The occasion was an evening of entertainment sponsored by the Institute for Humane Studies (IHS). IHS was trying out a new approach to communicating the virtues of liberty and free markets. It had rented the gallery for the night and put on display work by Morgan Ashcom, a fine-arts major at George Mason University who is interested in liberty and economics. Morgan spoke briefly about how he had become interested in economics (he credited a phenomenal GMU teacher—Tom Rustici) and described the work that was hanging nearby—a set of photographs surrounded by notes from classic works on liberty (quotes from Hayek, Friedman, Sowell, and others), along with a sculpture and a short film that both captured the power of liberty and the threat of totalitarian oppression.

Morgan was followed by Ben Parizek, who sang folk songs he had written about the virtues of spontaneous order and the lack of virtue to be found in the life of Che Guevara. Both Morgan and Ben were very inspiring. I closed the evening with a reading from the book I’m currently working on.

The event was marred and enhanced at the same time by an unscheduled speaker. After Morgan had finished describing what he was trying to achieve in his art, he asked if anyone had any questions.

A man in the back of the room raised his hand and was recognized. Rather than ask a question, he proceeded to make a speech. He opened by making a few brief remarks about Morgan’s dedication and persistence in making sure the works were presented the way he intended them to be seen. It turns out he was the owner of the gallery. He explained how he and Morgan had spent hours hanging the photographs to make them look appealing.

Having expressed his respect for Morgan, he launched into what can only be described as a diatribe against the ideas that Morgan was trying to portray, particularly concerning capitalism and the way it treats the poor. He wanted us to know that the quotes surrounding the photographs were dangerous—they might lead people to think that capitalism was a good thing. It wasn’t, he explained. Americans, especially the poor, were oppressed by corporations and capitalism. Besides, he added, America wasn’t a capitalist country anyway. He also wanted the assembled people to know that capitalism required unemployment of at least 6 percent (I think that was the number he chose) at least until Bill Clinton showed how it could actually be less than 4 percent.

It was a fascinating and awkward moment. Most if not all the people in the audience were passionate believers in free markets. How would they respond? Would they shout the man down? Angrily denounce his comments with their own diatribes? Politely disagree and marshal the case against the views he had outlined?

We did nothing. We said nothing. I quietly ignored the counterarguments and facts that leaped into my mind. Others must have done the same thing. The organizer of the event thanked the owner for his comments and went on to the next raised hand. It was as if the interruption hadn’t happened at all. I suspect that the decision by each of us individually to refrain from responding was a combination of politeness and pragmatism. There was no need to voice a defense of capitalism—those arguments spoke loudly through the words and pictures that Morgan had so artfully combined.

For me the episode was also a reminder of how far we have to go in clearly explaining economics and claiming the moral high ground for liberty. Here was a guy who had spent a lot of time with this talented and thoughtful student. And yet he viewed his artwork as dangerous. Here were these photographs surrounded by the words of Hayek, Friedman, and Sowell, and they had no impact on opening his mind to an alternative worldview.

In a way it was the ultimate compliment to the artist. The owner of the gallery viewed the art as being sufficiently provocative that it had to be denounced. I was also reminded of the graduate students in social work I had once taught who also believed that capitalism needed a reserve army of unemployed to function—a strange view that misunderstands how unemployment is defined and measured in government statistics. Theirs was a Marxist interpretation that presumed that everyone who was measured as unemployed was desperately out of work for a long period of time. In fact, zero unemployment is essentially impossible the way government defines it—anyone who is looking for a job and doesn’t find one immediately is defined as unemployed.

Interestingly, we all shared one point of complete agreement—that America was not a true capitalist society. The disagreement was over where to go from here—toward more freedom or away from it.

Lots to Do

But the real lesson I took away from the evening is how hard it is get people to understand economics. We have lots to do, and we need more Morgan Ashcoms and Ben Parizeks, people who work outside the printed page, our time-honored medium for explaining how markets operate and the virtues of freedom. Books and articles and words are wonderful, and we need more of them. But they do not speak to everyone. To reach a wider audience, we need more art exhibits, more folk songs, more rock songs, more operas, and a lot more movies. Maybe if that gallery owner knew a few more Morgan Ashcoms and listened to a few more Ben Parizeks, he might be able to imagine that at least those of us who long for an America with more economic freedom are not monsters to be denounced.

