Indications Of Bad Economics In The Conservative Style

Can I just take a step back this week and set the stage, again, by noting some typical propositions one finds in the rhetorical artifact I call “anti-democracy bad economics in the conservative style” and contrast them to what one finds in real neoclassical welfare economics?

“We should not distort or interfere with market outcomes, especially if they are (what we suggest are) near enough approximations to theoretical perfectly competitive markets.” - Bad economics in the conservative style.

“We should strive toward a free market or, if we already have one, strive to retain it.” - Bad economics in the conservative style.

“Active democratic government is unnecessary and indeed bad because it allows voters to distort or interfere with market outcomes.” - Bad economics in the conservative style.

“Greed is good.” - Bad economics in the conservative style.

“We shouldn’t care about voters’ views on interpersonal ethics, equity issues, fairness, justice, social welfare, when evaluating economic results, because they’re subjective, unscientific nonsense.” - Bad economics in the conservative style.

“Neoclassical economics explains using only logic, math, and (in some accounts) a few uncontroversial normative or ethical inputs, the best or optimal way to allocate scarce resources.” - Bad economics in the conservative style.

“(Free) markets are socially optimal / maximize social welfare / maximize total “utility” / are best for everyone.” - Bad economics in the conservative style.

“Only after we attain, or if at one retain, any (free) market outcome should we worry about voters’ views on equity and interpersonal ethics.” - Bad economics in the conservative style.

“Only willingness to pay affects the allocation of resources in markets; the ability to pay, economic power, is irrelevant.” - Bad economics in the conservative style.

“Whoever pays more for a product on the market evidently gets more ‘utility’ from it.” - Bad economics in the conservative style.

“The only ethically acceptable way to address fairness, equity, welfare concerns is via direct transfers, as they do not distort or interfere with free markets.” - Bad economics in the conservative style.

“Anyone who objects to any given market or free market outcome evidently cannot understand the basic logic and math used in neoclassical welfare economics.” - Bad economics in the conservative style.

“Neoclassical welfare economics establishes the ethical optimality of extending markets to as many contexts as possible involving interpersonal conflicts of preferences as over the allocation of resources.” - Bad economics in the conservative style.

“False factual premises are not an issue in normative neoclassical welfare economics because they also feature as false but simplifying assumptions in the engineering models / storytelling of positive neoclassical economics.” - Bad economics in the conservative style.

Will that do? Ring any bells? Does the rhetoric of anti-democracy bad economics in the conservative style sound familiar to you at all? Well, that’s what I’m talking about. Oh, and real neoclassical welfare economics?

“One cannot generate normative conclusions regarding the social optimality of resolutions of interpersonal conflicts of preferences as over scarce resources without normative inputs on interpersonal ethics, equity, from some source as voters in a democracy.” - Real neoclassical welfare economics.

Did you think that was communism? Marxism? No, not at all. That’s neoclassical welfare economics. Note the nod to the exogenous normative premise other exogenous normative inputs should come from the governed, the voters, and not from some ethical arbiter, high priest, technocrat, Leader, monarch.

Wondering how you got the impression anti-democracy bad economics in the conservative style was real neoclassical welfare economics? Why you never really understood the normative conclusions of real neoclassical welfare economics? That’s what I discuss. Week in, week out. It’s interesting, fun.

Addendum: What makes anti-democracy bad economics in the conservative style "bad" is the false attempt to present it as real neoclassical welfare economics. To the extent the same values are presented in an honest, sincere, open way, they may not be bad economics, per se, albeit maybe dodgy ethics.

Social Welfare Functions, Again

I know I discussed it relatively recently, but I feel I should say a few more words more about the rhetoric of so-called “social welfare functions,” mostly because so many dismiss the baleful effects of bad economics in the conservative style by waving their hands at it. It’s meant to be a way to introduce interpersonal ethics, equity issues, into neoclassical welfare economics, to make it a full ethical theory rather than an ethical half-theory. In reality, it’s a rather daft, misleading bit of bad ethical philosophy, rhetoric, mostly about deflecting criticism.

