Mar 05
From Bryan Caplan on his EconBlog:
All ideology aside: If the government had followed a laissez-faire policy for the last six months, and output, employment, housing, and financial markets stood exactly where they stand today, what fraction of people would conclude that "Events decisively prove that laissez-faire is a disaster"? Can you honestly give any answer less than 90%?
March 5th, 2009 at 4:44 pm
Post hoc, ergo propter hoc is a commonly used convention, by almost everyone with an axe to grind. And in economics, it is particularly useful because economic data are easy to interpret for any desired result. But for any economic situation, “decisively prove” in next to impossible, which is why economists rely so heavily on correlations. Only political commentators use phrases like “decisively prove” to mask their ignorance of actual mechanisms.
March 5th, 2009 at 6:04 pm
Is 90% a fraction? I would have thought, from his example, that laizzez-faire had no impact.
March 5th, 2009 at 7:35 pm
Wow… it’s like posting to cyborgs! The point was that if they had done laizzez-faire it would now be discredited. Instead, the got real active after decades of being increasingly active, which currently isn’t discredited.
The question is about the disconnect, currently, between performance and the view of the approaches taken to “fix” the economy.
March 5th, 2009 at 10:10 pm
OK I guess if I had read the whole article instead of the quote only I might have gotten the point.