This is my last column as a regular columnist for The Freeman. I’ve been doing this for seven years, and it’s time for me to move on to other things and to give someone else a chance to put this space to good use. I’ve enjoyed talking with you, the readers of The Freeman, and hope you’ll stay in touch. And I’m grateful to both Beth Hoffman and Sheldon Richman for wonderful editing over the years, and to Don Boudreaux, who got me involved in the first place.

Related posts:

1. Teaching Economics
2. Catholicisms Developing Social Teaching
3. Teaching Business Ethics in an Environment of Mistrust

What does the future hold for economic life in the United States? Will we move toward greater freedom or less? What role will ideas and rhetoric play, if any, in making sure that the direction is one that lovers of freedom prefer?

One way of looking at American economic policy in the twentieth century is that Keynes held sway over economic policy for the first 50 years. In the second half of the twentieth century, Milton Friedman and F. A. Hayek held the upper hand. In the first half of the twentieth century the dominant president was FDR, who centralized economic power. In the second half of the twentieth century the most important president from the perspective of economic policy was Ronald Reagan, whose advocacy of smaller government and antipathy to the Soviet Union spread the use of market forces in the United States and beyond, to Eastern Europe and Latin America. One could argue that the increased market orientation of the Chinese economy is part of this trend. In this story of the twentieth century and the future, the glass is half full.

But perhaps the glass is half empty. Government spending continues to grow. The limited government that Reagan espoused was more rhetoric than reality— the era of big government is clearly not over. In fact, government continues to grow and at an increasing rate of late. Even the rhetoric has faded now; few politicians seriously advocate real economic freedom. Even George Bush’s plan for “privatizing” Social Security required forced saving administered by the government.

So what’s a classical liberal to think? Is there any reason for optimism? My colleague and blogger extraordinaire Tyler Cowen thinks not, at least in the short run:

My prediction is that, in general, welfare states will increase in size in most places around the world. We can expect most areas of the world to become wealthier because of globalization as well as other reasons. And if you look at countries that are wealthy, they tend to have very generous welfare states. Also, I believe that the human desire for security is extremely strong, even when it is not efficient or rational. So as long as we experience economic growth, I think we can expect welfare states to grow. (“Interview, Tyler Cowen,” Region Focus, Winter 2006)

Tyler seems right. All evidence points to an increasingly centralized world, a world where taxes are higher, where welfare states are bigger, where individual liberty, at least economic liberty, is smaller. And the fundamental reason is that as we get wealthier, we buy more of the things we like. One thing we like is security. When you’re poor, a risk-free or less risky world is a luxury. When you get richer, you take more care and caution because you can afford to.

This effect of higher incomes on behavior is one reason, I suspect, that parenting today isn’t what it used to be. We make our children wear bike helmets; we program them so that they don’t roam freely in the neighborhood; and we discourage risky activity in a way previous generations never did. That desire for security and less risk funds the welfare state in America. That desire for security and less risk creates a seemingly never-ending demand for protectionism.

That desire for security and less risk creates the nanny state—the regulatory environment that makes seat belts, tobacco, cocaine, and prescription drugs the government’s business when it should be mine and mine alone.

If Tyler is right, as other nations get wealthier, they will become more like the United States in how they treat risk. The increased wealth will create a demand for regulation just as it has in the United States. And future growth in the United States will create even more paternalistic regulations here.

Could be. I might even wager that Tyler’s right. But I hope he’s wrong. And I can imagine at least one route to economic freedom, despite all the trends running in the other direction.

As we get wealthier, we do want more safety and security. That trend isn’t going to change. But why do that safety and security have to come from the government? Why can’t we get our safety and security from private, voluntary sources? The obvious answer is that that trend is also running in the wrong direction—we turn increasingly to the government for achieving the goals of security. We’re further from abolishing the FDA than ever before. We’re banning smoking in private restaurants in some cities and more are on the way.

But on the positive side, we’re closer to abolishing Social Security than ever before. Not very close, admittedly, but closer. True, President Bush’s privatization wasn’t real privatization, but it was closer to real privatization than expanding the government’s role in Social Security.

