JOSEPH HEATH ~ FILTHY LUCRE ~ 2009

~T-S&F-O-TWS-HFB-TLATR-TWVBP-TRACCOTITAOTSTA-TLHBFTGUO-C-W-TRHBFTGUO-L ~ The – Successes And Failures – Of – The Welfare State – Have Forced Both – The Left And The Right – To Swallow Very Bitter Pills – To Renounce A Core Component Of The Ideologies That At One Time Set Them Apart – The Left Has Been Forced To Give Up On – Communism – While – The Right Has Been Forced To Give Up On – Libertarianism

~ C:TSSDE-L:TSSDN-BIANTD ~ Communism: The State Should Do Everything – Libertarianism: The State Should Do Nothing – Both Ideas Are Now Thoroughly Discredited

~ TCO-C-I-OC-SBK-BIMFBT-B-TCO-L-ITTCWJAC ~ The Collapse Of – Communism – Is – Of Course – Somewhat Better Known – Because It Made For Better Television – But – The Collapse Of – Libertarianism – In The Twentieth Century Was Just As Complete

~ AWBO-II-JDAUTO-GI ~ A Whole Bunch Of – Individual Interest – Just Don’t Add Up To One – Group Interest

~ DHTSO-PONT-‘VH’-OGTSI-IOTGETAIAWTAPTCO ~ Despite Having The Same Objectives – People Often Need The – “Visible Hand” – Of Government To Step In – In Order To Get Everyone To Act In A Way That Actually Promotes Their Common Objectives

~ SWNTHA-S-YCGAMEOOS-IA-WIR-AWS-ICP-IAHEA-T-PPP-ETVOE-A-TEF-TEA-MRN-ISCSBATTHB ~ So We Need To Have A – State – You Can’t Get A Market Economy Out Of Self-Interest Alone – What Is Required – And What Self-Interest Cannot Provide – Is An Honest Enforcement Agency – To – Protect Private Property – Ensure The Voluntariness Of Exchange – And – To Enforce Contracts – This Enforcement Agency – Must Remain Neutral – Its Services Cannot Simply Be Available To The Highest Bidder

~ IYLATLOSPBTGTETSFOTCE-OJTMLEFI-TRIPI ~ If You Look At The List Of Services Provided By The Government To Ensure The Smooth Functioning Of The Capitalist Economy – Or Just To Make Life Easier For Investors – The Range Is Pretty Impressive

~ TITBSBATRCTTGETTGROIRN-AAR-TSSESEPTIOCT-SPFC ~ The Idea That Businesspeople Should Be Able To Run Crying To The Government Every Time They Get Ripped Off Is Relatively New – As A Result – The State Spends Enormous Sums Essentially Protecting The Integrity Of Commercial Transactions – Social Programs For Capitalists

~ TCT-‘LG-A-‘LF’C-TOTBNSM-APDOIL-A-AAPOTIOTWMTI’LG’-TBACT ‘KTPTBTW-SEE’-ATSDQAAPP ~ The Commitment To – “Limited Government” – And – “Laissez-Faire” Capitalism – Turns Out To Be Not So Much – A Principled Defense Of Individual Liberty – As – An Arbitrary Privileging Of The Interests Of Those With Money To Invest – “Less Government” – Therefore Becomes A Call To – “Keep Those Programs That Benefit The Wealthy – Scrap Everything Else”

~ IM-EWTD ~ Incentives Matter – Except When They Don’t

~ EAFFBTAHAI-MBS-I-TSTDRBT-WTDBITAHAI-U-AAR-TWUIFSAOHPMD ~ Economists Are Famous For Believing That All Human Action Is – Motivated By Self-Interest – Technically Speaking They Don’t Really Believe This – What They Do Believe Is That All Human Action Is – Unprincipled – As A Result – They Wind Up Ignoring Fairly Significant Aspects Of How People Make Decisions

~ SS-WTMSAC-‘S’-WTWTIAASCT-‘E’ ~ Social Scientists – Who Take Morality Seriously Are Called – “Sociologists” – Whereas Those Who Think It’s All A Scam Call Themselves – “Economists”

~ TFIT-PACNOWTCOTA-BAWTPTGT ~ The Fact Is That – People Are Concerned Not Only With The Consequences Of Their Actions – But Also With The Principles That Govern Them

