Friday, September 11, 2009

Ought Implies Can - "Fantasy is Not a Serious Policy Option."

Stole this link from Art Carden of Division of Labor.

Ought Implies Can
The Freeman
By Steven Horwitz • May 2009 • Volume: 59 • Issue: 4

In exploring the relationship between economics and ethics, we can start with two definitions that seem relevant here. The economist David Prychitko once defined economics as “the art of putting parameters on our utopias.” And in a particularly insightful definition, Nobel laureate F. A. Hayek wrote that “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” What both definitions suggest is that economics deals with the realm of the possible and in doing so demarcates the limits to what should be imaginable. Before we say we “ought” to do something, perhaps we should be sure we can do it, in the sense that the action is likely to achieve the intended ends. Put differently: ought implies can.

Ethicists can imagine all kinds of schemes to remedy perceived social ills, but none of the aspiring benefactors can afford to ignore economic analysis. Being able to dream something doesn’t guarantee it is possible. Too often ethical pronouncements have an air of hubris about them, as the pronouncer simply assumes we can do what he says we ought to do. By contrast, economics demands some humility. We always have to ask whether it’s humanly possible to do what the ethicists say we ought. To say we ought to do something we cannot do, in the sense that it won’t achieve our end, is to engage in a pointless exercise. If we cannot do it, to say that we ought to is to command the impossible.

So contrary to the commonly heard complaint, it is not that economists ignore ethical issues. Rather we attempt to describe the likely results of putting particular ethical rules into practice. For example, someone can argue that a living wage is an ethical imperative, but that doesn’t change the economic analysis of minimum-wage laws. Those laws increase unemployment and/or lead to reductions in nonmonetary forms of compensation among all unskilled workers, but especially the young, male, and nonwhite. No matter how much we think we ought to pass such legislation as a way of helping the poor, the reality remains that economics shows us that we cannot help them that way. Those who argue we ought to have such a law can still pass it if they want, but they should do it with eyes wide open to the fact that it will not achieve the result they wish, no matter how much they think we ought to have it.

Once again, my favorite law is the law of unintended consequences. If you want radical change and believe in social engineering it is always the bitch waiting to bite you in the ass.

Every kid ought to have a stable and loving home. In that frame of mind, we might as well pass legislation to make that happen. But what is stable? What is loving? You have to debate and define those things in legal terms. And even if we all could agree on the definition, would it be possible to ensure? No.

We can all agree that we don't want human suffering, especially with children. What we can't agree upon is the best way to prevent such suffering. Some people favor intrusive government intervention because it is "the right thing to do" or "we ought to do it for the kids".

The results don't seem to matter to some people. Read Thomas Sowell's The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy .

In some estimates the difference between liberals and conservatives is that liberals support policy that is right or just in their intention regardless of the consequences, and that conservatives support policy that is sound in what we can reasonably achieve. I know that isn't entirely fair given what some conservatives do, but those conservative probably aren't real conservatives anyway. That is my ideal conservative.

In my mind the ideal conservative makes the world a better place by looking at how policy actually impacts and effects people. The intentions are nice, but the results are the key. What we can do is different than your vision of the way the world should be if you were God and everyone should be happy. We have limitations. We live in a world of scarce resources.

Back to the article at hand:

It might be more accurate to say that ethicists ignore economics than that economists ignore ethics. To the extent that good economics shows what we can and cannot do with social policy, it is engaged with ethics. After all, if the point of saying we ought to do X is that we think it will achieve some set of morally desirable goals, then knowing whether or not doing X will actually achieve those goals is, or at least should be, a key part of moral inquiry. One of the tasks that economists should set for themselves is to engage in this sort of dialogue with moral philosophers and others who argue from “oughts.”

Economics is a study of incentives that I have continued all of my life. Why do people do what they do? How do incentives affect society? Politicians rarely think of unintended consequences.

What if we have insurance with no preexisting conditions? If so, I don't want to buy insurance at all. I want to find away around the system. I am a healthy man with a healthy family. We don't need medical care.

If something happens to one of us, we could simply apply for insurance and not be rejected because of preexisting conditions. So if I have cancer, I need to apply then, but I don't need to pay now. That would be silly for me from a personal economic standpoint.

I pay for insurance now because I might have cancer one day, knock on wood. It could be next week of 30 years from now. I buy insurance despite my good health. I may need it someday. But what happens if you say that I can sign up whenever and nobody can deny me? Well then I don't need insurance right now at all. The Obama administration will try to make me join anyway, but my motivation will be to find a way to get around that, because my needs will be taken care of regardless. I may not find a way around paying, but in a country of hundreds of millions of people acting on their own self interest, many people will. It is the law of unintended consequences. Sphere: Related Content

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