As we get richer, two things affect the Social Security debate, both trending toward freedom. First, money coming from private assets will increasingly dwarf those government Social Security checks. And that’s even before the system has to cope with the baby boomers, putting downward pressure on benefits. When people talk about the “riskiness” of private Social Security, they conveniently ignore the fact that half the American people own stocks and they like it. An increasing proportion of the American people already controls their retirement money through their own decisions.

The proponents of government-provided retirement always raise the specter of people starving in the street by their myopic failure to save for retirement or simply from bad decisions. But why can’t private, voluntary charity take care of those who struggle? The skeptic responds that there’s a free-rider problem—people simply will let others take care of the unfortunate. Too many people will step aside to let others take up the burden, and as a result, there won’t be enough money to help the poor. We need government, they argue, to tax everybody to provide for the poor elderly who won’t have the foresight or the good fortune to be self-sufficient.

Overcoming the Free-Rider Problem

But as America becomes wealthier it will be easier to overcome the free-rider problem to bring the poor out of destitution. That increases people’s willingness to try a private solution for taking care of the elderly.

There’s a fly in this ointment of freedom. As we get wealthier we’ll also have higher standards for what it means to take care of elderly people who are poor. That will push some Americans to keep favoring coercive government solutions. But if enough wealthy Americans fund those private alternatives to government, maybe we can show people that private solutions can actually work.

Call it an end run to freedom. We’re already seeing this strategy with educational reform. Instead of waiting for enough Americans to tire of the failure of the public school system and pressure politicians to support vouchers, people have turned down the “free” public schools and home-schooled their kids or sent them to private schools.

And some people have funded scholarships for poor kids to go to private schools. Yes, there’s a free-rider problem. But enough people give anyway to make privately funded scholarships a real way to show people that vouchers work, or even better, that we don’t need government schools.

As we get wealthier, these private end runs around the heavy hand of government are easier to fund. If we keep fighting the good intellectual fight and making the moral and analytical case for freedom, the end runs can help us market the virtues of freedom to the skeptics. We’ll never reduce the demand for security and safety. But maybe, just maybe, we can establish the superiority of private, voluntary solutions to government solutions.

Related posts:

1. Big Government — Big Risk
2. Are High Taxes the Basis of Freedom and Prosperity?
3. Freedom of Opportunity

There are two extreme views of American government and the political process. One is that policy is the result of special interests rigging the system in their favor and exploiting the ignorant or at least impotent masses. The other is that government pretty much gives the people what they want.

My own view is much closer to the second claim than the first. While I recognize the depressing frequency of pork-barrel legislation and numerous regulations that are structured to benefit special interests rather than the so-called public interest, I believe that the broad thrust of policy responds to the desires of the general public. Given this view, I believe that the road to greater freedom in America is to encourage a broader consensus for freedom that will in turn get translated into more limited government via the political process.

While reasonable people may disagree on these differing perceptions of the nature of the American political process, I think it’s undeniable that the average American is considerably more comfortable with an activist role for government rather than a more limited role. Why is this the case? Why don’t my fellow citizens prefer more limited government?

At first glance, liberty should be wildly popular. Each of us loves it and expects it for ourselves. Few of us want to be bossed around or treated like a child. There is a strong human urge to have our own way without restraint, and it starts young. As a parent, I see this desire in action constantly. Simply tell a baby “no” to any desire, be it for more food or something as simple as climbing the stairs, and you can see the desire for freedom in action. If anything, this resentment of authority grows stronger with time. I don’t have teenagers yet, but I hear they’re pretty willful. How do these creatures of desire, these babies and adolescents, mature into voters who support candidates who constantly advocate and implement restrictions on freedom—from drug laws to labor regulations to high tax rates?

There are many explanations for why activist government is not only prevalent in our times but popular. But one answer lies within each of us, working to counteract that same internal force working for liberty. There is one urge that may be equally strong as the desire to have your own way, and that’s the urge to impose your will on others. Again, parenting gives us insight into this urge, but from the other side of the highchair. We want our children to do what we tell them. Parental discipline may be weaker and punishment less corporal today than in past times, but we as parents still spend a great deal of time bossing our kids around or at least trying to.

