Doing the Devil’s Work

I read this post, What Economists are paid to do that was linked to in the commentary of Yglesias’ post, Neo-Ricardian Notions. Now as a Georgist, I have written previously about the Neo-classical mistake of treating land like capital in terms of factors of production. From a political economy analysis standpoint, incorporating land into capital muddled the concept of economic rent. The Neo-classical treatment took the political out of “Political Economy,” leaving us with a faulty discipline of a science of “mere economics.” The problem of economic rent wasn’t restored until a number of generations later with the advent of “Public Choice.” But still, many economists remain fairly ignorant of public choice and economic rent. Just as I would say the work of of practicing physicist who had no knowledge of Newton’s laws of motion probably wouldn’t have much merit, the work/opinions of an economist who has little or no knowledge, or faulty knowledge, of economic rent is likewise devoid of much value(of course, there are disciplines in physics where Newton’s laws do not apply, particularly in the subatomic realm, but such specialization cannot occur without knowledge first of general principles. And while, say, a high-energy particle physicist might forget about Newton while studying the creation of exotic particles in high-energy collisions of subatomic particles, he is quickly reminded, nonetheless, if he stubs his toe on the floor).

The political discussions of equality and justice are best useless and at worst evil without consideration of economic rent. Now, the author of the first post in Yglesias’ comment section notes that Smith and Ricardo leads to Henry George and not Hayek. Well, I would say he is both correct and incorrect in such a conclusion. In the author’s linked post, he spends a few paragraphs propounding that the job of economists(what they are paid to do) is to explain away the role of economic rent in political economy. His conclusion in his post, however, is a type of Non sequitur, in that he pleads that Paul Krugman, Brad DeLong and Christie Romer are examples of economists who are not “bought off” and who are sufficiently concerned with the “public interest(they are doing the Lord’s work).” However, positive law redistribution via taxation on labor, capital, and support of such things likes tariffs does not follow from Ricardo’s Law of Rent. And, frankly, those economists positive law progressive views on re-distributive justice have nothing to do with analysis of economic rent. It would be absurd to advocate for deadweight losses from taxes on labor and capital, to promote dead weightlosses from tariffs, in order to correct the deadweigt losses of Ricardian rent. In political economy, taxes on capital and labor, and things like tariffs should be understood as economic rents.

The flaw of “progressivism” is the belief that “positive justice” corrects injustice. The author, who in Yglesias’ comment section stated that Ricardo/Smith leads to George but then in his post seemed to conclude that Ricardo/Smith leads to corporate liberalism, lacks coherence. George, perhaps, could be called a “progressive,” but in it’s original meaning of “reform,” not in today’s meaning. Georgist ground rents are restitution for Ricardian rent. Ricardian rent is economic rent but Georgist rent is not. If you fail to see that distinction, then you end up babbling about “taxes are the price we pay for civilization.” The actual translation of that statement should be, “economic rents are the price we pay for government.” But that statement doesn’t make much sense. What it really means is the “function of government is to extract economic rents.” Of course, this requires moral rationalization.

Bastiat wrote:

When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.

I leave as an exercise to the reader to conclude whether the rationalization of such moral codes is the Lord’s work or the Devil’s work….

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