I thought this week I might revisit fake indifference and normative “roadblock” rhetoric in bad economics in the conservative style. I did a related post recently on “economic efficiency” and thought I should complete the set.
One famous conclusion of neoclassical welfare economics is that unrealistic theoretical constructs called “perfectly competitive markets” are normatively laudable with respect to individual preference rankings in the sense they exhibit “economic efficiency.” “Economic efficiency,” or “Pareto efficiency” after the Italian fascist who coined the definition, relates to individual preference rankings, there called “utility,” and means no one can move up his or her preference rank without someone else moving down his or her own rank.
Another famous conclusion of neoclassical welfare economics is the normative equivalence, within the context of that theory, of all perfectly competitive, economically efficient, market outcomes. This “distributional indifference” holds for both economist observers, who are meant to consider only individual preference rankings, and the ant-like theoretical ciphers themselves, who are presumed to have no preferences relating to interpersonal ethics, economic systems, etc. Within the theoretical, unreal world of neoclassical welfare economics, which I often call the Fairy Land of Economic Theory to distinguish it from reality, the only sensible normative advice is to try to move toward any perfectly competitive market outcome, never mind which one. That conclusion breaks down in reality when the interpersonal ethical issues excluded from the Fairy Land become relevant. Any two outcomes that differ by how interpersonal conflicts of preferences are resolved will not appear normatively equivalent to real people. That will be true not only for any two perfectly competitive, economically efficient outcomes, but even for any two outcomes where one is perfectly competitive, economically efficient and one not, but which differ by how interpersonal conflicts of preferences are resolved. In the real world, those willingly constraining themselves to the (now) ethical half-theory of neoclassical welfare economics are meant to be indifferent to those ethics because they’re exogenous to that theory; they’re not meant to oppose those ethics as illegitimate, baseless.
The rhetorical program of anti-democracy bad economics in the conservative style is an elaborate, multi-pronged attempt to misstate the relationship of neoclassical welfare economics to reality to reproduce in reality the conditions and conclusions that apply in the Fairy Land. The most typical expression of bad economics in the conservative style is someone arguing against those promoting some economic policy or other, based on exogenous ethical considerations relating to interpersonal ethics, because it “interferes with” or “distorts” market outcomes. One supposes the reason they engage in fake indifference is they support the interpersonal ethics expressed in whatever proposed approximation of a perfectly competitive, economically efficient market they’re talking about, although some may, of course, be sincerely confused. Recall what makes bad economics bad is not the expression of interpersonal ethics but the way it’s done, the misstatement of the implications in reality of the arguments relating to perfectly competitive, economically efficient outcomes from neoclassical welfare economics.
Let’s look at two rhetorical techniques associated with bad economics in the conservative style. One is encouraging people to be more like the interpersonal ethics-free ciphers of the Fairy Land, suggesting equity, interpersonal ethics are nothing but baseless virtue signaling. Arguments in favor of strictly egoistic morality or amorality are highly controversial and inconsistent with the significance most forms of ethical philosophy assign to the issue of how one ought to resolve interpersonal conflicts of preferences, needs, wants, rights, and so on.
Another rhetorical technique is to focus on the normative significance of economic efficiency to suggest one should focus on that first, get to some approximation of a perfectly competitive, economically efficient market, then fix it by moving to another, if people so prefer. That’s an example of what I call a normative “roadblock” argument because it’s used in bad economics in the conservative style to inappropriately engage in exogenous ethics in an indirect way by throwing up impediments or roadblocks to expressing certain ethical views. One isn’t halfway to where one wants to go if one attains a perfectly competitive, economically efficient outcome one objects to on the basis of interpersonal ethics. It’s not something everyone can or will agree based on the limited normative significance of individual preference ranks. Policies meant to pursue or promote any particular real approximation of a perfectly competitive, economically efficient outcome can and typically will crowd out or at least complicate pursuing outcomes expressing the interpersonal ethics of some and is not true indifference. It’s not necessarily easier, more feasible, less costly to express interpersonal ethics one way than another, say by addressing the distribution of economic power rather than the definition of economic power (legal property rights), regulating markets, or just not using markets. Indeed, if one considers the incentive structures of labor and capital markets a component of a general perfectly competitive market, it’s not even clear it’s sensible or consistent to say one wants to maintain such a market while revising the distribution of economic power. In this context, it may also be noted the same democratic government expressing the same subjective ethics of voters is responsible for laws relating to not just the definition, distribution of economic power, but the choice to regulate or not use economic power in markets.There is no basis in neoclassical welfare economics to draw distinctions in that area. For example, it’s perfectly consistent with that theory for voters to decide to use economic power in markets to allocate most goods, but decide to allocate a vaccine by medical need instead. That result doesn’t imply all reasons to regulate, revise, not use any real market structure are normatively equivalent or that one cannot promote such actions on a misapprehension of facts, on ethical propositions voters disagree, or on an ignorance of unintended consequences.
If you hear someone opposing some policy or other because it interferes with or distorts ostensibly (economically) efficient market outcomes, put your critical faculties on high alert. That language indicates anti-democracy bad economics in the conservative style. Ask those expressing such ideas to drop the pretense of basing their thinking only on the ethical half-theory of neoclassical welfare economics and instead honestly explain and defend the interpersonal ethics involved. Don’t get played, get real.