When our children obey us, we feel good for two reasons. The first is altruistic, but the second is a little less attractive. Yes, we tell our children to stop playing in traffic for their own good. Yes, we refuse them the second ice-cream cone for reasons of health or the creation of self-discipline. But we also try to manipulate our children for our own benefit. We ask our children to quiet down because we’d like a more peaceful home. We tell them to sit rather than roughhousing with each other. We tell them to read this book or that because we want them to be more like us. We send them to bed earlier than they’d like because they need a good night’s sleep, yes, but also because we like a little private time with our spouses.

Power is an intoxicating elixir. One of the secrets of good parenting is restraining the urge to impose authority on our children simply because it is gratifying to have obedient children.

I’m not suggesting that we should indulge our children in order to let them enjoy freedom. I’m arguing that even the best of parents resents a child’s disobedience. We don’t like having our will thwarted as adults any more than we did as children. One challenge of being a parent is not to impose our will on our children just for the sake of being in control. This desire for control and the seductiveness of power can conflict with what is best for our children.

And of course, this phenomenon of imposing our will on others doesn’t stop at our children. We want our spouse to act in ways that we deem desirable, our co-workers to recognize our wisdom and act in ways that we feel is best for the organization, and so on. We even want people to vote the way we do and support the policies we think are best for the country and the world.

The Public Arena

The conflict between the desire to be free and the desire to impose our will on others plays itself out in the public arena. We want our Scotch, but think it right to make cocaine illegal. We want to go skiing, but we force others to wear their seatbelts. We want to eat our ice cream, but think it’s okay to ban smoking.

Mencken defined Puritanism as the haunting fear that someone, somewhere may be happy. A paternalistic government plays into the Puritanism most of us harbor somewhere deep inside. Not content with mere disapproval, we use force via the political process to restrain others.

Next time you’re in the grocery and you see a stressed-out mom or dad screaming at the kid who naturally wants to play with the candy at the check-out line, you’re seeing the roots of big government.

For normal human beings and decent parents, those grocery-store-type moments are few and far between. Love restrains us from indulging our urge to boss our children around for our good rather than theirs. Love for our children encourages us to let them begin to make their own choices as they grow up and head toward adulthood.

I long for a world where we show the same restraint in the political arena. One way to get to that world is to remind our fellow citizens of the virtues of adulthood. As an adult, I make my own decisions and deal with the consequences. Why do we want a political system that treats us like children?

Related posts:

1. Liberty And Onions
2. Constitutional Liberty
3. Book Review: Tax Free 2000: The Rebirth of American Liberty by Murray Sabrin

Daniel Sumner is in trouble. Sumner, an agricultural economist at UC Davis, has been accused of betraying his country. What has Sumner done? Given the charge, you might assume that he has aided terrorists or leaked nuclear secrets. Or perhaps shared some sophisticated technology with America’s enemies.

Not quite. Sumner’s treasonous activity came in support of Brazil, a country not usually considered a rogue state or an enemy of America. And Sumner’s action didn’t exactly involve advanced technology, but economic analysis.

What Sumner did was to study the effect of American cotton subsidies on the world price of cotton. Not surprisingly, Sumner found that those subsidies lowered the world price of cotton. Subsidies encourage supply. Increased supply lowers price. End of story, or so you’d think. Could there be anything more mundane?

Sumner’s finding came during consulting work on behalf of Brazil in a World Trade Organization (WTO) case. Brazil was accusing the United States of an unfair trade practice. The claim was that the U.S. cotton subsidy punishes Brazilian cotton farmers.

When the WTO ruled in favor of Brazil, howls came from the California Cotton Growers Association. Sumner had helped Brazil at the expense of America! What a traitor! And the pain for the cotton growers was all the greater given that their association had been a significant donor to UC Davis. They threatened to send future money elsewhere. They also encouraged the citizens of California to let the university know what they thought of a man in the employ of the state working against what seemed to be its interests.

Even the dean of the College of Agricultural and Environmental Sciences at UC Davis weighed in. True, there was academic freedom at the school, and Sumner was free to say what he wanted. But there was something unseemly about Sumner’s helping the Brazilians, said the dean. It showed bad judgment. A bit of biting the hand that feeds you. Or in this case, smashing the loom that clothes you, or something like that.

