Lately on his blog Gene Callahan has been lamenting the free-market economist’s tendency to reduce all human choices to economic ones. First Gene was horrified at a recent argument in defense of allowing monetary payments for adoption, but then Gene switched his target to this passage from Mises in Human Action:
“All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference.”
Gene was saying this is clearly not the right way to look at people, because it would mean (for example) that we have to picture Jesus saying to Himself, “Well, I certainly have a great absolute advantage at producing loaves and fishes. And I do think that Galilee offers tremendous opportunities for opening a chain of loaf and fish stores. On the other hand, just how much utility will I really gain from that whole ‘dying on the cross’ business?””
I have a few responses:
==> Gene is quite obviously mischaracterizing Mises’ position when he (Gene) says in his first volley that Mises “famously treated moral choices as just another species of economic choice.” No, Mises didn’t do that at all; Mises explicitly denied that he was doing that.
==> If you don’t take my word for it, take the word of this guy in his book popularizing Austrian economics:
school of economics, often referred to as the Neoclassical
School, seems to describe people behaving in ways that
are hard to relate to the human activity we see around us
every day. The textbook humans seem robotic, rigidly obeying
a set of equations that “maximizes their utility” based on
a set of parameters. The equations themselves are said to
“cause” supply and demand to meet at an equilibrium price—
one that sets the quantity demanded equal to the quantity
supplied. What place do humans have in such a system of
equations? It seems difficult to relate those mathematical constructs
to the world in which we live. How is the idea of man
as a utility equation solver relevant to an Islamic revolution,
to Mother Teresa, to Jimi Hendrix, or to your own decision to
take a vacation that you “really can’t afford,” but really need? [p. 11]
The Austrian School of economics is an alternative to the
mainstream approach. It places economics on a sound, human
basis. It avoids the traps that plague most of modern economics:
the assumption of selfishness as the basic human motivation,
a narrow definition of rational behavior, and the overuse
of unrealistic models. [p. 12]
Although we often use profit to refer to monetary gain, it
also has a wider sense, as in, “How does it profit a man to
gain the world but lose his soul?” We perform all of our
actions, whether buying a stock or retreating to a mountain to
meditate, with an eye to profiting in this psychic sense. As the
above quotation indicates, if we choose to lead a pious life in
poverty, it is because we expect the end result to benefit us
more than the cost of surrendering the pursuit of worldly
goods: we expect to profit from the choice. [p. 24]
Austrian economics does not attempt to decide whether
our choice of ends to pursue is wise. It does not tell us that
we are wrong if we value a certain amount of leisure more
than some amount of money. It does not view humans as
being only worried about monetary gain. There is nothing
“noneconomical” about someone giving away a fortune, or
turning down a high-paying job to become a monk. [p. 25]
The question of whether or not there are objective values
does not concern economics. Again, that should not be taken
to mean that Austrian economics is hostile to any religion or
system of ethics. I personally know of Austrian economists
who are Catholics, atheists, Orthodox Jews, Buddhists, Objectivists,
Protestants, and agnostics, and, if I only knew more
economists, I’m sure I could mention Muslims, Hindus, and so
on. Economics should, quite properly, leave comparing values
to ethics, religion, and philosophy. Economics is not a theory
of everything, but simply a theory of the consequences of
choice. In studying economics, we take human ends as an
ultimate given. People, somehow, do choose ends and do act
to pursue them. The goal of our science is to explore the
implications of these facts.
Mises said in the introduction to Human Action:
“Choosing determines all human decisions. In making
his choice man chooses not only between various
material things and services. All human values
are offered for option. All ends and all means, both
material and ideal issues, the sublime and the base,
the noble and the ignoble, are ranged in a single row
and subjected to a decision which picks out one
thing and sets aside another. Nothing that men aim at
or want to avoid remains outside of this arrangement
into a unique scale of gradation and preference. The
modern theory of value widens the scientific horizon
and enlarges the field of economic studies.” [p. 26]
==> Continuing with the above-quoted author’s idea to look at Scripture where obedience to God is treated as “economic,” consider this verse: “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. 20 But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. 21 For where your treasure is, there your heart will be also.”
