sexta-feira, maio 26, 2006

 

ECONOMIC POLICY IS CRAP!

Caros cidadãos da blogosfera: este é um blog pluralista. Reagindo ao convite de um amigo, escrevi um texto para o blog http://thenewyorktrilogy.blogspot.com/ e acabei por me juntar ao blog quando percebi que a "triology" se referia a mim, ao fundador e a mais um grande amigo. O meu primeiro "post" chama-se "economic policy is crap" e é uma crítica ao intervencionaismo económico, no espírito do último parágrafo do meu post sobre eficiência. Uma provocação à sabedoria espontânea dos economistas....
Conventional economic wisdom tells us that markets fail to allocate efficiently society’s scarce resources an awful lot of times. Whether because people are stupid — definitely not as smart as the average economist — or because markets are largely imperfect institutions, a very popular — I would say overwhelmingly popular — branch of the economics profession claims that without strong economic policies there is going to be a lot of waste. Efficiency is the word economists use to define the pattern of evaluation of society’s managements of its scarce resources. When they claim, as they often do, that economic policy is needed for efficiency reasons, they are claiming that laissez-faire economies are not very economic at all.
There is a common distinction between “questions of equity” and “questions of efficiency”. Equity problems concern how the bundle of social scarce resources is distributed among the members of the social whole; efficiency problems concern how these resources are, within a given distributional framework, maximized ― in a word, if they are or aren’t producing the greatest sum of economic value. To prevent answers to these separate questions from interfering with each other, the Italian mathematician and social scientist Vilfredo Pareto developed the following conception of efficiency: a state of affairs is better than another one if, and only if, nobody is worse off and at least someone is better off. Put to its briefest, the Paretian standard means that because nobody is worse off after the change from one state of affairs to another, there has been no distributional impact whatsoever, while at the same time, since at least someone is better off, the same resources are producing more value. This resembles very clearly our intuitive notion of economics as wisdom concerned with economizing.
Markets typically produce Paretian outcomes, since people freely exchange resources in their own interest. An agreement, by mere definition, lefts both parties better off, at least from their own standpoint. But in some circumstances, which in practice are very frequent, markets fail to push further economic value. Consider a basic problem of high transaction costs: I am willing to sell my car for at least $500 and you are willing to buy it for up to $1000. In a world of zero transactions costs, we would happily exchange resources for mutual benefit. But now suppose the transaction ― summing up searching, bargaining and enforcement costs ― costs more than the $500 surplus. It makes impossible to exchange resources for mutual advantage. The mainstream economist would say that there is a straightforward remedy: economic policy. Transfer the car coercively from my hands to yours, and compensate me afterwards through the workings of the legal or the tax system.
Unfortunately, economic policy is wishful thinking …or just crap! Consider three different scenarios: a) at least one of the individuals changes his preferences; b) one of the individuals suddenly becomes aware of a better business alternative; c) unanticipated rise in the relative price of oil. Any of these banal events would erode the initial terms of the business evolving my car. It means that state intervention will hardly do any good: all the information on basis of which the policy was designed suddenly becomes obsolete. Moreover, we shouldn’t assume that public decision-makers are perfectly informed even about the present state of affairs ― they often, not to say always, work on a rather narrow picture of reality. Economic policy “presumes” two things: constancy of parameters and truthfulness of available surveys. Since these are, to say the least, ridiculous assumptions, economic policy does not benefit the economy at all.
Behind the excitement with policy in economic affairs, there is an impressive row of epistemological myths that I shall not explore in this place. It is enough to say that mainstream economics is an attempt to copy the methods of natural sciences and the dream of conventional economic wisdom is to carry this knowledge into policy-making. As much as physics and chemistry are crucial instruments for the engineer, economists claim that public economic policy can be turned out in a sort of social engineering. The late F.A. von Hayek called this obsession “scientism” and warned us against the dangers of it. No matter how sad trained economists are about it, it is impossible to describe the economy with the precision that steams from the work of the physicist. The reason is amazingly simple: in society everything is constantly changing, there is no constancy. The real economic problem that society faces is not to solve a big set of known equations, but to constantly calculate and re-calculate rates-of-exchange on basis of new parameters. And with all its imperfections, the old good invisible-hand is much better at doing this work than any self-proclaimed social engineer.

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