Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Sunday, March 28, 2010

Why are libertarian so often right-wingers?

I was reading EconLog a couple of days back and it brought back to the surface a question I have been asking myself for a while. Why are libertarians so often associated with the right wing? Specifically, why the Republican Party in the USA. Let us look at the Republicans and the Democrats and evaluate them according to libertarian values:

Economic Issues

Republicans advocate for a "small government" which trusts the market to do what it does best. Goods and services are best priced by a free undistorted market. Republicans also advocate fewer taxes (which is a big bonus when it comes to respecting private property) and an unregulated labor market without price controls or contracting restrictions. That is the conventional wisdom.
However, we should not forget things such as the Republican stance on immigration. Republicans are much more likely than Democrats to oppose open borders. Why? Keep American jobs for Americans. In other words: Knee-jerk protectionism. Libertarians realize that the job market is not a pie that you have to divide between foreigners and locals. Instead, an influx of cheap labor drops prices boosts consumption and helps everyone. (Somebody may have lost their job, but overall, we are better off) Also, who loves those rural voters and throws them farm subsidies as often as possible? Also, it is a historical fact that Republicans are much worst at balancing the budget than Democrats. And eventually, that bill is going to come due...

I would give Economic issues to Republicans by a slight margin.

Foreign Policy

Democrats it's well known are all peace loving hippies. That's a far fetched exaggeration, but recently, the Republicans started two wars where neither accomplished a whole lot. Whether it is Afghanistan or Iraq, it is hard to argue with the fact that the Democrats were a whole lot more committed to peace than the Republicans were. Now, it would be unfair to forget things such as the Balkans war which Clinton jumped in, but comparing the recent records of Republicans and Democrats, the Democrats seem less likely than the Republicans to get involved in wars.

I would give the Foreign Policy issues to the Democrats by a slight margin

Social Issues

This is in my opinion where the big difference is. Whether you are talking about abortion rights, gay rights, minority rights, women's rights, etc, the Democrats can carry this one home easily. The Republicans are a whole lot more likely than the Democrats to tell you what you can or cannot do in your bedroom. And that for me is a deal breaker. If we also look at things such as religious freedom and discrimination, it seems the Republicans would be a whole lot more amenable to racial or religious profiling.

Social issues in my opinion go easily to the Democrats.

So, why is it that Libertarians associate so much with the Republicans? Are the economic issues so immensely important that the slight Republican advantage in that area overshadows everything else? I had that chat with a friend of mine recently who said: "Well, I'm in favor of abortion rights and letting whoever want to marry do so, but I'm a white heterosexual guy. It's not my issue. Economic policy on the other hand affects me a lot." I think some of it may be that point. We are closer ideologically to the Democrats, but the dimensions on which we are more "left-wing" are not those most closely aligned with our self-interest. So we are likely to go with the other side. We'll grumble and kick and scream, but in the end, we'll get seduced by a little bit more of free-market. Now the question is: Should we keep on doing that? Or should we switch to the other side?

Tuesday, February 16, 2010

There is no such thing as normative economics

Bryan Caplan over at EconLog is asking how normative economics should be. For those of you who may not know, normative means "pertaining to a norm" and is opposed to positive. In other words, normative statements tell you what should be which positive statements tell you what is. (I am flashing back to first day High School Econ class)

I for one believe that economics should never venture into normative statements because it then ceases to be economics. Strong opinion, I know, but hear me out: The social scientific method relies upon building testable, falsifiable theories which allows us to gain predictive power. How do normative theories measure to that standard?

A normative theory is effectively a positive theory with something added at the beginning and the end. Take for example the theory of comparative advantage. A very simplistic version states that unrestricted trade through specialization leads to greater prosperity. At the beginning, add "We should do things that lead to prosperity." and at the end add "Therefore we should do unrestricted trade." At best those statements are irrelevant, at worst, they make the theory untestable and therefore unscientific. If the actual conclusion is: "We should do unrestricted trade," the theory is untestable. You cannot take facts, compare them to that statement and determine whether those facts infirm or confirm the statement without bringing in the original statement that "We should do things that lead to prosperity." But, if you bring in that assumption, you are redefining the word "should" such that the actual conclusion is: "Unrestricted trade leads to prosperity" And at that point, you have not added anything with the normative statements.

Furthermore, when you bring in an assumption, you are opening up the field for its discussion. However, how can you discuss "We should do things that lead to prosperity" as an economist? The answer is, you can't. You are doing philosophy, politics, religion which are noble pursuits (or at least can be) but you are not doing economics.

The only valid answer as an economist when asked what should be done is to say: "Tell me what you want, and I will help you get it." But to pretend that economists know what should be done is simply preposterous.