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Your Objection to My Perpetual Motion Machine is SO Physics 101

March 21st, 2007 · 4 Comments

Lest my decoder ring be revoked for the previous post, let me reply to my friend Micah’s post, which trots out what I’d called a “paint-by-numbers” argument I expect my fellow travelers are as bored of hearing as I am: That a defense of (relatively unregulated) markets in this or that case is (profound sigh) so Economics 101. Because, you see, you learn about things like “supply and demand” in intro courses, so they must be terribly crude and misguided notions. Interestingly, people lacking even an Economics 101 background seem to feel few compunctions about deploying this trope.

Now, the perfectly accurate core idea here is that with greater theoretical sophistication, you find plenty of conditions under which the generalizations of the first-pass, stripped-down model don’t hold. (In the pedagogical context, this is probably close to being a definitional truth: There would be little point to developing and teaching a more complex model unless whatever new wrinkles you added yielded some difference from the simpler one.) So every budding young econ student learns first that raising a minimum wage above the market wage will create a disemployment effect, and only later that this doesn’t hold under monopsony conditions, and so on. Demonstrating even genuine market failure, of course, is a far cry from showing that the political process can do better, but it’s surely worth trying to find out when it can be expected to occur, how serious it is, and so on.

What’s annoying about the “Economics 101″ line isn’t (just) that it’s a noxiously condescending way of making such an argument. It’s that quite a lot of the time, it’s a substitute for such an argument. Instead of being a prelude to an elaboration of why the instant case constitutes such an exception, it’s treated as a sufficient dismissal in itself—as though if a more sophisticated model incorporates more exceptions to general economic laws, the ne plus ultra of sophistication must be to assume everything is an exception. But the general rules remain general rules because they’re still generally true, and indeed, are often predictive in circumstances far removed from the idealizations of blackboard models. Even when you really do have an econ 201 exemption to an econ 101 rule, it’s still poor form to be too supercilious about advancing it. After all, your interlocutor might have an econ 301 riposte.

Addendum: I should clarify that most of this is a response to the “econ 101″ trope in all its multifarious incarnations, not an attack on Micah, who is a fine human being.

Tags: Economics


       

 

4 responses so far ↓

  • 1 micahd // Mar 22, 2007 at 12:09 am

    From my response …

    “In fairness, I do happen to believe that regulation should justify itself. Libertarian principles are, therefore, a good starting point for any policy analysis. Infancy is also a good starting point. But in neither case does this mean that we should stay there, screaming our fool heads off about a world that we either do not – or refuse to – understand.”

    http://micahd.blogspot.com/2007/03/widgetarians.html

  • 2 __earth // Mar 23, 2007 at 8:33 am

    Hail!

  • 3 David J. Balan // Mar 26, 2007 at 4:05 pm

    It does happen to be the case that the “markets are good” stuff gets taught in Econ 101, and the “markets can fail” stuff gets taught later. And it also happens to be the case that a lot of people who have had one or two economics courses come away believing that it has been demonstrated that markets are always good and government intervention always bad. So some correction is often in order.

  • 4 dsquared // Mar 29, 2007 at 2:43 pm

    If this is a “paint-by-numbers” critique of libertarianism, then presumably “what about the dinosaurs?” is a “paint-by-numbers” critique of Creationism! It’s an entirely legitimate criticism, which is only ubiquitous precisely because it goes straight to the heart of a real weakness of a lot of the central arguments. Libertarians *do* make widgetarian arguments a hell of a lot, and it is not in any way illegitimate to point out that many of them are based on introductory models which have serious flaws that are corrected at a higher level. “Economics 101″ might be a bit patronising, but it is not like most net.libertarians are really great and polite guys.