Many of my favourite economists recoil from “villains-and-victims” stories. Robin Hanson panned the movie, Blood Diamond, in large part because it is a villains-and-victims story. It’s a safe bet that these economists are also jaded about stories with heroes. Tyler (Cowen) probably speaks for most economists when he writes things like: “(F)inancial markets rarely fit into simple moral narratives...” I think the real lesson of economics is not that most stories have no villains, but that we’re often deeply mistaken about who the villains are. When we capture the villain and pull off his mask, Scooby-Doo style, he usually turns out to be the demagogue rather than the speculator.
The odd couple: Al Gore and the supply siders
a) Takes an important truth developed byothers.
b) Exaggerates it for dramatic effect.
c) As a result, draws public attention to this important truth.
d) Also brings acclaim to himself as a profound, far-sighted, truth-telling guru.
Who do I have in mind?
Maybe you think it’s Al Gore, and if so, you are correct. But I also have in mind the supply-side economists of the 1980s. The more I think about it, the more similar Al Gore and the supply-siders appear.
They both noticed something that many serious scholars had been working on (human carbon emissions are causing the planet to overheat, high tax rates are causing the economy to underperform).
They both overstated the scientific consensus (if we do nothing, temperatures will rise so quickly that sea levels will increase 20ft; if we cut tax rates, the economy will grow so quickly that tax revenues will rise rather than fall).
They both were alleging to convey a scientific message, but drew more attention to themselves than their scholarly contributions warranted (neither Al Gore nor Arthur Laffer became known for their numerous highly cited peer-reviewed publications).
They both ended up more famous as a result (a Nobel Prize, an eponymous curve).
They both infuriated those on the opposite side of the political spectrum (the right has about as much respect for An Inconvenient Truth as the left has for supply-side economics).
But, through it all, they both educated the public about something important (according to the best evidence, both carbon emissions and high tax rates are true problems which we should avoid to the extent we can).
Herb Stein once said, “There is nothing wrong with supply-side economics that division by 10 wouldn’t fix.” I thought of this quotation when I saw Al Gore’s movie. The more I think about it, the more I realize how parallel these two efforts of public education, or perhaps political propaganda, really are.
Why does New Delhi have better infrastructure?
The discussion on the collapse of the Punjagutta flyover in Hyderabad some time back had turned into a debate on civic infrastructure in India and on why New Delhi has much better infrastructure than other cities. My argument:
1. It is because New Delhi was built by the British.
2. The British cared more about civic infrastructure than Indian politicians after independence.
3. Yes, I know that they built better civic infrastructure for their selfish reasons, but that does not alter the point. They built better infrastructure. Current Indian politicians do not have any incentive, selfish or selfless, to build cities.
4. By and large, all the cities built by the British —Mumbai, Kolkata and Chennai—have held up better than the cities that came up after independence. But New Delhi is the best planned of these because it was the last one that the British built and the only one that was built after the advent of the car. Plus, they had special reason to build, being the Capital and all.