So here’s a university administrator who supports taking money from a local industry, then complains that one of his faculty takes scholarly positions that are not in the interest of that industry. One might ask whether it’s appropriate at all for a university to take money from what is essentially a lobbying group. Especially if it creates an expectation that the scholars there will only do research that supports the cause of the cotton growers. Maybe instead of talking about whether Sumner has betrayed his country, we ought to talk about whether the dean has betrayed his university and the taxpayers who pay him.

But let’s focus on Sumner and the accusations that have been leveled against him. Is he a traitor? Did he betray his country by working for the opposition in a WTO case? Not in the literal sense. Even the cotton growers, in making the accusation, admitted it wasn’t a perfect analogy. They said that if this had been a government or military matter, it would have been treason and grounds for a trial. But it’s not just an imperfect analogy. It’s not just a case of Sumner’s activities being less harmful than someone who gives away nuclear secrets or reveals some secret code. The analogy doesn’t hold at all.

The economic interests of the United States are nothing like the military or security interests of the United States. In the case of the military, our interests as Americans are monolithic. Every American citizen has the same goals of safety and security. When America has enemies, we all want those enemies defeated.

But in the case of economics, our interests are not monolithic. Policies that help one group often come at the expense of another. What helps business may harm consumers. What helps consumers may harm business. And sometimes, helping business or consumers means harming taxpayers.

Take cotton subsidies as an example. To argue that Sumner is a traitor, or even that he harmed his country, you’d have to argue that cotton subsidies are good for America. Yes, they’re good for the members of the California Cotton Growers Association. But alas, there is no free lunch. The benefits of that cotton subsidy come from somewhere. They come from taxpayers, you and me. So cotton subsidies benefit U.S. cotton growers and punish American taxpayers. Along the way, they hurt cotton growers outside the United States and benefit clothes-wearers around the world.

Strange Welfare

There are worse programs. But when you sit back and examine the whole effect of cotton subsidies, it’s a strange sort of welfare program. The main beneficiaries are rich American cotton farmers and everyone who wears clothes made from cotton, rich and poor, around the world. The losers are taxpayers and poor farmers outside the United States. And the amounts gained by the winners don’t equal the amounts lost by the losers. It is almost always the case with subsidies that their net effect is negative—all the extra resources that get devoted to farming exceed the benefits of the extra cotton that gets grown. Subsidies make us poorer as a nation. They persist because of the political power of the cotton growers.

Given these effects, how should we assess Sumner’s contribution? I haven’t actually seen his study, but my guess is that it’s some version of truth-telling. The precise magnitudes of his findings may be high or low, but the fundamentals are probably right—U.S. subsidies hurt poor farmers outside the United States.

American taxpayers might want to give Sumner a medal rather than insult him if his findings hamper U.S. farm subsidies. Lower farm subsidies mean a richer United States. If this be treason, we ought to make the most of it.

Related posts:

1. Dr. Andrew Ure: Pioneer Free Trader
2. Ending Farm Subsidies Wouldn’t Help the Third World? It Just Aint So!
3. Dead Men Farming

Suppose gasoline became so expensive that getting oranges to Wisconsin raised their price to $3 each. If that price were expected to persist for a long time, there would probably arise a Wisconsin citrus industry with all the trimmings. Orange orchards would be planted near the Illinois border where the weather is warmest. There would be a Wisconsin Citrus Growers Association taking out ads to tell the citizens of Wisconsin about the health advantages of genuine Wisconsin orange juice. There’d be a number of orange-juice bottling plants opening up too.

The price of an orange in Wisconsin would still be a tad expensive, maybe $2. It would take some serious capital investment in greenhouses and heating systems to overcome the Wisconsin climate’s disadvantages as a place to grow oranges, and the price would have to cover those costs. But it could be done. Oranges would be a bit of a luxury. Most people wouldn’t eat them as regularly as they do now.

It might even be worthwhile to truck in oranges from Canada. It’s a short haul. True, it’s colder in Canada. Not much. But a little colder. So the greenhouse and heating costs might be a little higher. But suppose Canada had lower wages than Wisconsin. Even after the higher heating costs, let’s say a Canadian orange grower could sell an orange for $1.50 and still make a profit. There’d be rejoicing in the supermarket aisles of Green Bay. Brunch-goers in Madison would be toasting each other with fresh-squeezed OJ.

