CLOVIS -- As the archchair
economics professor it has been my role as your counterintuitive guide to
evaluate the small anomalies of daily life in a free-market society.
In a series of interchangeable columns, I have
asked questions like, "Why do laws mandating use of seat belts increase the
rate of traffic accidents, as statistics show they do?"
The answer is one of those sneaky unintended consequences
in economics. In time we will figure it out in advamce. Case studies after the
fact have taught us that the presence of the driver's fastened seatbelt gives
that driver a false sense of protection and thus the incentive to
drive faster and less carefully.
Take another case. In this instance let's look at what
we have been calling "efficient markets." Some time ago here
in the San Joaquin Valley, wheat farmers sued the Southern Pacific RR for
fires that damaged crops resulting from sparks thrown off track by passing railroad
In economics theory, however, Valley wheat growers
should have been orderd by the court to absorb their own damage, since such damages
could be borne more cheaply by farmers than by the railroad companies that
were found to be at fault.
The same is true when analyzing the costs and benefits
of legalizing drugs, because increased tax revenues from untaxable criminal
activity is a non-starter. Why? The economist answers: "The transfer of wealth
from individuals to government is never equivalent to the creation of new wealth
and may even be a societal drain." Get that?
In general, as we have cheerily pointed out, economists
value efficiency as a higher order entity, than justice. In the
same vein, market solutions over legislated compromises, consumption
over saving, and the creation of wealth above all else. You
casn take that to the bank.
These are the principles that drive the engine of the
economist's analyses of criminal penalties, tax policy, environmental
legislation, and the ultimate good of market- based free trade.
For all my cleverness, I have not nor will I ever seriously
question the ``neutral'' assumptions of my profession's unbelievably contrarian
survey of everything from why popcorn at movie houses costs so much to
why recycling may actually reduce the number of trees on the planet.
That is also why I write these columns -- to turn the
discussion of vexing economic questions into an activity that ordinary people
Note: Prof. Landsburg's latest book, The Armchair Economist: Economics and
Everyday Life is available in paper from the Free
Press, ISBN: 0029177766.]
Letter to the Editor
©2001 Clovis Free Press. All rights reserved.