What Do the Laws of Economics Assume?

P.S. Huff

Bryan Caplan suggests that economic laws hold true "[b]ecause the assumption of human selfishness is roughly true." (In an earlier post, he went further: "although people aren't perfectly selfish, they're shockingly close.") Thus:

Rent control leads to shortages and/or declining quality - if landlords are selfish. If they loved their tenants as themselves, it's a different story. Printing tons of money wouldn't cause inflation if people were happy to build up unlimited cash balances for the "good of the country." Yadda yadda yadda.

But his examples actually demonstrate the weakness of his argument. The laws of economics will hold up extremely well so long as the parties to market transactions are, in the overwhelming majority of cases, essentially disinterested in each other's welfare.* This is consistent with widespread selfishness, but it doesn't require it. A world of 10 billion people, each of whom was firmly dedicated to the welfare of about 500 individuals, could fit this scenario quite well.

(I know "Austrian" economists like to claim that economic laws are a priori true, and apply across all places and all time. But they establish this only by means of a gimmick that robs the laws of all of their predictive power. Thus, for instance, the Austrian law of demand—contrary to what its proponents seem to believe—tells us nothing about the responsiveness of the quantity of bread demanded to the price of bread. The trick is simply to redefine the "good" so as to make it a psychological construct—which, alas, divorces the law from market outcomes as we ordinarily define them.)

What's in a Name?

P.S. Huff

What's in a name? Apparently quite a lot; in politics, at least. Read these numbers:

In the poll, 59 percent say they now support allowing "homosexuals" to serve in the U.S. military, including 34 percent who say they strongly favor that. Ten percent say they somewhat oppose it and 19 percent say they strongly oppose it.

But the numbers differ when the question is changed to whether Americans support "gay men and lesbians" serving in the military. When the question is asked that way, 70 percent of Americans say they support gay men and lesbians serving in the military, including 19 percent who say they somewhat favor it. Seven percent somewhat oppose it, and 12 percent strongly oppose it.

When it comes to whether Americans support allowing gays to serve openly, there is also a difference based on the term used. When referred to as "homosexuals," 44 percent favor allowing them to serve openly. When referred to as "gay men and lesbians," the percentage rises to 58 percent.

Mark Liberman of Language Log has commentary.

The Greatest Foes of Established Opinions

P.S. Huff

"The most dangerous enemies to established opinions are those who, by always defending them, call attention to their weak sides." — William Hazlitt

From Sketches and Essays (1839), 89.

Let Newton Be

P.S. Huff

From The Works of Alexander Pope (Joseph Warton ed., 1797), vol. 2, 403.