Standing in a Green Bay supermarket and weighing the virtues of a premium Wisconsin orange and an imported Canadian one would be pretty easy. Canadian oranges would flood in. Some Wisconsin growers would start losing money—trying to meet the Canadian competition at only $1.50 might be just too hard. They’d start lobbying the legislature to ban Canadian oranges. After all, they’d explain, Wisconsin is a better place to grow oranges than Canada. It’s warmer. It would be foolish to let in Canadian oranges simply because Canadians have lower wages. That’s an artificial advantage.

I doubt lovers of orange juice and Hunan beef with orange sauce and screwdrivers (the drink, not the hardware item) would be interested in the exact reason that Canadian oranges were helping to make the food and drink they love more affordable. And they’d be right. It wouldn’t matter if Canadian oranges were cheaper because Canadian orange growers were able to pay their workers less, or if Canadian soil happened to have a good mix of nutrients for citrus-growing, or if the Canadian natural-gas companies received subsidies that keep heating costs artificially low. The only thing that would matter is that oranges cost less. Citizens would have more money left over for other things. They’d also have a lot more oranges to enjoy, now that the prices were lower. The citizens of Wisconsin would have a higher standard of living.

The Wisconsin Citrus Growers Association would argue that all those cheap Canadian oranges were going to cause some unemployment in the Wisconsin orange orchards. That would cause some hardship for a while. But someone would be sure to notice that if the Canadians used some of their land to grow oranges for Wisconsin, then some of those Wisconsin orchards would be freed up to use for something else. They could be planted with grass for dairy cows to munch on. The dairy industry could expand. There would be more jobs in that industry. Without Canadian oranges, it would be worth giving up some cheese to have oranges. But if you could get oranges from Canada, it would make more sense to use that land for dairy farming.

So what’s the best use of the land in Wisconsin? Is it better for dairy farming or better for oranges? It seems obvious to us in the real world we live in that the “best” use of Wisconsin’s land is dairy farming. In the real world, that’s true because transportation costs from Florida are low enough to make Wisconsin orange orchards an absurdity. But if for some reason Florida oranges weren’t available, then the best use of Wisconsin land might no longer be dairy farming. And if cheese suddenly gets cheaper to make somewhere else, someday it might be better to turn those dairy farms into the next best alternative, whatever that might turn out to be given the nature of the land and the skills of the people of Wisconsin.

High-Tech Jobs to India

I’ve been thinking about cheese and oranges because a lot of people are worried about America losing high-tech jobs to India. We think of America as the “best” place to do programming in the same way we think of Wisconsin as the best place to make cheese and Florida as the best place to grow oranges. Programming jobs “belong” here. The worriers argue that the lower wages of Indian programmers are an artificial advantage, not a “natural” one.

Keeping those jobs here if Indians can do them more cheaply makes no more sense than keeping those orchards going in Wisconsin in a world where Canadian oranges are available. It’s particularly costly when Florida oranges can move cheaply. So too with programming jobs. If Indians are capable programmers and their wages are low, then we give up a lot to artificially keep the jobs here via some sort of protectionism or barrier to outsourcing.

Yes, says the skeptic, but it’s a bad trade—low prices for lost jobs. But that’s not the real tradeoff. The number of jobs isn’t fixed. The number of high-tech jobs that involve information isn’t fixed either. Letting India do some of those jobs for American firms more cheaply than they can be done here frees up the resources to do new things we can’t imagine and that will create the new job opportunities. And some of those opportunities will be in high-tech firms that are able to expand because they’ve saved resources leveraging Indian labor.

Related posts:

1. Is Canadian Health Care a Good Model for the U.S. to Follow?
2. Health Care: Over the Canadian Cliff?
3. Canadian Medicare: Doomed from the Start

Here is a puzzle.

I’m at a social gathering that includes some doctors. One doctor is discussing a prescription drug for a particular ailment. I interrupt with a lengthy discourse on the medication, explaining that the doctor’s understanding is faulty. He has misunderstood the most important applications of the drug. His analysis of the side effects is absurd. I patiently explain to the other bystanders that the doctor is simply wrong.

