Like you, I mostly agree with all of these except the school vouchers. To use the language from the Fiske article; economists are approaching education from a “market pricing” viewpoint, and I think the only effective way to view education is from a “communal sharing” viewpoint. Phrased another way, education should not be about competition, but rather a general sharing of information that benefits everyone, not just those that are better able to compete.

I’m very curious what the surveyed economists think the goal of government policies ought to be. My guess is that it’s about maximizing some number, or set of numbers, that they calculate.

I argue that while some of these numbers are important, they are not the point of government. My reading of the Declaration of Independence suggests that the truly American goals of government ought to be the life, liberty, safety, and happiness of all the American people. My reading of the Constitution suggests that the goals of government are, among other things, to establish justice, to promote the general welfare, and to secure the blessings of liberty, for all of the American people.

I would further argue that economists’ measures are only loosely correlated with these goals.

I have to confess that my opinions about school vouchers have changed now that I have a daughter about to enter the school system. I used to oppose them because, among other reasons, I worried they would drain resources from the public schools and leave them with the hardest-to-teach students. But here’s the thing: the public schools are a one-size-fits-all model. If the school and teachers don’t suit a particular student, tough. Schools are, if anything, cutting back on “elective” programs in order to put resources into the core — further restricting their ability to handle diversity. And by “elective” they mean things that I consider non-negotiable, such as science and AP classes. Vouchers would help by giving parents and students options. Right now, the only people with options are the rich.
George

There are a couple problems with lifting tariffs. The first is the obvious one, that if we have no protection for businesses in this country, while other countries do, that puts our producers at a disadvantage. If both sides in trading relationship have eliminated their tariffs, it may look like an equitable relationship, but there are other, much sneakier forms that protectionist measures can take. When America approved permanent normal trade relations with China, it was sold as a measure that would help our trade deficit with China, rather than hurting it. China would be able to join the World Trade Organization, and as a member state, they would be required to open their internal markets to American products. By and large, that has not happened, and the American-Chinese trade imbalance has gotten worse (although there are other factors that have driven up our trade deficit with China besides China’s subtle trade barriers).

The second factor is related to exchange rates, which have huge effects on how profitable trade is between different states. Currencies are not exchanged based on “how much of currency X will buy the same in its home territory as will currency Y in its.” Exchange rates can’t deviate too far from this formula (and it’s not so easy to define exactly what that formula is, especially because in countries with very different economies, the relative scarcities of different commodities may be quite different), but a factor of two discrepancy is not at all rare. Exchange rates are driven by speculation, and (just as happens with oil prices, which are also driven primarily by speculation) they may settle into effective equilibriums that are effectively random (or at least, are based on psychological, rather than econometric criteria). This can create a long-term imbalance in the profitability with trade, which cannot be remedied merely by the free market, at least not in a reasonable period of time.

There is a useful concept from Computer Science, that of Atomic Transactions.
An Atomic Transaction is something made up up multiple pieces ALL of which have to happen or disaster will ensue. For example my telling Amazon to send me a copy of a book, paid for with this credit card, means that, at the very least

* Amazon’s shipping database has to be told to send out the book and
* my bank has to be told about the credit card transaction.

If only one of these happense, either I or Amazon get screwed.

With this as background, the reason this sort of economic list, and most of what we are told economists say, sounds so unsatisfactory, is that we are only given parts of what should be atomic transactions. For example, I imagine that a substantial number, many more than a majority, of those same 87.5% of economists who say that tariffs should be eliminated ALSO add “and there should be significant help provided to transition those who lose their jobs as a result”. The atomic transaction is reasonable, the result, after non-economists pick and choose the pieces they want, not so much.

I am guessing most of these same economists also come out strongly against the length of current copyright, the existing tax structure, local taxes paying for schools, mortgage interest deduction for individuals, and most of the corporate welfare that is embedded in the complexity of the tax code.
The collection as a whole makes sense, individual pieces, well, sometimes yes, sometimes no.

You would not be especially happy with a medical system that listened to the sentence where the doctor said “We’ll cut out his appendix” and ignored the part that said “Obviously we’ll give him anasthetic first”. Yet this is what happens everyday in the intersection of politics and economics.
IMHO economists ought to rebel at the way their statements are used in this way, or work on some sort of alternative that incorporates real-world politics, but they appear not to have much interest in that.

The fifth statement clearly demonstrates that economists are desk jockeys: You can’t just up the retirement age, because people who do physical labour are already worn out by the time they hit 55.

Increase the retirement age? That might be fine for an office worker who sits on his bum all day, but forcing manual laborers to work past 65 is cruel. Of course, you would have to personally know manual laborers to adequately appreciate this, to have some idea about the sometimes awful and often unhealthy conditions they work under, whether they’re in developing or developed countries.

