Economists have no clothes

Was the new paper by James Buchanan who won Nobel Prize in Economics science in 1986 "for his development of the contractual and constitutional bases for the theory of economic and political decision-making" otherwise called The Theory of Public Choice.

• “Economists have been parading around, really very naked, walking around in space” ” Buchanan said. “It’s time to recognize that.” With the establishment of macroeconomics as a field of study, economists have developed models and algorithms that make people think the numbers can be manipulated, he said.

If anyone wanted to read all about Prof Buchanan should read this fantastic brief. For long I was confused about the notion of policy advice to The State or government. Prof Buchanan says:

• “First, I have been influenced by Frank Knight and F. A. Hayek in their insistence that the problem of social order is not scientific in the standard sense. Second, I was greatly influenced by Knut Wicksell’s admonition that economists cease acting as if government were a benevolent despot. Third, I rejected, very early in my thinking, the orthodox economist’s elevation of allocative efficiency as an independent standard of evaluation.”

And more importantly:

• “I resist, and resist strongly, any and all efforts to pull me toward positions of advising on this or that policy or cause. I sign no petitions, join no political organizations, advise no party, serve no lobbying effort. Yet the public’s image of me, and especially as developed through the media after the Nobel Prize in 1986, is that of a right- wing libertarian zealot who is antidemocratic, anti-egalitarian, and antiscientific. I am, of course, none of these and am, indeed, the opposites. Properly understood, my position is both democratic and egalitarian, and I am as much a scientist as any of my peers in economics. But I am passionately individualistic, and my emphasis on individual liberty does set me apart from many of my academic colleagues whose mind-sets are mildly elitist and, hence, collectivist.”

On his personal economics:

• “I like space around me. I bought this century-old log cabin and started fixing it up and added to it and so forth. I kept buying more land, more land, more land. I found out something about my utility function as I did that, because I found out that every step I took toward genuine self-subsistence really gives me a big charge. If I can build a fire in my wood stove and don’t have to depend on electric heat if we have a power outage, then I’m that much happier. Or if I can go across the street to the spring and get a bucket of water as opposed to having an electric pump to the well, that gives me a charge. Or if I grow my own vegetables or pick my own berries, which I’m doing now. This year there is a good blackberry crop. I became more and more interested in having at least a backup, so self-subsistent existence really did give me a lot of utility.”