All hail the glorious misunderstanding of His Ritchieness

But in that same world of uncertainty (which neoliberals do not think exists) there has also to be firm government action under the direction of politicians who know they have been elected to make decisions.

I really don\’t understand where he gets this idea that \”neoliberals\” think that uncertainty doesn\’t exist.

We\’re the people who insist that it does exist: that\’s why you can\’t centrally plan for the future and need to have a market based system so that people can continually experiment to see what works in that uncertain future.

If we had certainty, about either the present (we don\’t, the economy is too complicated for that to be possible) or the future (we don\’t, it\’s uncertain) then we really could have all the bright people in an office in London telling us all what to do.

But to insist that we have uncertainty thus we must have central planning is simply absurd. The very assumption disproves the policy.

24 thoughts on “All hail the glorious misunderstanding of His Ritchieness”

  1. Truly amazing.

    The man is in a class of his own.

    Tim, I’ve said it before, you really need a more difficult target. One that moves at least. It’s like shooting sitting ducks.

  2. I thought the right wing explanation for the recession was uncertainty over future taxes and regulations

    (I reckon it’s the expectation of low demand, myself)

  3. “The third is that the people who persist in this argument almost all work in secure employment in government Treasuries or universities and have no experience at all of the best in which they place so much faith.

    I have that experience.”

    Vote for Ritchie!

  4. Richard knows perfectly well that his description of what he calls “neoliberals” (ie, classical liberals) are lies.

    Luis, it is true that uncertainty on taxes and regulations can retard growth severely. Certainty of law and the knowledge that property rights will be respected is a key feature of successful open economies. Whether such uncertainties cause a recession is not clear. I am not sure that people on the right have said that.

  5. ‘even though right wing economists and politicians from Margaret Thatcher to George Osborne are adamant that they do.’

    I find the use of the term right wing economist odd.

    Surely the difference between right wing and left wing economists is that the right look to understand economics and then work out how to create their desired outcome whereas the left create an ideology and attempt to fudge economics to get there in a way that suits them.

    i.e. there is no such thing as a right wing economist. If you are truly and economist you are by default right wing. Left-wing ecomomist is an oxymoron. Perhaps in Murphy’s case just plain moron?

  6. @Jonathan Pearce:
    Certainty of law and the knowledge that property rights will be respected is a key feature of successful open economies.

    I agree this is one of the fundamentals and the UK has previously been very good for these very reasons, but the years of socialist dogma and state interference have eroded both the certainty of law and the respect of property rights.

    Some of the malodorous laws and regulations that have caused fear within the ranks of business leaders and entrepreneurs include Money Laundering Regulations, retrospective legislation, vague and uncertain tax laws, etc.

    I may be paronoid, but I am wondering how long it will be until capital controls are reintroduced in the UK to prevent all of that lovely currency that has been created to recapitalize the banks from leaving the UK.

    Equally although the latest ComRes polls has had an improvement recently (Labour unchanged @ 40%, Tories up 2% @38%, Lib Dems up 1% @11%), given the overall weakness of Cameron I expect to see Ritchie and his socialist buddies in power again come 2015.

  7. @MW, I think you go slightly too far.

    There are economists and non-economists. Murphy is one of the latter.

    Left and right comes in to the objectives of the policy not the methodology – hence free market, high taxation economies in Scandanavia – lefty – versus free market, low tax economies in the Baltic – righty.

    Or, another way, lefties might want to raise as much tax as possible (to do good things with, like commission Murphy to write reports 😀 ), righties as little as absolutely necessary. Economics tells them how to achieve these with the minimum damage to the economy (import tariffs are generally seen as bad, however low they are set.)

  8. Surreptitious Evil is correct.

    Raving lefty economists like Paul Krugman, still support markets and free trade. Its the non economists who think that they can repeal human nature.

  9. Surreptitious Evil-

    I disagree. An economist’s job is to understand the economy, and that is where it ends. Political goals, be they “maximal wealth” or “social justice” or “maximal personal freedom” or “maximal welfare” are not a matter for economics; they are not even a matter for politics. They are just a matter for agents within the economy to act upon either personally or collectively. But they are not economics.

