Inferior Good: Diminishing Marginal Stupidity in Action

Monday, August 13, 2007

Hoodwink or hyperbole?

Patrica Cohen’s recent NY Times article on Heterodox Economists is very disappointing. The gist is that mainstream economics won't make room for heterodox views on trade and free markets.

First, as Alex Tabarrok points out, it is absurd to cast the profiled economists as embattled outsiders fighting the oppressive mainstream, for those mentioned in the article are most prominent.

Second, the profiled economists make some ridiculous claims. For example, Dani Rodrick states:

“I fall into the methods of the mainstream, but not the faith,” which he defines as the belief that more markets and free trade are always good and government regulation is always bad...

Assuming the article correctly characterizes Mr. Rodrick’s beliefs, Mr. Rodrick is guilty here of gross exaggeration or tremendous sloppiness.

I don't think I've ever read or heard an economist say that more markets are always better than government regulation. I learned about the concept of market failure in Econ 101. Does not every other economics student do the same? I’d be shocked if 99% of economists did not concede that there are at least some cases in which a government solution may prove optimal.