Thursday, 28 June 2012

The ‘good-citizen’ economist

As the NZAE meetings are on right now I would hope that one issue being discussed is how can we be, what Donald J. Boudreaux calls, The ‘good-citizen’ economist?

Boudreaux's answer involves attempts to chip away at the Everest-sized mountain of "man-in-the-street" myths that wildly distort the public's understanding of the workings of the economy. Chief among these myths is the notion that the key to economic prosperity lies not in attending chiefly to the long-run interests of consumers but, rather, in attending to the short-run interests of producers – the false notion that the ultimate point of consumption is to stimulate production rather than the understanding that the ultimate justification for production lies only in the consumption it makes possible. This myth is made especially pernicious because it is so politically convenient for office-holders and seekers.

Notice that economists have for a long time have been battling this myth. Adam Smith pointed out more than 240 years ago that "Consumption is the sole end and purpose of all production" and that the measure of a country's true wealth, is the total of its production and commerce. That is, a country's wealth is what the people of that country can consume. The great 19th century French economic pamphleteer Frédéric Bastiat wrote, "Consumption is the end, the final cause, of all economic phenomena, and it is consequently in consumption that their ultimate and definitive justification is to be found."

Here'e hoping that those at the NZAE meeting are "good-citizen economists". I have my doubts about some of them :-(.


Invisible Backhand said...

Boudreaux can't even get a majority of economists to agree with him, and so he shouldn't be telling us peasants what to think. Charles Koch yanks his leash anyways, so all you're really getting from Donald J. Boudreaux is what the Kochs are paying for you to hear. I believe the technical term for that is 'advertising'.

Paul Walker said...

Can't see why the majority of economists would not agree on this.