If you recall my previous discussion of the odd way the term “utility” is used in neoclassical economics, you may recall the dominant modern interpretation is that it has no content beyond indicating preference ranks for a given individual. There’s nothing “behind” it, only the fact of the ranking. This interpretation is often called “preference rank utility,” although what the word utility is meant to add to that formulation is anyone’s guess and it should simply be “preference rank.” Under that definition, “utility” is undefined in interpersonal contexts. That is to say, it’s grammatical nonsense to talk about how the “utility” of person A compares to that of person B. One has a “utility” defined relative to A, and a “utility” defined relative to B, but there is no “utility” defined relative to both at the same time. Despite this, it’s not uncommon to see economists who profess to be using modern preference rank utility then move on without skipping a beat to adding up “total” utility by using a “social welfare function.” One cannot avoid the implication they simply don’t know what they’re talking about.

If a “social welfare function” is to be sensible, one must use an interpretation of “utility” in which something lies behind individual presence ranks and so exists in interpersonal contexts, as in the older “inaccessible inner perceptions of satisfaction from preference fulfillment” definition. You may recall that older definition, related to utilitarian ethical philosophy in which “utility” typically related to usefulness for an implied end as satisfaction, happiness, well-being, was also formerly used to shut down interpersonal “utility” comparisons to produce an ethical half-theory. The earlier approach to achieving that end was based on interpersonal utility comparisons not being undefined, as under the modern preference rank definition, but being technically and scientifically impossible, there being no way to obtain information on these inner perceptions of satisfaction. Later economists developed a desire to be viewed more as scientists, despite their philosophical and ethical concerns, leading them to want to shed the non-observable “nonsense” of their older definition of “utility” and adopt the new observable preference rank one. In a practical sense both approaches led to the same conclusions because although the “inaccessible inner perceptions of satisfaction from preference fulfillment” was not defined only relative to individuals, individual preference ranks were the only observable information meant to relate to it. 

The funny thing about the “inaccessible inner perceptions of preference satisfaction” utility is that, as ethical philosophy, it’s complete garbage, in the sense few would likely agree with it if they could actually implement it. Say one had a dream where one could access these postulated inner perceptions and one found they were greatest with someone, oh heck let’s say Adolph Hitler, whose perceptions were so much stronger they dwarfed all others. So the ethical thing to do would be to let Mr. Hitler victimize everyone? Would anyone seriously accept maximizing that type of “utility” as sound ethical philosophy if they could implement it? Unlikely. As I like to say, it’s an ethical theory whose utter implausibility is masked by it utter impossibility. It’s not a real ethical proposition but a rhetorical maneuver. However, if one starts with “utility” defined in that way, and has no actual idea the size or intensity of the relevant inner perceptions, one might want to “weight” them according to some formula in order to add them up and get a total “utility” or inner perception across people.

It’s garbage. Bad philosophy. One claimed implausibly to want to maximize a peculiar sort of “utility,” then one basically ignored it and introduced unrelated ethical thinking (ironically possibly involving other takes on utility), and made up conclusions having nothing really to do with it.

It introduces the ethical stylings of philosophically clueless economists, the ones making these social welfare functions, based on who knows what ethical thinking, and sets economists up as ethical arbiters. Why? What does your average economist know about ethical philosophy? 

It does nothing to address the problems introduced by bad economics in the conservative style, as that rhetoric remains untouched. The ethical rationale for interpersonal ethics and equity issues remains external to neoclassical welfare economics, which remains an ethical half-theory.

The odd formulation supports rhetorical arguments in some forms of bad economics in the conservative style in which interpersonal ethics, equity issues, are viewed as irrational, unjustified, arbitrary, mere “virtue signaling,” nothing that should be taken seriously in economic evaluation.

If one is serious about addressing the dodgy normative rhetoric of anti-democracy bad economics in the conservative style, one won’t be distracted by the essentially mathematical issue of economists potentially using “social welfare functions” to rank perfectly competitive market outcomes.