~ PANATWESTS ~ People Almost Never Act The Way Economist Say They Should

~ TFITKOTTEHTTSIPB-OD-A-TKOTTEHTTSIPB-OD ~ The Fact Is The Kinds Of Things That Economists Have Traditionally Thought Should Influence People’s Behavior – Often Don’t – And – The Kinds Of Things That Economist Have Traditionally Thought Shouldn’t Influence People’s Behavior – Often Do

~ EIB-PHATTOTIOEIIMHC ~ Extrinsic Incentive Bias – People Have A Tendency To Overestimate The Importance Of External Incentives In Motivating Human Conduct

~ IANTOTTM-IAOIC ~ Incentives Are Not The Only Things That Matter – Incentives Are Often Incredibly Complex

~ YPPIM-CP-ATCOT-‘LOE’-BU-WOIAHEAAB ~ Yet People Persist In Making – Confident Predictions – About The Consequences Of The – “Laws Of Economics” – Based Upon – Wildly Oversimplified Ideas About How Economic Actors Actually Behave

~ THBASMT-S-C-BE-WTP-TA-ATNS-PALMAT-HPAB ~ There Has Been A Significant Move Toward – So-Called – Behavioral Economics – Within The Profession – This Approach – As The Name Suggests – Pays A Lot More Attention To – How People Actually Behave

~ TAASO-‘IH’-AWITITGODL-MOWHNTDWTM ~ There Are All Sorts Of – “Invisible Hands” – At Work In The Institutions That Govern Our Daily Lives – Many Of Which Have Nothing To Do With The Marketplace

~ TS-IF-PETSAOWA-TM-WITS-IP-NAA-P-PW-A-PCW ~ The State – In Fact – Produces Exactly The Same Amount Of Wealth As – The Market – Which Is To Say – It Produces – None At All – People – Produce Wealth – And – People – Consume Wealth

~ I-SA-TS-O-TM-NPNCA-TSCMTWPCTPACOW ~ Institutions – Such As – The State – Or – The Market – Neither Produce Nor Consume Anything – They Simply Constitute Mechanisms Through Which People Coordinate Their Production And Consumption Of Wealth

~ ALOEIERAFTTTTEIATTWP ~ A Lot Of Errors In Economic Reasoning Arise From The Tendency To Treat Economic Institutions As Though They Were People

~ PWAF-TSOPOPPOTGO-C-OOTAOCTAEI-PM-WUTAOCTEI-TPS ~ People Who Argue For – The Superiority Of Private Over Public Provision On The Grounds Of – Choice – Often Overstate The Amount Of Choice That Actually Exists In – Private Markets – While Understating The Amount Of Choice That Exists In – The Public Sector

~ MOTSMAIATWTTOA – ‘S’ – HALMTDW-RP-TW-E-O-DJ-AICWTMSIGPIR-IIUBTATPIW-WEG-NW-LROI ~ Many Of The Social Movements And Institutional Arrangements That We Traditionally Think Of As – “Socialist” – Have A Lot More To Do With – Risk-Pooling – Than With – Equality – Or – Distributive Justice – And In Cases Where These Movements Succeed In Generating Permanent Institutional Reform – It Is Usually Because The Arrangements They Promote Involve Win-Win Efficiency Gains – Not Win-Lose Redistributions Of Income

~ FWPHNTRI ~ Fiddling With Prices Has Nothing To Recommend It

~ C-DHALTTILTIT-B-TSD-P ~ Corporations – Do Have A Lamentable Tendency To Ignore Laws That Inconvenience Them – But – Then So Do – People

~ WMSTSIV-RTJIV-ICHTEOSUTEE ~ When Money Starts To Seem Intrinsically Valuable – Rather Than Just Instrumentally Valuable – It Can Have The Effect Of Seizing Up The Entire Economy

~ PDI-OOTMISPFC-EETPOROOCB ~ Public Deposit Insurance – One Of The Most Important Social Programs For Capitalists – Essentially Eliminated The Problem Of Runs On Ordinary Commercial Banks

