George Stigler vindicated: Learning the Wealth of Nations
14 Nov 2014 Leave a comment
in constitutional political economy, political change, politics - Australia, politics - New Zealand, politics - USA, Public Choice Tags: george stigler, Leftover Left, Milton Friedman, neoliberal conspiracies, public choice, Twitter left, Tyler Cowen
Tyler Cowen has drawn attention to a 2011 paper on policy learning in the 1970s and 80s by Francisco J. Buera, Alexander Monge-Narajo, and Giorgio E. Primiceri was published in Econometrica in 2011. Their paper found that:
1. Policymakers have priors about how good the market economy is, and they revise those views — and thus revise policy — as they observe their own growth results and those of their neighbors.
2. A simple learning model predicts about 97% of the policy choices observed in the data. The model accounts for more than 77% of the observed policy switches over a three-year time window.
3. Evolving beliefs — and not just the fixed demographic characteristics of countries — are critical for understanding policy decisions.
4. It was probably the growth collapse of the late 1970s for interventionist countries which led to a greater reliance on markets.
5. Adjustment toward better-performing policies is often quite slow. In part this is because policymakers attribute the superior performance of other countries to heterogeneity rather than policy per se.
This record of politicians learning from failure and success at home and abroad is a vindication of George Stigler’s views of the relative unimportance of economists in influencing public policy.
There was no neoliberal conspiracy that captured the hearts and minds of politicians through mass hypnosis in the 1970s and 1980s as both the Left over Left and the Twitter Left like to suggest
The policies of Friedman had to wait, as George Stigler predicted, for a market to develop among interest groups and the voting public. Once that market developed, Milton Friedman, FA Hayek and others looked like leaders of an opinion.
A few years earlier, Friedman and Hayek were just angry men in the wilderness.
The reason for this sudden change in their public profile and purported influence on the shape the course of public policy in th 1970s and 1980s onwards was political parties were yet to conclude that the existing policy regime had failed irretrievably, and that the successes of neighbours on economic reform might be worth imitating locally.
Once politicians, the voting public and interest groups concluded that new solutions are needed, just as Stigler predicted, the ideas for reform been around for a long time came to the front.
via http://marginalrevolution.com/marginalrevolution/2014/11/learning-the-wealth-of-nations.html
Buchanan and Tullock on the rise of bourgeois virtues in the private and public sectors
05 Nov 2014 Leave a comment
How on earth did this guy get to become French Minister of Finance? Shades of Roger Douglas?
28 Oct 2014 Leave a comment
Piketty on inequality: views of the IGM economic experts
16 Oct 2014 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, discrimination, economic growth, entrepreneurship, gender, human capital, income redistribution, industrial organisation, labour economics, Marxist economics, Rawls and Nozick Tags: Daron Acemoglu, James Robinson, Piketty, poverty and inequality, The Great Enrichment
Question: The most powerful force pushing towards greater wealth inequality in the US since the 1970s is the gap between the after-tax return on capital and the economic growth rate?
Daron Acemoglu and James Robinson have a simple explanation for why Piketty is wrong:
But like Marx, Piketty goes wrong for a very simple reason. The quest for general laws of capitalism or any economic system is misguided because it is a-institutional.
It ignores that it is the institutions and the political equilibrium of a society that determine how technology evolves, how markets function, and how the gains from various different economic arrangements are distributed.
Despite his erudition, ambition, and creativity, Marx was ultimately led astray because of his disregard of institutions and politics. The same is true of Piketty.
Legal Systems Very Different from Ours – David Friedman’s forthcoming book
14 Oct 2014 Leave a comment
in comparative institutional analysis, constitutional political economy, David Friedman, law and economics Tags: comparative economic analysis, comparative law, David Friedman, law and economics, Legal systems very different to ours
The central idea of David Friedman’s forthcoming book on legal systems of different societies is they face similar problems and solve them, or fail to, in an interesting variety of ways.
Looking at a range of such societies and trying to make sense of their legal systems provides a window into both problems and solutions, useful for the general project of understanding law—in particular but not exclusively from an economic point of view—and for the narrower project of improving it.
Unlike the usual course in comparative law, he did not look at systems close to ours such as modern Civil Law or Japanese law. Instead, Friedman examined systems from the distant past (Athens, Imperial China), from radically different societies (saga period Iceland, Sharia), or contemporary systems independent of government law (gypsy law, Amish).
System Chapters
Icelandic Law
18th c. English Criminal Law
Gypsy Law
Chinese Law
Athenian Law: The Work of a Mad Economist
Jewish Law
Islamic Law [Recently Updated]
Plains Indian Law
Puzzles of Irish Law
Amish Law
Somali Law [Recently Updated]
Commanche, Kiowa and Cheyenne: The Plains Indians
Thread Chapters
Enforcement Mechanisms: Civil, Criminal, And Lots More
The Incentive to Enforce: What and How Much
Embedded and Polylegal Systems
God as Legislator
Making Law
Guarding the Guardians
His Class web page is based on Student Papers from the SCU Seminar
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