This scene, of course, has never occurred. And yet in many a social gathering I have heard doctors explain to me that the minimum wage is good for the poor; it raises their wages at no cost in reduced employment. I have had doctors patiently explain to me that my understanding of the energy market is faulty, that there is no competition there, simply the greed of big multinational oil companies that jack up the price of gasoline from time to time and only lower it to mask their sinister ability to exploit us.

So here’s the puzzle. Why do doctors feel competent to contradict economists on economic matters while economists would never contradict doctors on medical matters?

There’s a simple explanation. Doctors are more confident than economists in their ability to understand the world around us. Doctors feel that they hold the power of life and death. This induces a certain measure of self-esteem leading to the occasional intellectual overreach.

There may be something to this theory, but I doubt many doctors would contradict an engineer about the safety of a particular bridge or correct an astronomer’s assertion on the identity of a particular constellation.

We are left with a more depressing conclusion. Doctors (and plenty of other folks) don’t respect economists as credible sources of information on many economic topics. I used to think that this was the inevitable result of being a social scientist rather than a “real” scientist. No doubt the imprecision of economics has something to do with our relatively low standing in the eyes of the public relative to the practitioners of more reliable disciplines, such as physics and chemistry.

But lately I’ve started to wonder if there is a more fundamental misunderstanding at work. That misunderstanding is about the very essence of the field of economics. I’ve come to realize that most people, even intelligent, educated people, have not the faintest clue as to what economists do or what the discipline of economics has to contribute to an understanding of the world around us.

I got an inkling of the problem one time when on an airplane, the woman next to me asked what I did for a living. I mentioned that I wrote books on economics. Too bad my husband isn’t here, she said. He loves books on the stock market. I wanted to reply that I was glad her husband had stayed home, given that I have no interest in books on the stock market. I held my tongue, but I learned a lesson that I have heard confirmed in subsequent conversations with even highly educated strangers—most people think economics has something to do with personal finance or the stock market. At best, non-economists think economics is all macro, dealing with GDP, interest rates, and the money supply. Most non-economists find these topics either intimidating or boring. No wonder that most people are unaware that economics has something to say about what Alfred Marshall called the “ordinary business of life.” That side of economics, the micro side, the side that focuses on human behavior at either the individual level or in groups, has been dwarfed by the emphasis on financial news, interest rates, and the stock market.

You can see part of the problem when you mention the word “markets” to a non-economist. He immediately thinks of the stock market rather than the slightly surreal concept of economics where buyers and sellers are linked by prices.

What Is to Be Done?

So what can we do to give non-economists an idea of what economics is really about? The simple answer, of course, is to teach more people economics. But it’s a Catch-22. If people have a preconception that economics is about financial matters and if people are either intimidated or bored to tears at the prospect of a lecture on finance, then this solution is unlikely to help. It’s a little like the old “Saturday Night Live” skit about Smucker’s jam. How do you market a product with such an unattractive name? With a name like economics, you know it must be fascinating!

A more attractive and practical answer is to pick a different name for the field, a name that gets away from that embedded term “economic,” which reasonably enough, makes people think of financial matters. When strangers ask me what I do for a living, I’ve stopped saying that I teach economics. It’s a conversation stopper unless you’re talking to a fan of the stock market.

I’d prefer to say that I study human behavior. But most people assume that means psychology. So I now tell people I teach spontaneous order. Instead of ending the conversation, I usually get a follow-up question asking about spontaneous order. That gives me a chance to talk about the insights of Adam Smith’s invisible hand and Hayek’s discussion of how markets make use of information.

My idea of talking about spontaneous order is just one way to improve the reputation of what George Stigler called the queen of the social sciences. Many of you understand that economics is about more than just the stock market or interest rates. I’d like to hear from you about how you think economics might improve its image problem. E-mail me your suggestions (or send them to me c/o FEE). If any of them appeal to me I’ll use them at cocktail parties and highlight them in a future column.

Related posts:

1. Unpleasant Economists
2. Book Review ~ What Do Economists Contribute? edited by Daniel B. Klein
3. Why Economists Need to Speak the Language of the Marketplace