The visible hand in economics

Rodrik vs GMU

Posted on: August 9, 2007

It’s game on between Dani Rodrik and the GMU crowd at Marginal Revolution and EconLog these days. Rodrik made a very interesting post about the different types of economists, saying that:

I think the best way to understand the source of [economists] disagreements is to recognize that there are two genres of economists. I call them “first-best economists” and “second-best economists.”…The first group’s instinct is always to apply the first-best reasoning to the case, ignoring market imperfections in related markets, while the second group almost always presumes some market imperfections in the system.

I think we at this blog fall squarely in the second camp, as economists who feel that the government has an essential role to play in correcting market imperfections.

Arnold Kling took exception to being placed in the first category, but he often seems to fall into the trap Rodrik describes of leaving the method of achieving first-best outcomes to others. Witness his post on healthcare provision, where he claims that he doesn’t have the answer but is confident that government coverage isn’t it. Can someone who criticises others’ support of government intervention but fails to provide alternatives really claim that their position is more than an ideological one?

1 Response to "Rodrik vs GMU"

It takes less effort to just criticize. For example, your post was nonsense. Am I going to show you where you can improve? No. Just kidding…

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