==> More generally, I think it is wrong to compartmentalize our actions, as Gene–following Collingwood–wants to do. (This is a bad habit that I often fall into, and my Bible study partner often Ctrl-Alt-Deletes it.) A Christian, for example, isn’t supposed to do holy stuff on Sunday, and secular stuff the other six days. No, even when he gets up on Monday morning to go to work and make the donuts, he should be doing that to glorify God. This is definitely purposeful behavior, and is an example of human action. If someone says, “Immoral actions are off the table,” that’s fine, but I don’t see how that adds anything to the analysis; it certainly doesn’t seem like a fruitful category of analysis to me.
But whether or not it is fruitful, for sure it is clear that Mises wasn’t saying, “All moral choices can be viewed as economic” (if that means anything narrower than merely “purposeful”) and there’s nothing odd in imagining Jesus considering disobeying His Father’s will but choosing to obey. After all, Jesus was (famously) tempted by Satan to pursue a worldly life, and Jesus chose to reject him.
(We are getting into some deep theological issues here–did Jesus have the power to sin?–but surely Gene doesn’t think Jesus rejected Satan’s offers the same way people sneeze when pepper is blown in their faces.)
Reuters explains Ben Bernanke’s new gig:
Former Federal Reserve chairman Ben Bernanke is joining bond giant Pimco as a senior adviser, as the firm seeks to bolster its star power following the departure of co-founder Bill Gross.
The move may be questioned by some competitors who had criticized the Fed during Bernanke’s reign for being too close to Pimco, whose full name is Pacific Investment Management Co. The critics suggested that could have potentially given the Newport Beach, California-based firm an advantage in interpreting monetary policy.
In an interview, Bernanke, who only last week announced he’d signed on to consult for the hedge fund Citadel, said he will restrict his Wall Street advisory roles to just the two firms. He also works at the Brookings Institution.
“The Fed does not regulate Pimco or its parent or any other firm that is affiliated with it,” Bernanke said. The same situation obtains with Citadel, he said. “So there is no contact.”
Now there is some concern over hanky panky:
In late 2008, the Fed hired Pimco, along with three other big Wall Street firms, to implement enormous purchases of agency mortgage-backed securities to keep interest rates low and spur the U.S. economy. Pimco also managed the commercial-paper assets for the Fed during that period.
“If they were employed to do that kind of thing, that was in their professional capacity,” Bernanke said. “I had nothing to do with selecting them or I had no involvement with them myself.”
When asked if he has advised Pimco to prepare for an expected interest rate hike this year, Bernanke said: “No, I haven’t given them any advice on that. I will be speaking broadly about the economy and markets.”
All told, Bernanke said: “From my perspective, they are a firm that the way they operate is by taking a macro view — they try and decide how they see the economy evolving both in the United States and abroad and they base their investment strategies on that macro view. That’s something where I believe I can be helpful, thinking about where the economy is going.”
That sounds entirely plausible. Just look at Bernanke’s resume when it comes to forecasting movements in the macroeconomy:
==> Benjamin Zycher has an interesting reaction to a (pro-)carbon tax event that some of his colleagues at AEI recently hosted.
==> My colleagues at IER put together this interesting post on oil and gas production on federal versus other lands.
==> Phil Magness on the alleged misrepresentation of the “Austrian” School.
==> At Mises CA I take on the claim that labor unions gave us the weekend.
==> A man has been released after decades in prison when it turns out the FBI confused a dog hair at the crime scene with his hair.
==> Tom Woods and I talk carbon taxes.
An interesting take on the book of Revelation (last book in the Bible). What’s funny is most people think “apocalypse = awful” but in the Biblical sense, it eventually ushers in eternal paradise. But it’s definitely hardcore, don’t get me wrong.
It’s fashionable among “respectable” libertarians and other small-government types to make fun of their more extreme brethren, especially when it comes to the United Nations. And yet the UN’s “Negotiating Text”–draft language containing options for the delegates who will meet in Paris in December–doesn’t need any wild imagination to appear sinister. We can just quote from the thing.