    You can be a left winger, and an economist, but you cannot be a left wing (or right wing) economist, in the same way as you can be left wing and a bus driver, but you cannot drive a bus in a left wing (or right wing) way.

  10. Surely a right-wing bus driver would go where the passengers were, and a left-wing bus driver would go where the Central Omnibus Planning Committee told him the passengers should be?

  11. IanB,

    How does what you have written differ from what I had written?

    Did I talk about left and right wing economists as opposed to economies (would you agree that economies can be run in a left or right wing manner?)

    BTW – “political goals” not a matter for politics? You might be taking reductionism a bit too far.

  12. Surreptitious Evil

    Ian B’s comment says what I intented to in a better way.

    I admit I have probably gone to far by saying if you are an economist you should be right wing. However, I would say that there is problem with having left wing objectives and trying to use economics to acheive them. This is extremely simple becasue economics shows us that inequality helps create incentives and encourages people to acheive. By creating a left wing society you effectively reduce/remove incentives to work hard and achieve. Basically, what is the point in working hard if everyone ends up equal?

    I think the best evidence for this is probably the greatest economics experiment of all time, namely the USSR and Communism.

  13. Ian B, you are of course entitled to your own opinion, but reality is that people hire economists often to provide advice on what to do. And a number of economists take this task on themselves too.

    And our biases mean that people are indeed, in reality, left-wing or right-wing economists (or dry versus wet, or libertarian versus statist). Evidence can shift economists’ positions, but as it’s impossible to do controlled experiments on many real world important policy decisions, one’s own priors come into play a lot.
    If you have never seen this, this indicates that you don’t know many economists.
    Buses may not be able to be driven in a right or a left wing way, but a bus driver is certainly capable of driving in a deferential or aggressive way, depending on their beliefs, it just so happens that we haven’t labelled those differences with the words “left” or “right”. (Of course, a driver can be so deferential as to cause problems for other drivers.) Every job I know of has some room for individual judgement.

  14. A left-wing bus driver would go where Marx predicted the passengers would be and should go and when they weren’t there accuse them of false consciousness.

  15. Tracy, anyone claiming that economics supports left wing policy isn’t doing economics. It’s the equivalent of a Creationist evolutionary theorist. They’re ignoring reality and promoting a crank philosophy. They aren’t economists, it’s as simple as that. Sure, these idealogues can call themselves economists. They can call themselves bus drivers, or what they like. But they aren’t doing economics.

    Economic theory is only a matter of opinion in the same sense as evolution is. For instance, it only takes school-level arithmetic to understand why Keynes’s stimulus hypothesis is wrong. It’s not a matter of opinion, or judgement. It’s just a fact.

  16. Ian B, there are rooms for disagreement on things like when government can step in and make things better. For example, with the exception of capital-anarchists, economists who call themselves right-wing tend to agree that the government has a role in defending property rights, and introducing new ones from time to time (eg Individual Tradeable Quotas in fishing).

    Given that government is made up of people, who are irrational, but there’s empirical evidence that things like the introduction of ITQs in fishing have improved fishing species survival, it’s not clear-cut what other areas governments can usefully intervene.

  17. BB: “Tim, I’ve said it before, you really need a more difficult target. One that moves at least. It’s like shooting sitting ducks.”

    Murphius delenda est!

  18. @ MW
    It is possible to apply economic theory to deduce what laws you should introduce in order to pursue the goal of having everyone equal (except yourself and your favourite pals). Not all left-wingers will regard as an insurmountable objection the fact that this will make the people, in aggregate, a lot worse off.

  19. Would it be possible to posit an anti-economics?
    Most of left-wing policy starts with the assumption – “This process is controllable so must be controlled.” & goes on to “This process is currently uncontrollable how can it be controlled?”
    To do this requires the sign to be reversed on most revealed economic laws so for instance in the arts they start with the premise “This product is a benefit & this is how much the producers wish to be paid for it”, go on decide where the money to fund it can be extracted & lastly justify the whole process by requiring the audience to ‘enjoy’ it. Hence the BBC.*

    It’s like trying to run a version of physics based on negative entropy.

    *(And if Arnald wakes up, no this is NOT & is NOWHERE SIMILAR to wicked multinationals ‘forcing’ consumers to buy their stuff. Being advertised at is not the same as being threatened.)

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