Scholars and pundits expend a lot of energy to tell or to hear some new thing. A lot of these new things are strange mixes of genuine insights and resurrected fallacies, and they lead to policy conclusions of dubious merit. Consider behavioral economics. It asks interesting questions and explores some interesting puzzles, but it goes off the rails when it comes to policy.
As Steven Horwitz discusses, we measure the success and failure of market outcomes and the desirability of social institutions against our idealized conceptions of how we think the world should work, or how it would work if we were in charge. The conclusions are distressingly repetitive: liberty yields, and politicians get more power. The offer–your life will be better if you give us more control over it–is suspect in light of the evidence on government intervention, and it puts the burden of proof in the wrong place. You should have to convince me to cede liberty. I shouldn’t have to convince you that I should be allowed to keep it.
The literature on behavioral economics, externalities, and “imperfect markets” offers a lot of very interesting puzzles, but enthusiasts for intervention usually assume what they need to prove. Namely, they assume that where the market can’t, the government can. As Michael Munger said at an event I attended last summer, any time someone says “the government should…”, they should replace “government” with “politicians who usually get elected.” Even if, somehow, we found a set of worthies who were able to transcend the incentive problems inherent in state action, they would still face insurmountable problems associated with identifying tradeoffs and using resources wisely. For more, here’s a great paper by Peter Boettke and Peter Leeson in which they discuss “robust political economy,” here’s Glen Whitman’s critique of the new paternalism, here’s Edward Glaeser’s critique of paternalism, and here’s Murray Rothbard’s essential “Toward a Reconstruction of Utility and Welfare Economics.”