Political Fatal Conceit

Economists and lawyers think differently. Economists believe that incentives are more effective to alter behavior; lawyers believe that coercion via laws is the way to affect behavior. The parable of the Sun and the Wind is illustrative. They are both intent on getting a man to remove his overcoat. The Wind tries to blow the coat off, an action which only produces behavior that makes retention of the coat more valuable. The Sun heats up, making removal of the coat more comfortable than retention. In the latter case, the man willingly removes his coat. In the parable, the Sun behaved like an economist providing incentives to alter behavior, while the Wind behaved like a lawyer trying to coerce behavior. In Washington, most elected politicians are lawyers. Too many believe that they can achieve desired behavior via coercion. They distrust incentives and markets. All problems are seen as having legislative solutions -- i.e., coercions or controls. Our current financial mess is being...(Read Full Article)

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