Where's the Beef?
In her latest book, Cogs and Monsters, University of Cambridge economist Diane Coyle, co‐director of the Bennett Institute for Public Policy, undertakes an ambitious project: to say what we need to change about economic thinking inherited from the 20th century to help us explain, understand, and make economic policy for the 21st century. Unfortunately, she rarely goes into specifics. Whether it be about how to measure well‐being, what antitrust policy should be for an economy with industries in which one firm is dominant, or how large the role of government should be, she typically fails to pull the trigger. Along the way, she gives good examples of mistaken 20th century economic thinking without seeming to realize that her refutations can be accomplished with 20th century economic understanding. Although she has flashes of insight and affirms some important economic truths that economists have understood for more than a century, such flashes and affirmations are too rare in a 200+ page book.
This is the opening paragraph of David R. Henderson, “Where’s the Beef?“, Regulation, Fall 2021. It’s my review of British economist Diane Coyle’s latest book, Cogs and Monsters.
Some of the good:
In surveying 20th century economic thinking, Coyle gives some credit where it’s due. She highlights, for example, economists’ belief in school vouchers and trade liberalization and she seems to second those beliefs. She also quotes a beautiful passage from economist Paul Seabright about the international origins of the various components of a shirt, a quote that is reminiscent of Leonard Read’s 1950s essay “I, Pencil.” She could have titled the quote “I, Shirt.” She understands Friedrich Hayek’s insight, expressed in his 1945 article “The Use of Knowledge in Society,” that only a market can aggregate individuals’ local knowledge and that a central planner would not have access to that knowledge. Coyle also points out that economists’ “market-oriented instincts” do not depend on understanding higher-level math. She writes, “Markets are far more useful in practice than they are in theory.” Nicely said.
At times, though, she seems to straddle an issue by not taking a position. There’s nothing wrong with that per se, but when one straddles, one should explain why. In discussing Harvard philosopher Michael Sandel’s critique of markets (see “The Smart Philosopher vs. the People,” Fall 2012), for example, she writes, “He argues for excluding medicine from the market — should only the rich be able to buy a kidney or a heart?” Because Coyle doesn’t make clear whether this rhetorical question is Sandel’s or hers, she leaves the reader wondering what her view is. The obvious economic answer is that allowing anyone to buy a kidney or heart — something that is illegal now — would give people a strong incentive to sell one kidney when they’re alive and both kidneys and one heart when they die. That would enormously expand the number of hearts and kidneys supplied and would make not just rich people, but also many others, recipients of hearts and kidneys. If you found out about a GoFundMe for a modest-income neighbor who wanted a kidney for her daughter, wouldn’t you contribute a few hundred dollars? I would.
Read the whole thing.