Some years ago, in reviewing Lindy Edwards’ book How to Argue with an Economist, I suggested that it was part of a genre of anti-economic rationalist writing. I think ‘genre’ is a good way of describing critiques of economic rationalism, because it picks up connotations of a common style as well as of shared subject matter and perspective.
There was another example of this in an article by Martin Feil in today’s Age, run under the title ‘We killed manufacturing’. It’s a vigorous polemic against economic rationalism and free-market economics, but as is usual in this genre it does not cite any actual economic rationalist or free market advocate and shows the standard lack of interest in facts.
Admittedly, indifference to evidence does have its liberating effects, allowing creativity closed to those who drearily stick to what can be substantiated. Take this claim, for example:
According to the free-market adherents, productivity improvements occur only when there is no government intrusion in the marketplace. Businesses are left to compete and only the most efficient survive. They then altruistically give their efficiency gains to consumers to grow the market. (emphasis added)
I’ve been reading anti-economic rationalist tracts for 20 years, and have read countless denunciations of free-market theories putting self-interest at their centre, but I think this is the first time I’ve seen the theory criticised for putting too much faith in altruism. Of course many people are altruistic, but it would indeed be a foolish theory that assumed business would give productivity gains away out of generosity. If it happens, it’s because business want to increase the amount they sell by lowering prices – as free market theory would predict.
Another anti-economic rationalist intellectual tic is to present commonplace economic ideas as if they were radical critiques of economics. After saying that tariff cuts were intended to improve economic growth by creating a more efficient and export-oriented manufacturing sector, Feil argues that:
The Australian economy grows for a number of other reasons. These include the creation of new industries and new products such as information technology, computer games, the internet and the mobile phone.
Economic rationalists have, of course, noted that new industries contribute to economic growth. But far from this being a compelling argument against reducing tariffs, it is one reason for doing so – instead of investors being encouraged to put their money into inefficient industries and consumers forced to pay too much for goods this money can go to other industries.
Then there is the reliance on anecdotal evidence:
Thirty years of watching the retail price of imports not fall in response to reductions in tariff barriers and the removal of import quotas has convinced me that the consumer is the last person to benefit from a reduction in either production or logistics costs.
Perhaps Mr Feil hasn’t been clothes shopping in the last couple of decades. As the RBA’s long time series of Consumer Price Index data shows, clothing prices have been held down over a long period of time. Indeed, they are cheaper now than they were in 2000. The reason? We are importing from low-cost countries in Asia rather than propping up our own inefficient clothing industry. The long-term loss of market share by domestic car makers is also clear evidence that the abolition of car import quotas and the reduction in tariffs has greatly helped car buyers purchase the vehicles they want, rather than those that Mr Feil, the car unions, and the car manufacturers think they should have.
When I Googled Feil the story behind this op-ed aquired the potential to become more interesting. It seems that he is probably an economist, having worked for the Industries Assistance Commission long ago (it was a predecessor to the Productivity Commission, back in the days when they published reports on such matters as the duty to apply to bras imported above the quota, one of my favourites from their history – and presumably the world Feil wants to go back to). That makes his misrepresentations less excusable. But I also turned up a personal crisis, a divorce in 2002 that led to this piece on middle-aged internet dating. There seems to be some link between personal crises and wacky political beliefs.
Whatever the case, Feil’s seemingly high embarrassment threshold seems to be a factor behind publishing under-researched and confused op-eds in The Age and discussing his love life – or lack thereof – in the SMH.