domingo, dezembro 16, 2012

government officials, being human, are not gods

Follow-Up Letter to a Very Bright 11th-Grader por Don Boudreaux:
At the end of the day, it must be conceded that if officials with god-like powers of discernment – along with god-like abilities to remain unaffected by partisan politics and ideological prejudices – are in fact in charge, then such officials, being god-like, will always outperform real-world markets (which are only ever operated by us flawed mortals).

Your teacher’s implicit theory, therefore, is correct: gods do outperform humans. Your teacher’s premise, though, is mistaken: government officials, being human, are not gods.

I can’t close this letter without objecting to your teacher’s allegation that my earlier response to you is “the kind of thing believed by only followers of Ayn Rand.” My point to you in my September e-mail has nothing to do with Ms. Rand; it is, instead, pretty standard economic reasoning. And that reasoning reflects a deep wisdom that’s been around since long before Ms. Rand was born. The great Scottish philosopher David Hume, for example, observed in 1772 that “so great is the uncertainty of merit, both from its natural obscurity, and from the self-conceit of each individual, that no determinate rule of conduct would ever result from it.”* While Hume here wasn’t speaking about equal-pay legislation specifically – he was speaking about proposals to reward people according to their moral merit – his wisdom applies perfectly to equal-pay legislation. The ‘true’ market value of any worker’s effort is bound to be obscure to even the smartest government official, and every worker is naturally prone (that is, has “self-conceit”) to believe that he or she is worth more than he or she is paid.

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