Memo to Economists Like Nobel Laureate Gary Becker: Stop Writing Opinion Pieces in the WSJ ---

You are Embarrassing Yourself and Your Profession.

The editorial and opinion pages of the Wall Street Journal attracts Economists with impressive credentials.  This week it has attracted Mr. Gary Becker. Mr. Becker, the 1992 Nobel economics laureate, is professor of economics at the University of Chicago and senior fellow at the Hoover Institution. 



Does Getting This Make Conservative
Economists Stupid?



The Problem is that when these very highly qualified economists write for the Journal they descend into misconceptions, falsehoods, repudiation of basic economic theory and logical inconsistencies.  Far from advancing their cause, they leave the impression that their positions must be incredibly weak in that they cannot be supported by facts, logic and analysis.

Mr. Becker writes the following nonsense.

This recession might well have been a deep one even with good government policies, but "government failure" added greatly to its length and severity, including its continuation to the present. In the U.S., these government actions include an almost $1 trillion in federal spending that was supposed to stimulate the economy

No, what has happened is that the stimulus stopped the decline and started the economy on recovery but because it was not enough and has run its course, the economy has stalled.  Government has been a major factor in stopping the recession, it has just not, laregely for political reasons, been able to cause substantial growth.

Mr. Becker rightly blames regulatory failure for contributing to the problem, but then says this about increased regulation passed to correct things.

Congress did manage to pass badly designed laws concerning financial markets, consumer protection and medical care. Although regulatory discretion failed leading up to the crisis, Congress nevertheless added to the number and diversity of federal regulations as well as to the discretion of regulators

In short, regulators failed, but having more regulations and giving regulators more authority is not the answer.  Don’t Nobel Laureates have to know at least basic logic?

As far as state government goes we have the obligatory praise for Conservative Republicans

A few newly elected governors, such as Scott Walker in Wisconsin, have pushed through reforms to curtail the power of unionized state employees. But most other governors have been afraid to take on the unions and their political supporters.

And apparently willful ignorance of reforms and successes by Democratic governors in Montana, New York, Connecticut and California, because acknowledging them would undermine the political spin that Mr. Becker must put forth to even get on the WSJ opinion pages.

With respect to government intervention to promote private competition, Mr. Becker rejects that

Does the existence of market imperfections justify government intervention? The answer would be no, if the imperfections in government behavior were greater than those in the market."

ignoring over 100 years of some success in anti-trust laws, and over 75 years some success in regulation of financial markets and institutions, (until the George W. Bush administration)  civil rights, employment practices, the environment and the like.

Finally we have this

The widespread demand after the financial crisis for radical modifications to capitalism typically paid little attention to whether in fact proposed government substitutes would do better, rather than worse, than markets

Thus completing the illogical circle by totally contradicting his initial premise that lack of effective regulation is partly to blame for the current difficulties. 

After abandoning the regulated capitalism of the New Deal and subsequent programs, the result has been the worst economy since the Great Depression.  Does any non-ideologue really think active government regulation in 2001-07 would have made things worse?