Tuesday, February 9, 2010

"zero-sum" in economics but not politics?!

I had never caught the perverse, ironic and infuriating observation at the end of this article and my post on it: those who apply zero-sum thinking to economics don't do the same for government activism.

Morons, political hacks, or both?

From Matt Welch in Reason...

Anyone who has expended energy arguing for free trade, market competition, and the open exchange of ideas has repeatedly encountered the same obstacle: zero-sum assumptions misapplied to dynamic, nonlinear phenomena. Almost anywhere you see statism advancing— in economic policy, national security, even the basic conditions for free speech—you can bet that underneath there’s a faulty zero-sum argument....

You might have thought that the New Democrats routed those zero-sum arguments years ago, perhaps when then–Vice President Al Gore eviscerated Ross Perot while debating the North American Free Trade Agreement on Larry King Live. But Old Democrat economics made a rousing and depressing comeback during the 2006 congressional elections...

It’s an alluringly simple vision, this notion that public policy challenges can be solved merely by lifting some gold off one end of the scale and plopping it down on the other. You see it every day...

There are three fatal flaws in this line of thinking. The first is that it fails to acknowledge, let alone explain, the fact that we keep placing more and more gold on the “government services” end of the scale without seeing anything like a commensurate increase in results....

The second flaw in zero-sum economic logic is that by consciously whittling down issues to a single, hermetically sealed scale, policy makers overlook the complexity of consequences, whether intended or not....

The third and most infuriating aspect of zero-sum economics is that its practitioners suddenly forget to apply the same standard to one of the few entities that can accurately be described with a pie metaphor: government budgets—especially on the state and local level...

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