Marglin's The Dismal Science: How Thinking Like an Economist Undermines Community

The premise of The Dismal Science: How Thinking Like an Economist Undermines Community sounds very intriguing. Stephen Marglin is a guy who got tenure in the economics department at Harvard in the 1960s and promptly outed himself as a radical leftist who has devoted the majority of his career to criticizing mainstream economics. The central thesis of the book is that under the guise of scientific objectivity, the discipline of economics priveleges a peculiar view of human nature. Marglin contends that economics promotes the primacy of the needs of the individual over those of the community, and that this perspective is not rooted in science as economists claim but is in fact the artifact of a particular strain of philosophical thought that has emerged to legitimize the inequalities inherent in capitalism.

This was a book I had been really looking forward to- I enjoyed Marglin's appearance on the excellent EconTalk podcast, and of course the central idea has a lot of relevance for development. Like Marglin, I too am skeptical about a lot of things that economists are up to (though my criticism of the discipline would have less to do with some fundamental flaw in the tools of mainstream economcis and more to do with how those tools tend to be applied). Unfortunately, though, I found The Dismal Science disappointing- ultimately, there was very little here that I had any difficulty disagreeing with. The book spends far too little time trying to convice the reader of its central thesis, and far too much time on an unfocused, scattershot attack against a straw man version of "economics" that I don't recognize much at all. For example, Marglin keeps arguing that economics denies the community and allows only the individual or the state as the relevant unit of analysis. Yet, some of my own work focuses on the effects of HIV/AIDS mortality on community cooperation, and though other economists may take issue with various aspects of it one criticism I have never heard is that the community isn't a relevant focus. I would have enjoyed a thorough and balanced exploration of the idea that economics undermines community, but this book felt a lot more like a broadside.

Bryan Caplan's The Myth of the Rational Voter: Why Democracies Choose Bad Policies

Good Libertarians have long been plagued by two paradoxes: one, "How can we hate the government for interfering with the choices people are so great at making for themselves, when in a democracy the government is a product of those choices?" and two, "how can we include the people whose political ideology is limited to wanting to smoke more marijuana without having to actually hang out with them?" In The Myth of the Rational Voter, George Mason University economist Bryan Caplan sets out to resolve the first paradox. In doing so, he is heroically successful. When the day comes that Libertarians manage to vanquish government once and for all, the spontaneous order that emerges will undoubtedly include a national holiday celebrating his achievement.

Fortunately for the rest of us, Caplan has produced a fascinating and insightful book along the way. His starts with the idea that for most people, it requires discipline to think rationally and objectively. When people have nothing at stake, they prefer to hold beliefs that are emotionally satisfying, rather than beliefs that are necessarily true. The problem for democracy is that since no election comes down to a single vote, no one experiences the consequences of their own political views. For a voter, there is no incentive to go through the painful process of scrutinizing one's beliefs, since it won't impact the election anyway. When you combine that with polticians who respond to public opinion, you tend to get less-than-perfect policies. It's a compelling way to think about policymaking, and just why it is that so many otherwise intelligent people seem to hold such bizarre political views.

Most (if not all) readers will find much to disagree with in this book. Caplan is not afraid to tread on shaky analytical ground at times- some of his claims are poorly supported, and some of his arguments ultimately ring hollow. But in fact the book is far more compelling as a result of the author's willingness to reach. The approach that Caplan has taken seems to be less one of trying to convince you that everything he says is true; rather, he convinces you that his central thesis is worth thinking about, and then proceeds to stretch it as far and in as many directions as he can. It is then up to the reader how far he or she is willing to go. At one point in the book, Caplan urges his fellow economists to be less equivocal and cautious, and througout he practices what he preaches.

Paul Collier's Wars, Guns, and Votes

Just finished Paul Collier's outstanding Wars, Guns, and Votes: Democracy in Dangerous Places, his follow-up to the development blockbuster The Bottom Billion. Once again, Collier has managed to summarize a line of quantitative macroeconomic research in a way that is lively and engaging for a general readership. Wars, Guns, and Votes is more limited in scope than the Bottom Billion, and I found it more convincing as a result (though I did like Bottom Billion as well). The focus is on the causes and consequences of political violence, and Collier uses both theory and empirical work to advance a number of provacative conclusions. Some highlights:

• Elections are not enough to generate accountability and legitimacy for governments (something readers of the New York Times Letter to the Editor Page have known for over a decade). But it's even worse than that- in very poor countries, holding elections appears to lead to worse policies and governance outcomes, and increase the risk of civil war.
• About 12% of foreign aid ends up financing militaries, regardless of what the aid money is actually going towards. Governments of beneficiary countries simply spend less on whatever issues donors are involved in, and more on their militaries.
• Most interesting is Collier's "feasibility hypothesis" of civil war. The idea is that the best way to understand civil war is to look at whether rebellion (as opposed to peaceful opposition) is a feasible means for the opposition to contest the ruling government's authority. He makes the case by showing that you can actually predict whether or not a country will have a civil war fairly well just by looking at the circumstances that make it feasible (access to resources that rebels can exploit, mountainous terrain that is more difficult to police, etc.) This is a bolder statement than it sounds, because it implies that preventing civil war is less a matter of understanding or fixing the underlying grievances, and more a matter of making it harder to pull off (more on this later).
  

Wars, Guns, and Votes is a fine illustration of how the methodology of economics- rational agent models and econometric analyses of data- can yield important insights when applied to other fields, such as political science. The book also illustrates the critical importance of contextual knowledge in this kind of thing. Collier's expertise in African politics is evident, and it is only in bringing this expertise to bear that the results of his economic analysis are convincing. Some have criticized Collier for "data mining," and undoubtedly some of the details of his findings will not bear further empirical scrutiny. However, what seperates Collier's work from other more egregious data mining exercises is that Collier's empirical findings are supported by both coherent theories and an extensive knowledge of context, and as a result his stories tend to tend ring true.