January 9, 2013Economics has lost one of its greats. James Buchanan has passed away at age 93. Born on a Tennessee farm in 1919, he continued working as a farmhand to put himself through college, milking cows twice a day. From there he went on to a long and varied career, culminating in his being awarded the 1986 economics Nobel. He won that Nobel for his role in developing public choice theory. After the Prize Committee made its announcement, a flock of economically innocent reporters asked him to explain what the heck that was. They were astonished at his simple answer: it is applying the economic way of thinking to politics. It is treating politicians the same as everyone else -- self-interested, responsive to incentives, a bit vain, eager to please and be pleased -- flesh and blood human beings, basically. The reporters scoffed; why, that’s nothing more than common sense! Maybe so, he replied....
June 12, 2012Among the individuals with whom I wish I could have greater opportunities to exchange ideas is Elinor Ostrom. She passed away today, and now I must pursue that conversation indirectly -- via her writings, her colleagues, and my recollections of those few conversations I did have the opportunity to enjoy.
March 23, 2012F.A. Hayek died twenty years ago today. In his long career—his first book was published in 1929, his last in 1988—he made important contributions to economics, philosophy, and even psychology. He even won a Nobel Prize along the way. If there is a unifying theme to Hayek’s diverse body of work, it is an emphasis on intellectual humility. He was a dogged opponent of capital-C Certainty, and was always quick to remind would-be social engineers that there are limits to their knowledge. The unintended consequences of their grand plans are somewhat less limited. Hayek’s grandfather was a professor of natural science, and his father was a doctor who moonlighted in botany. As happens to many boys growing up in scientifically minded households, the young Hayek was fascinated with evolution. This would profoundly influence his economic thought when he grew up, especially his concept of...
February 28, 2012
To the Editor, Financial Times:
Gillian Tett notes the vogue among CEOs for “corporate social responsibility” (When Making Shampoo Becomes a Service to Society). CSR is a response to those demanding business assume responsibility for ending pollution, poverty, income disparities, discrimination, and the other ills of the world. As Tett notes, charging business with CSR is a back-handed complement. The critics have more confidence in business’s abilities than they do in governments’. But, should business accept this assignment? Will the CSR shampoo really wash those attacks right out of business’s hair? Market tests say no.
The marketing notion that the customer is always right -- useful in enhancing brand reputation -- has mistakenly been transmuted to...
October 14, 2011It's much more fashionable to attack Adam Smith these days than to read him. Yes, he favored economic liberalism, which wasn't exactly in style in his time. Nor is it in ours. History remembers him as cold and calculating. But in real life, he was neither. There are two main drivers behind Smithian liberalism, neither of them cold or calculating. One is that man is a social animal. The foundation of Smith's moral theory is the impartial spectator theory. People figure out the right thing to do by asking themselves if an impartial third party would approve of their actions. Empathy -- thinking of others and feeling for them -- is at the very heart of Smithian morality. Take trade, for example. Smith is well known for being an ardent free trader. But why? Because trade is an inherently peaceful act.It is moral. If you have something I want, I'm not going to hit you over the head and...
June 30, 2010
Economist Don Boudreaux reminds us that 209 years ago today, the great economic journalist Frédéric Bastiat (1801-1850) was born. F.A. Hayek in his introduction to some selected Bastiat essays wrote that he was “a publicist of genius” and quoted Joseph Schumpeter’s assessment of Bastiat as “the most brilliant economic journalist who ever lived.”
Here's a short...