~ TR-IN-C-IIS ~ Tax Revenue – Is Not – Consumed – It Is Spent

~ TQI-H-TM-ITB-M-HIAHTSITB-A-HTBABOCATBD ~ The Question Is – How – The Market – Is To Be – Managed – How Inclusive And Humane The System Is To Be – And – How The Benefits And Burdens Of Cooperation Are To Be Distributed

~ U-PNTWT-AWIAOOTMISOICAD ~ Ultimately – People Need To Work Together – And Wage Inequalities Are One Of The Most Important Sources Of Internal Conflict And Dissension

~ FAETOTGITFOE-BPFTA-C-WITFTEDUEE ~ Fallacies Are Especially Thick On The Ground In The Field Of Economics – Because People Fail To Appreciate – Complexity – We Ignore The Fact That Everything Depends Upon Everything Else

~ MBR-PA ~ Mutually Beneficial Risk-Pooling Arrangements

JOSEPH HEATH ~ WHO SHALL WE SAY IS RESPONSIBLE? ~ FILTHY LUCRE ~ 2009

~ T-C-W-BAHTS/HCNA? ~ The – Consumer – Who – Bought A House That She/He Could Never Afford?

~ TB-W-L-TM? ~ The – Bank – Who – Lent – The Money?

~ T-I-W-WTATLIWMTBTLI? ~ The – Investor – Whose – Willingness To Assume The Loan Is What Motivated The Bank To Lend It?

~ T-IC-W-WTUTCRIWMTITATL? ~ The – Insurance Company – Whose – Willingness To Underwrite The Credit Risk Is What Motivated The Investor To Assume The Loan?

~ T-G-WDBT-MTICSASMTCSP? ~ The – Government – Which Didn’t Bother To – Make These Insurance Companies Set Aside Some Money To Cover Such Policies?

~ TYP-TPIT-EDSW ~ Take Your Pick – The Point Is That – Everyone Did Something Wrong

~ T-S-T-LICU-TS-IOT-ETMH ~ The – Solution – Therefore – Lies In Cleaning Up – The System – In Order To – Eliminate The Moral Hazards

JOSEPH HEATH ~ FOUR BIG IDEAS ~ FILTHY LUCRE ~ 2009

~ TA-FBI-YNTKIM-WYTA-‘S’:PAS/TIOE/EDUEE/CTHTAU ~ There Are – Four Big Ideas – You Need To Keep In Mind – Whenever You Think About – “Society”: People Aren’t Stupid / The Importance Of Equilibrium / Everything Depends Upon Everything Else / Certain Things Have To Add Up

~ PAS-YNTRTEEIPASAW-TMNBDAGJOI-B-TADI-A-IOFYPASTWO-YGTHTTTIC-ECT-TSDOSA ~ People Aren’t Stupid – You Need To Remember That Everyone Else Is Planning And Scheming As Well – They May Not Be Doing A Great Job Of It – But – They Are Doing It – And – In Order For Your Plans And Schemes To Work Out – You’re Going To Have To Take Theirs Into Consideration – Economists Call This – The Strategic Dimension Of Social Action

~ TIOE-UAAOTHNTTC-BPATBIRTCITE-YCPWTGTDJBLAWTACD-YHTFOHTGTRTTC-AWTRIGTCFC-ASO ~ The Importance Of Equilibrium ~ Understood As An Outcome That Has No Tendency To Change – Because People Adjust Their Behavior In Response To Changes In Their Environment – You Can’t Predict What They’re Going To Do Just By Looking At What They Are Currently Doing – You Have To Figure Out How They’re Going To Respond To The Change – And Whether This Response Is Going To Cause Further Changes – And So On

~ EDUEE-BTATALOQRDDUTATALOOQ-WSHAWWTCIE-WHTMSTWTTBFE ~ Everything Depends Upon Everything Else – Because The Answers To A Lot Of Questions Really Do Depend Upon The Answers To A Lot Of Other Questions – Whenever Something Happens And We Want To Consider Its Effects – We Have To Make Sure That We’re Tracing Them Back Far Enough

~ CTHTAU-ETSSS-SEMBS-BTOWTSSITSITSE ~ Certain Things Have To Add Up – Every Time Someone Sells Something – Someone Else Must Buy Something – Because The Only Way To Sell Something Is To Sell It To Someone Else