Saturday, June 17, 2006

First, kill all the doctors

Meta and Meta discusses a common free-market argument that economies are self-correcting equilibria. He quotes from a Wall Street Journal interview with economist Thomas Sowell:

The notion of a self-equilibrating system -- the market economy -- meant a reduced role for intellectuals and politicians, he says. "And even today many still haven't accepted that their superior wisdom might be superfluous, if not damaging."

before going on to raise the question:

But are the interventions of policymakers into the workings of the "self-equilibrating" economy really any more fraught with error than, say, the interventions of doctors into the workings of the "self-equilibrating" human body? Should we dispense with surgery merely because it "might be" damaging?

I think that Sowell would reply that the question of whether interventions into the economy is more or less fraught with danger than surgery is an empirical question, not a philosophical one, and as such should be decided based on the empirical facts. Sowell's emphasis on empirical testing of economic theories is excellent advice. No matter how elegant of sensible your theory is, if it fails to match reality, it is worthless (except in the negative sense of "this is what not to do").

Furthermore, I guess that Sowell would probably continue that we've already collected enough evidence to be sure that attempts to intervene in the marketplace almost always do more harm than good. Whether he is right about this, I'm not so sure (which is a polite way of saying I think he's wrong.)

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