Important Words

Don Boudreaux posts an important Quotation of the Day from Deirdre McCloskey (see Don’s post for full cite):

Unlike stealing or taxing or highhandedly appropriating, exchange is a positive – not a zero- or negative-sum game.  If Sir Botany must tempt the peasants with offers of educational services or consultation on interior decorating in order to get the barley, both he and the peasants are better off.  If he just grabs it, only he is better off and they are worse off.  If I buy low and sell high, I am doing both of the people with whom I deal a favor.  That’s three favors done – to the seller, the buyer, and me in the middle and no one hurt except by envy’s sting.  The seller and buyer didn’t have to enter the deal, and by their willingness they show they are made better off.  One can say it stronger.  Only such deals are just.

I was exposed to the idea of that voluntary trade is a win-win much too late in life. This is the foundation upon which we can credit our superb standard of living, but we all too often are taught to despise rather than celebrate it. We should despise, or at the very least, be more cautious of the unjust transactions.


Meet Deirdre McCloskey

Don Boudreaux of Cafe Hayek posted a link to this interview with economist and historian Deirdre McCloskey.  This is my first exposure to her.  I plan to read more of her work.

Some pluckings from the interview:

Shaffer: How do you evaluate economics today and economists’ function as modern America’s preeminent public intellectuals?

McCloskey: With alarm. But non-economist intellectuals need to understand some elementary economics: There is no such thing as a free lunch; national income equals national product equals national expenditure; free trade is nice; more money causes inflation; governments are not all-wise; spontaneous order is not chaos.

My alarm comes from the economist’s tendency to reduce humans to Maximum Utility machines. We need a humanomics, of the sort that Adam Smith and John Stuart Mill and John Maynard Keynes and Friedrich Hayek and Gunnar Myrdal and Kenneth Boulding and Albert Hirschman practiced. Some current practitioners are Nancy Folbre, Arjo Klamer, and Richard Bronk. It’s an economics for grownups.

And another:

Shaffer: Traditionally, bourgeois political life is defined in precise contrast to the ancient state, as one devoted to accommodating citizens’ desires rather than inculcating virtue in them. And yet, you suggest the virtues are the precondition for a bourgeois state.

McCloskey: Not exactly precondition, because I also argue that virtues are generated by a liberal economy and state (“liberal” in the old and still European and true sense, not the sense in which progressives have used the word in the U.S.A.). Markets make us more moral.