Arnold Kling again comes in with a easy-to-Read article on Masonomics; the Word itself an aggrandizement of a group who are mighty in their own minds, and may just be. George Mason does sure enough have a Powerhouse Econ Dept. There is so much to agree with in Arnold’s descriptions, and also much to disagree with under study. Masonomics, MIT, and I agree that perfect markets are a ‘bad approximation’ of reality. I would go further and state that perfect markets will create a static condition where Profits reduce to minimalize Production Costs, with loss of Incentive to capitalize new Investment because simple Purchase is the Risk-avoidance cheaper route. It is the imperfection of markets which generate the Investment advantage.
Masonomics possesses the regretful failing of a detestation of Government, refusing to grant it a rightful position in the economic spectrum. The basic underpinning for this lies in the inefficiency of Government in all but one area: Taxation. They hold the traditional Conservative hatred of usurpation of another’s money, discounting the legality of the Government’s activity; conscious they are the Prey, not the Predator. They discard the advantages of full employment theory, labor economics, and protective regulation, all because they contain real threats of taxation. Their dedication to Free Trade resides on the real desire to strip taxation from the economy by venue of purchase of foreign Goods. This Attitude prevents their appellation as the Vanguard of economics.
Masonomics worry about Government failure rests in this misapprehension that Government taxation and action are unnatural economic events. Government will always be the largest Customer that the economy will have, and the least-caring Customer in terms of the Prices charged, and the Profits derived. The expenditure patterns of Government are uniform, and thereby naturally regulating; the worst defect of Government being the elimination of deviant Consumption patterns by itself. I truly agree with Robert Hanson about excess medical care provision, and have established for myself that Government regulation causes the excess expenditure, generating the massive Windfall Profits of the health industry. Masonomics, though, would strangle the Baby, because of the existence of the dirty diaper. lgl