I give a more comprehensive explanation in my post for the Institute for Energy Research, but for our purposes here let me give you some of the highlights. Again, these are all quotes taken from the suggested text that the UN has released:
5.1. Option (a): Ensuring significant global greenhouse gas emission reductions over the next few decades or a 40–70 per cent reduction in global greenhouse gas emissions below 2010 levels by 2050 and near-zero emissions of carbon dioxide (CO2) and other long-lived greenhouse gases by the end of the century… [UN Framework Convention on Climate Change Negotiating Text, p. 5]
92. [Scale of resources provided by developed country Parties shall be based on a percentage of their GNP of at least (X per cent) taking into consideration the following:
a. The provision of finance to be based on a floor of USD 100 billion per year, and shall take into account the different assessment of climate-related finance needs prepared by the secretariat and reports by other international organizations;
b. Based on an ex ante process to commit quantified support relative to the required effort and in line with developing countries’ needs… [UNFCCC Negotiating Text, p. 43]
[Stressing that all actions to address climate change and all the processes established under this agreement should ensure [a gender-responsive approach][gender equality and intergenerational equity], take into account [environmental integrity][the protection of the integrity of Mother Earth], and respect human rights, the right to development and the rights of [youth and] indigenous peoples, [as well as ensure a just transition of the workforce and the creation of decent work, in accordance with nationally defined development priorities and strategies,]] [UNFCCC Negotiating Text, p. 4]
One does not need a tinfoil hat to see that the treaty that some want to come out of the December meetings will establish a giant international bureaucracy, beyond the control of any one national State, with the ability to disburse more than $100 billion, and to pass judgment on every manner of human life, but particularly operations in the energy sector. Moreover, the goals of this organization will not be limited to the projections of climate change shooting out of computer models, but will also involve traditional social reforms favored by anti-capitalist Leftists.
This isn’t a conspiracy theory, these are the simple facts for anyone who wants to click the UN document and begin skimming.
==> An article I just saw on Facebook (from last month) talking about a new theory of how life formed on Earth. Naturally everyone in the comments is very civil when discussing the religious implications.
==> I have my first click-baity title for an article at FEE: “The Economics of Karaoke (and Other Necessities).”
==> Max Borders has a good Earth Day post summarizing the climate change debate. My favorite part is his crystallization of what the “consensus” case relies upon, matter-of-factly:
* The earth is warming.
* The earth is warming primarily due to the influence of human beings engaged in production and energy use.
* Scientists are able to limn most of the important phenomena associated with a warming climate, disentangling the human from the natural influence, extending backward well into the past.
Scientists are able then to simulate most of the phenomena associated with a warming earth and make reasonable predictions, within the range of a degree or two, into the future about 100 years.
* Other kinds of scientists are able to repackage this information and make certain kinds of global predictions about the dangers a couple of degrees will make over that hundred years.
* Economists are able to repackage those predictions and make yet further predictions about the economic costs and benefits that accompany those global predictions.
* Other economists then make further predictions based on what the world might be like if the first set of economists is right in its predictions (which were based on the other scientists’ predictions, and so on) — and then they propose what the world might look like if certain policies were implemented.
* Policymakers are able to take those economists’ predictions and set policies that will ensure what is best for the people and the planet on net.
* Those policies are implemented in such a way that they work. They have global unanimity, no defections, no corruption, and a lessoning of carbon-dioxide output that has a real effect on the rate of climate change — enough to pull the world out of danger.
*Those policies are worth the costs they will impose on the peoples of the world, especially the poorest.
==> Blimey Cow on “there should be a law.”
==> A new Fraser Institute collection (edited by Don Boudreaux) on (the decline of) economic freedom and entrepreneurship in the US.
==> I liked this post by Bryan Caplan, on how “econ melts your brain” (and not in a good way–he doesn’t mean, “It’ll blow your mind!”). I had a similar experience when I taught Intro in Hillsdale. I asked some really basic question on a mid-term, trying to get students to illustrate the answer with the cost curves we had to learn. A bunch got the basic answer wrong. I know if I had asked them the general question at the start of the semester, their common sense would’ve given them the answer. So I (teaching standard micro) had provided negative value to those students.
==> Columbia econoimst Kopczuk has a new paper out commenting on Piketty. A man of wisdom, he does not cite my paper with Phil Magness.
==> Tyler Cowen loves my new book.
==> Troll hard or go home.
==> I find the good in Noah Smith’s blogging.
The more I study the Bible the more wisdom I discover. History itself revolves around one man.