Thursday, July 16, 2009

Reasonable vs. unreasonable intellectual opponents

I’ve previously written about Paul Krugman, the political pundit and NYT columnist who shares the same name (and AFAIK body) with an MIT-trained economist who won the “Nobel” prize in economics. Somewhere in the 1990s there was a “body snatchers” type moment and the old (Prize-worthy) Paul got replaced with the new one. Generally fans of the old one don’t have much respect for the new one.

Unfortunately for new Paul, like an incautious politician or Supreme Court nominee (i.e. David Souter), the views of the old Paul are preserved for posterity. As Bryan Caplan of EconLog writes:

The Krugman we've got is sold on the House health bill. But the Krugman we had, the thoughtful economist who wrote The Accidental Theorist, would have responded differently. Krugman Past, unlike Krugman Present, would have pointed out that when the unemployment rate is 9.7%, it's a bad idea to legislate an 8% payroll increase on businesses that fail to offer health insurance. Employers are reluctant to hire workers at today's wages; how are they going to feel once the marginal worker gets 8% pricier?
Serious economists do have differences of opinion, such as about value judgements over equal outcomes vs. equal opportunity. However, they tend to agree (as do physicists or chemists or materials scientists) about the basic precepts of their discipline, things the like increasing the price of something (in this case labor) will reduce the demand.

I’ve experienced this first-hand in my own life as a pro-entrepreneurship, anti-collectivist social scientist studying open source (actually “free, libre and open source software” or F/LOSS) where a majority of the researchers are promoting the cause. It is possible to have different values but agree on the facts.

This week I traded e-mails with a PhD student in the F/LOSS (as opposed to OSS) camp who nonetheless believes that F/LOSS software is usually imitative and (coming late) rarely better than proprietary software: it doesn’t matter to him, because unlike the proprietary software it is “free” (as in speech). Similarly, I have agreed with many activists (and even OSS execs) about certain companies whose open source strategy isn’t really open (in a governance sense) but merely a marketing gimmick akin to demoware or teaseware.

Usually with the reasonable people we can agree everything has its place: proprietary companies and open source companies (or communities) should produce their respective technologies and leave it up to adopters to decide what’s best for their needs. Certainly, if a farmer’s co-op or a rich socialist or a university wants to make something and give it away, then it’s up to the firm selling something for big bucks to show theirs is worth a premium — just as Apple has to show that an iPod or a MacBook is worth a premium over their commodity rivals. And if you can’t beat them, then you pull a Microsoft and give away something (e.g. a mini-Office suite) to compete with your free alternative while selling something for those who want more. (We call that freemium).

Such a pluralism of ideas works much better in free markets (where the markets decide) than government policy, where we have to pick one answer a priori. As in the Caplan example of healthcare, we know that taxing businesses to pay for healthcare will increase business costs and taxing affluent people will reduce investment capital and the incentives to work. What’s in dispute (as with any prediction) are how big these side-effects are, whether they are worth the cost, and whether there’s a more efficient way to achieve a similar outcome.

Alas, in economics (unlike experimental nuclear physics or recombinant DNA) there are enough confounds that the experts will argue over the data for decades, as (some) argue about the impact of minimum wage increases upon unemployment. Unfortunately, national policy choices are hard to reverse, even if they do prove to be flawed (Google “social security Ponzi scheme”).

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