Monday, September 12, 2005

How much of what you know is wrong? 

I bet I've used that title before. I can't quite place where it comes from, but I first saw it on some faculty member's bulletin board, and I think he said it was George Stigler. I've seen several examples today that drive me to the same thought.
As Kling points out, the problem with Dowd is that she thinks these are engineering problems rather than economic ones. I agree with the late Paul Heyne that economics IS a defense of the market system.
The economic way of thinking shows how social processes that look like recipes for chaos (and that have often been so described) produce actual cooperation and advance the purposes of those who participate in these processes. Adam Smith invoked a semi-theological metaphor to characterize this process: the invisible hand. Because economic theory explains the working of the invisible hand, it is in a very basic sense a defense of market systems.

Do DeLong, Dowd and McManus think the problems of energy and disaster response are engineering problems? For they are not. They are the description of millions of individual interactions. How much of what you know about each of these interactions is wrong? Probably a great deal. And the number of "smart people" you put in a room called FEMA or FEMMA or whatever isn't going to help. (And firing Brownie isn't going to change things, either.)