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Vol. 17  No. 21 Final Edition
Clovis Free Press

Tuesday March 20, 2001
The Armchair Economist Speaks
Turning vexing economic questions
into an activity that ordinary people might enjoy.
By Prof. Steven E. Landsburg

     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 trains.
     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 might enjoy.

        [Editor's 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.

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