Re: Mirowski and critiques

[enilsson@xxxxxxxxxxxxxxx (Eric Nilsson)]

Herb G. writes:

        "More recently, the ge model gave us nonconvexities, missing
        markets, and externalities, all of which are bases for policy
        interventions."

This is certainly true.  And, furthermore, the mainstream freely admits it.

However, arguments in the mainstream against policy intervention are now
based on other arguments: 1) the government cannot have adequate information
to actually perform an optimal policy intervention and, so, government
intervention will likely make things even worse; and, 2) rent seeking
behavior implies that even if the government did have adequate information,
self-interested political/economic actors would guide government policy so
that it benefitted them personally (instead of welfare of the "nation").

(I think I might have said this all before).

Purely economic arguments against government intervention are old fashioned.
 And the question as to whether current ge models (or any other mainstream
model) indicate that government intervention might be supported might be a
red herring.





Eric Nilsson
Department of Economics
California State University, San Bernardino
enilsson@xxxxxxxxxxxxxxx
909-880-5564