Deirdre McCloskey interview

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On choosing the Bourgeois Deal behind the veil of ignorance

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Source: Deirdre McCloskey: editorials: Review of Michael J. Sandel’s What Money Can’t Buy:  The Moral Limit of Markets , New York: Ferrar, Straus and Giroux, 2012. Pp. 244 +viii. Index. by Deirdre McCloskey  August 1, 2012. Shorter version published in the Claremont Review of Books XII(4), Fall 2012

@NZGreens @nzlabour @uklabour @berniesanders bite a gift horse in the mouth when complaining about the ignorance of the average voter

Left-wingers do whinge about voters not understanding; about how if only the voters understood better their arguments than they do now. The Left thinks voters just keep getting it wrong.

They do not know how lucky they are. Rational ignorance and rational irrationality are a rich harvest for the policies of Labour and the Greens.

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Most of the policies of Labour and the Greens are premised on cultivating the rational irrationalities of voters. These lead to Bryan Caplan’s pessimism bias, an anti-market bias, an anti-foreign bias and make-work bias:

The evidence—most notably, the results of the 1996 Survey of Americans and Economists on the Economy—shows that the general public’s views on economics not only are different from those of professional economists but are less accurate, and in predictable ways.

The public really does generally hold, for starters, that prices are not governed by supply and demand, that protectionism helps the economy, that saving labour is a bad idea, and that living standards are falling.

Politicians mindful of re-election must pander to these four biases.

Fortunately, for the New Zealand Labour Party and the Green Party of Aotearoa New Zealand, voters have no rational reason to correct these four biases. Voters are rationally irrational. As each individual counts so little, why spend any time correcting biased political beliefs?

Anti-market bias: The tendency to underestimate the benefits of the market mechanism. The typical voter equates market phenomena such as profitability and interest as examples of unbridled monetary confiscations by ‘greedy’ businesses. This  biased against the market, despite all its successes, is a rich field to till for both Labour and the Greens

Anti-foreign bias: The tendency to underestimate the economic benefits of interaction with foreigners. This antagonism towards such trends as outsourcing employment overseas, or selling raw materials to faraway traders, is reminiscent of the mercantilism Adam Smith so brilliantly demolished but it still lives on today in the hearts of the voting citizenry. Labour and the Greens play to that bias shamelessly.

Make-work bias: The tendency to underestimate the economic benefits from conserving labour. Those who look to the visible face of job losses overlook the job gains (often by those who lost their jobs) to be made tomorrow in emerging industries. The Greens and Labour are sure-fire enemies of creative destruction.

Pessimistic bias: The tendency to overestimate the severity of economic problems, and to underestimate the recent past, present and future performance of the economy. In The Progress Paradox (2003), Gregg Easterbrook ridicules abundance denial:

Our forebears, who worked and sacrificed tirelessly in the hopes their descendants would someday be free, comfortable, healthy, and educated, might be dismayed to observe how acidly we deny we now are these things.

Many average voters seem to feel that Malthus was correct in diagnosing the allegedly poor prospects for the market economy.

Where would the voting base of the Greens be without a pessimism bias? They are professional pessimists and doomsday prophets from their earliest days. Labour assumes working class Tories are dupes of what is left of fading media barons such as Rupert Murdoch.