the seemingly dispassionate rationalism of the right that leaves lefties red-faced and fuming. Our thanks therefore goes to Mr Nelson for inspiring this blog, whether or not he will regret it remains to be seen.

To kick things off, a recent post gives a compact argument about how private sector is better than public at the efficient management of resources. This adage has been around since the beginning of economics itself; most famously expounded by Nobel laureate Milton Friedman in his calls to 'starve the government'.

However, he has touched only tangentally on the truth. Let us assume that a private sector employee, with hopes of career advancement and rising salary, is good at making profit for his company. Public sector employees are not so good at making profit. Their career advancement, we hope, is through competency in his chosen office. Any differential in competency we can put down to lower wages and fewer opportunities for promotion in the civil service (although the latter is changing).

However, let us underline that the private sector is there to make profit. All other aims are subsumed to this one ambition. As a result markets created through privatisation (wholly/fully) will have a structure to further this end. This will maintain no matter how many government regulations/targets/inspections are carried out. For services such as education and helathcare this is an extremely worrying prospect. The only antidote to such a situation is so much government monitoring so as to make efficiency gains questionable.


Russell said...

So far I'm unimpressed. You don't seem to like economics so you're proposing that the world should work some other way. Unfortunately, economics doesn't force the world to work a certain way; economics (good economics at least) describes the way the world actually does work. If you don't like that, then you don't like how real people behave.

My fist of flounce said...

Russell, there are also many views of the way the world works and therefore many approaches to how economics is done. The views expressed on your blog (angry economist) take one side of an extremely broad discipline, and express a rather narrow view of human behaviour: one that is rational, profit motivated and treats economic agents as if they exist outside the social sphere. So who is more guilty of forcing the world to look a certain way?

The Pedant-General in Ordinary said...

"and express a rather narrow view of human behaviour: one that is rational, profit motivated and treats economic agents as if they exist outside the social sphere.

Huh? And that is a criticism? WTF?

I infer from this that your results derive from treating humans as irrational. That, obviously, will give robust results upon which conclusions could be drawn and actions planned. Oh damn, sorry, that would be rational.[/sarcasm]

My fist of flounce said...

I suppose it depends on your definition of robust

Anonymous said...

So far I'm unimpressed

Agreed. Fluffy is discarding economics whenever it gets in the way. So far I've seen a good deal of leftist thinking. For example the old chestnut of "All other aims are subsumed to this one ambition [profit]" and that this should self-evidently be a source of concern. Riiight. A case, I think, of the dangers of a little knowledge but not a lot.

My fist of flounce said...

1.You're quite right about the little knowledge thing. It's great to have a blog like this so I can stand routinely corrected on points of error.

2. I do find the pursuit of profit a source of concern. While it acts as apowerful incentive to innovation and creativity, we should not be so naive to think that all social goods are served in their pursuit. There are many economists who agree, eg Margeret Somers, JK Galbraiith. This particular line is actually a rip off from Karl Polanyi's 'The Great Transformation' : a compelling account of how society structures itself according to market needs.

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