Ramesh Ponnuru, who has taken an interest in Austrian theory, would like more on Bob McTeer’s confused piece. In addition to Corrigan and Thornton, here’s my letter to the WSJ:
Robert McTeer’s inclination to “define economics as the study of how to anticipate unintended consequences” (”The Dismal Science? Hardly!” June 4) is a tendency we should expect of economists who make their careers in government. Economics was, after all, slandered with the moniker, “dismal science,” because economists were continuously pointing out the infeasibility of schemes for improving society by government coercion.
Being a bulwark against government intervention was viewed as the proper task of economists in the bygone era of classical liberalism before economics became “professionalized” by a cadre of social engineers who made careers for themselves in running the burgeoning state apparatus during the twentieth century.
To call the effects of government intervention “unintended consequences” is nothing more that a semantic ploy used by these social engineers to deflect opposition to their schemes. It appears to absolve policy makers of any culpability for the consequences of their interventions because, as unintended, they either do not desire or do not foresee them.
By tracing out these effects for all to see, economics will always pose a formidable obstacle to all government intervention. If policy makers create a welfare state, then they are culpable for the loss of productivity and the social problems attendant to government welfare. If policy makers decide to generate a credit expansion via Fed monetary inflation, then they are culpable for the resulting financial crisis and recession.
Mr. McTeer invokes the “broken window fallacy” without mentioning that it was popularized by the great Henry Hazlitt in his best selling, Economics in One Lesson. Mr. Hazlitt speaks not of unintended consequences, but of secondary consequences. ”The art of economics,” Mr. Hazlitt wrote, “consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists of tracing the consequences of that policy not merely for one group but for all groups.” Because secondary consequences are hard to perceive, they can be ignored in policy decisions. The task of economists is not to promote such ignorance, but to dispel it.
