Saturday, March 22, 2008

Been there and done that

The Economist of March 15 has a nice essay on Economics and the rule of law ("Order in the jungle: The rule of law has become a big idea in economics. But is has had its difficulties").

Some might say that the "big idea" was never really absent from serious economic discourse. My 1964 copy of Alchian and Allen's Exchange and Production: Theory in Use, for example, mentions (p. 207):

"If the output decisions are made by an all-wise dictator who knows all of the production possibilities of each person, presumably efficiency can be achieved -- ignoring questions of how the dictator will get his orders enforced and how he will distribute the resulting product.

"But in the event of a succesful revolt against the dictator, is efficient allocation of productive resources possible? ... In such a private-property capitalist system, the new 'dictator' is the rule of law of private proerty if the government enforces that rule against all people ..."

And that brings us to the presidential campaign of 2008. For all of fawning over the smarts and education of candidates Clinton and Obama, where were they (and their advisors) when these basic ideas were discussed?

Many writers have heaped praise on "The Speech" by candidate Obama (for example David Brooks on last night's Jim Lehrer news and Peggy Noonan in this morning's WSJ) but the policy bits were pure New Deal-Great Society. We have been there and done that.