The World Bank did an interesting study (PDF) last year that attempts to account for the wealth of nations. Switzerland comes out on top with $650k of capital per person, with Denmark, Sweden and United States above $500k per capita; greater than 80% of these amounts is “intangible,” e.g. education.

The biggest conclusion to come from the report is that 90% of the variation in the net capital per person can be attributed to rule of law and education. In other words, a fair and transparent system of government and a literate populace are preconditions for wealth creation.

Given what we learned in the 20th century about totalitarianism and economics, the free market is part-and-parcel of these preconditions. Hayek had the brilliance to foresee this arc in 1944, when Keynesianism was all the rage and the Eastern Bloc looked to be a redoubtable foe.

This is not to say that capitalism is perfect. Certain groups (e.g., the elderly) can fall out of the bottom of the market, and the gov’t has a role in fixing “externalities,” e.g. protecting the environment and funding basic research (:P). Furthermore, one may encounter aspects that offend humanistic sensibilities, like the Exxon CEO’s impressive compensation package or Terrel Owens. But it sure as hell beats the alternative.

The Exxon CEO’s compensation package is based on the free market no more than say, telecommunications legislation is voted on by Congressmen based on what the voters in their constituency want.

Just as there is nexus between lobbyists, think tanks (opinion makers) and legislators, there is a similar nexus between executive pay committees, consulting firms and the board of directors. This has been documented innumerable times in our free press.

There are other conflicts of interest galore. For instance, the managers of funds that your company includes as options on your 401K typically vote their shares going along with board of directors’ decisions – the conflict of interest is obvious.

One should paraphrase Gandhi and say – the free market? It would be a good idea.

The problem is that the class of people who have effective control of the economy can and do sacrifice the free market in their own interests, but promote the free market where it does not affect them; and so far, there is no check on them or accountability for it. The general public, by swallowing “free market” as a religious concept instead of as an empirical one that constantly needs to be tested to see if it applies, aids in this self-deception.

What is the point of replacing the mythology of God with the mythology of “we live in a free market country” or “in a country where every vote counts”? The first dismissals are “you are indulging in the politics of racism, or of class warfare”. Add on top of that the kind of nonsense that one’s not buying into this secular mythology is a sign of being behind in evolution.

PK,

It certainly depends what you mean by “free market:” laissez-faire, or is a welfare state allowed to piggyback on it? By the former measure, Scandinavia certainly lags; by the latter, it is comparable to the United States (for example) because rule of law and private property are sure to a similar degree. (see here)

What will be interesting is whether market-oriented countries with large welfare states can continue to meet their obligations as their populations age. If not, will there be a deleterious effect on economic productivity? Or liberty, as Hayek (and Friedman later) warned?

When I disagree with economists, it’s usually because they’re using overly simplistic view of human behavior. As a physicist, I can understand why this simplified approach to the social sciences is attractive to physicsts at first. After all, we all like spherical cows. However, humans are too numerous to analyze precisely as individuals, yet too few to treat with a statistical mechanics approach, so economics is firmly in that region where physics gets hard between problems with a handful of particles and statistical mechanics. Economics is striving to be like physics in the complexity and precision of its mathematics, but it lacks the ability to precisely map the real world to those mathematics and thus makes dangerous oversimplifications.

For example, the real issues behind free trade aren’t tariffs, or such agreements and disputes between parties to such agreements wouldn’t result in thousands of pages of complex legal documents. The real issues about free trade are in the social system around free trade, ranging from copyright and patent laws, environmental regulations, labor laws, unions, and so forth. Similarly, the question isn’t whether one likes the free market, but which free market.

I disagree with economists because they never discuss the costs of the war budget.

Nor have they made any great effort to help the American people understand the economics of a government which has invested trillions in infrastructure, most of which is used free by only the largest of corporations.

When do you see a discussion of the difference between an industry like a railroad, which has a huge sunk investment in right-of-way, and a retailer, which has most of their investment in saleable inventory? How can both of these types of industry both be subject to the same “market rules”?

In short, it’s not that hard to find them ducking the hard questions, in favor of their easy answers that flatter the rich. They’re simply not credible.

@PK: Swedish socialism is a myth as this article points out. Sweden has few trade barriers, few immigration barriers and telecom, banking, insurance, electricity have been heavily deregulated. There is no minimum wage. In Sweden you can choose your electricity provider. Can you do this even in the United States? I wouldn’t say the free market is kept on a tight leash. In fact quite the opposite. So can I get a free market alleluia.

It is also very interesting to note that every single thing that the economists suggested with the exception of raising the retirement age has already been implemented by the Swedes. They have eliminated and substantially reduced most tariffs and barriers to trade. In the early 1990′s they had actually eliminated agricultural tariffs but this has changed due to the evil EU Common Agricultural Policy. They have implemented education vouchers. They have also reformed their pension system and have George Bush style individual retirement accounts.