At Pluralistic, Cory Doctorow comments on libertarian elitists like Bryan Caplan and Jason Brennan, who argue for restricting the franchise because most people “Just Don’t Understand Economics”:
When you compare the views of the average person to the views of the average PhD economist, you find that the public sharply disagrees with such obvious truths as “we should only worry about how big the pie is, not how big my slice is!” These fools just can’t understand that an economy where their boss gets richer and they get poorer is a good economy, so long as it’s growing overall!
That’s why noted “realist” Peter Thiel thinks women shouldn’t be allowed to vote. Thiel says that mothers are apt to sideline the “science” of economics for the soppy, sentimental idea that children shouldn’t starve to death and thus vote for politicians who are willing to tax rich people.
That “Just Don’t Understand Economics” thing probably sounds familiar, if you’re someone on the Left who’s engaged at all with smug right-libertarians on social media.
And if you’re on social media, you’ve also no doubt seen that “Galaxy Brain” meme, where ascending levels of understanding are represented by images starting with a tiny-brained schmuck and progressing through an average-size brain and then to increasingly large and psychedelically luminescent brains. In this meme, the first level is a widely believed misconception. The second level — the one with the average brain — is the conventional “real fact,” as presented in mainstream high school textbooks or as understood by a reasonably intelligent undergrad major in the subject.
The third and subsequent levels add progressively increasing nuance and meta-analysis to the mainstream textbook understanding. While in a sense the second level understanding is factually correct, in another sense it’s arguably as much of a misunderstanding in its own way as the first level. The second-level average brain lacks any critical awareness of their own “facts,” or of the assumptions behind them. So the first two levels require a meta-analysis that either treats them as alternative paradigms for describing the same reality, or synthesizes them into a higher-level understanding.
Here’s the connection between the two: The folks who say “You just don’t understand economics” are virtually always on the second level. They’ve absorbed the existing paradigm of their discipline, and are quite proficient at regurgitating it, but are completely oblivious to the assumptions behind it and how historically conditioned they are.
The “size of the pie” cliche Doctorow references is a perfect example. For starters, the size of the pie is measured largely in terms of GDP, which really amounts to the total price of all goods and services — including waste production, Bastiat’s “Broken Windows,” and the portion of prices consisting of embedded monopoly rents. By that standard, the Rube Goldberg economy of Terry Gilliam’s Brazil would have the largest pie of any society in human history. Second, the size of the slice obviously matters; you’re not better off if the pie is bigger, if your slice is smaller than what it would be if billionaires didn’t own most of the pie. Third, capitalists prefer a smaller pie if they can have a bigger slice. They prefer inefficient forms of coordination like absentee ownership and hierarchy, despite all their perverse incentives and information distortions, because even though productivity is extremely suboptimal they’re much more conducive to extracting surpluses.
Another example is the generalization, stated flat-out as a dogma, that minimum wage increases cause unemployment. Well, it does in the axiomatic sense that, ceteris paribus, the demand curve for anything is negative as the price goes up. But as an unqualified assertion, it doesn’t take into account all that ceteris paribus stuff — a concept online economics bros seem never to have heard of. It doesn’t take into account, among other things, the degree of demand inelasticity, or how much labor contributes to total unit costs compared to other factors, or whether the increase might just correct for structural inequalities in bargaining power and hence be paid for by reducing the portion of profit that results from economic rents, rather than by reducing employment.
The second-tier understanding that people like Caplan and Brennan mean by “economics” includes a lot of stuff like that — along with confusion between map and territory, the social and political functions of their supposedly neutral and objective theories, and the coercive history behind “spontaneous” and “voluntary” institutions like “private property” and “freedom of contract.” In his Pluralistic piece linked above, Doctorow does an excellent job eviscerating a bunch of other just-so stories about “economics” from those circles.
I almost always abandon political quizzes in disgust because I refuse to accept the obvious implicit assumptions behind the framing of the questions, and the misleading inferences that will result if I answer them literally. I suspect anyone with any perspective at all on the history of capitalism and of economic thought would have a similar reaction to the kinds of questions someone like Caplan or Brennan would put on an economic knowledge test, because of the understanding of “economics” embodied in those questions.
As David Roth said, the job of people like Tyler Cowen is “to find new ways to say ‘actually, your boss is right.’” The people who fail the philosopher-kings’ test of economic knowledge may not be able to recite the talking points from Economics in One Lesson or a Thomas Sowell column. But they know they’re getting royally screwed by all the neoliberal wonks and court intellectuals operating on that level of economic understanding. And — because they know their relations with their boss, landlord, etc., are not “voluntary,” and that the bigger pie isn’t doing them a god damned bit of good when Gates, Bezos et al stole the pie and left them the crumbs — they probably know a lot better than Caplan or Brennan how the economic system actually works.
