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April 16, 2009


Words are cheap.

I think the difference in before and after votes is simply that people didn't understand that when you talk about efficiency you mean simply in demarcating the role of economists from the more nebulous "social good" role that most public figures are playing at.

The reasonable conclusion would seem to be to go with liberty unless you had a professional economist tells you otherwise. Unfortunately this opens the door for opportunistic economists to tell public policy setters what they want to hear (you should meddle more). I feel that this is exactly what keynesian economics represents.

It's too easy to sign a pledge like this, and then ignore it - just like teenagers and virginity pledges.

I think the pledge needs to have a requirement that it be prominently advertised by those that sign it (to current and prospective clients).

Greg Mankiw is a Keynesian (please, no Post Keynesians denouncing the bastard children of Hicks or Samuelson!) and I think he'd endorse liberty on most micro questions in dispute. I would expect though that people who are inclined to think there is a larger positive role for the government to play in general would be attracted to a successful school of thought that gives government a prominent positive role in the macroeconomy. It should also be remembered that its most notable opposites, the Chicago & Austrian schools, did not have nearly the reputation for libertarianism in their early days as they did after Keynes. Matthew Mueller ably made that point about the Austrians on his blog, which is unfortunately no longer on the internet to be linked to.

denis and George, I didn't know if folks would agree that it would be good to commit to this pledge. If we can, then we can look more into how better to credibly signal our commitment.

nazgul, your vote explanation is plausible. I'm certainly not saying to always trust economists no matter what.

TGGP, I don't understand how your comment relates to my post.

I agree that economists should stick to talking about efficiency; they don't have a comparative advantage in figuring out what liberty would say. I was surprised to hear Caplan deny that this commitment would have benefits.

Robin, you're right. But I can't imagine a reason why this pledge would not be good in principle (ignoring its effectiveness).

Bryan's example of the Nazis seems to me to be an artificial world with only one major issue. I would argue that we are all minorities in some respect, i.e. each of those 2 trillion Nazis have at least one dimension in which they are a minority and for which they could be persecuted by a majority. So even they should value laws protecting the life and property of all minorities as insurance on a possible $100,000 loss in the future.

Also, the word "efficient" will not persuade anyone who is not an economist because they will think it means speed, or worse a euphemism for cutting-corners. "Win-win" is much more better. In fact, in negotiation and conflict-resolution workshops, it is the approach advocated most. So if the pledge in translated from econospeak to english, I think more people would be persuaded it's good.

The pledge is a bit like business managers pledging to maximise profits for shareholders. In isolation this could be bad for society - not everyone is a shareholder and we would rather they maximised consumer surplus.

However, life is repeated game with many agents, and profit-maximising businesses seem to maximise consumer surplus in the longterm compared to other alternatives.

Imagine your client is a government wanting to implement reforms in an economy which is ailing because a previous government had introduced regulations favouring narrow interest groups at the expense of the rest of the community. It seems to me that an economist who had signed your pledge would have to restrict his or her recommendations to Pareto-efficient changes i.e. win-win changes which would compensate the rent-seekers for the loss of their ill-gotten gains. Is that what you intend?

Winton, if you are giving advice to assist a long term deal which was to consistently follow advice from people like you, then you only need to consider transfers to make that overall deal win-win in the long run. But yes if you are just consulted once you must take the no-deal status quo as given, even if you disapprove of how it arose, or else refuse to help this client.

Sorry, Robin, I was responding to nazgulnarsil's comment on Keynesian economics.

how do you identify who has broken the pledge when empirical studies in economics are even harder than in medicine?

should economists have malpractice insurance?

George, you are right, so I've added a phrase about making this pledge clear to clients.

I just reworded the pledge a bit, in response to various comments.

I think I agree with all the principles in it.

Robin could you explain more about your purpose in writing it? Who are you trying to persuade to do what?

Is it to get other economists to agree to adopt efficiency as their goal, or to spread that same view more widely in society?

Re: For individual clients, I suggest actions that try to best get them what they want.

This doesn't sound efficient - it sounds partisan.

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