‘Theoclassical economists are basically immoral’

William K. Black with a long, long piece about a topic near and dear to my heart. Here’s an excerpt:

Theft of Food Aid in Somalia

The massive thefts of food aid in Somalia, primarily by the dominant clan, have worked just like Heyne predicted. As a result, Somalia is a true utopia. (It is also an NRA paradise in which because nearly everyone has an automatic weapon the streets are perfectly safe.) The reality of course is the same as what I described above in my discussion of thefts from Doctors Without Borders – except that thefts of food aid have caused far more deaths and widespread malnutrition. As with Heyne’s tale of economists’ invariably false predictions about voting based on a primitive misunderstanding of incentives the common denominator is that theoclassical economists are terrible at understanding the true nature of human incentives. The very thing that theoclassical economists claim to the defining element of their approach to predicting behavior, understanding incentives, turns out to be a great weakness.

Iraq: a similar ode to “privatization” via theft becomes a nightmare

As I write, Sunni Iraqi extremists have taken over Mosul, Iraq’s second largest city, Tikrit, much of Falluja, and key facilities in a key oil city. This is eleven years after President Bush’s infamous “Mission Accomplished” propaganda event on an aircraft carrier. One of the primary reasons that the U.S. occupation turned into a strategic disaster for Iraq and the U.S. is that the Bush administration took Heyne’s approach to epidemics of the theft from the Iraqi and U.S. governments. They treated epic thefts of state assets as “privatization” – and assumed it made Iraq’s government, society, and economy stronger.

Rajiv Chandrasekaran wrote a classic, deeply disturbing book revealing the theoclassical dogmas that underlay so much of our occupation policy failures entitled Imperial Life In The Emerald City – Inside Iraq’s Green Zone (2005). On pp. 135-136 he describes how the ideologues interpreted the theft of government trucks and police cars as desirable “privatization” – and the reality that the thefts crippled police effectiveness and the ability to distribute aid to the needy. We will never know how many people died as a result of the “privatization” of these vehicles by those who used them, and continue to use them, to transport terrorists, heavy weapons and ammunition or to create car and truck bombs.

Conclusion

Heyne demonstrates the unintended consequences of trying to create ethical apologia for theoclassical economics. He demonstrates that theoclassical economists are not simply wrong but wrong in areas in which an eight year old would consistently get the right answer. It is good to vote and tens of millions of Americans vote for reasons that reflect well on them and the Nation. The inability of theoclassical economists to comprehend this fact and their efforts to destroy the legitimacy of democratic government demonstrates a sad combination of incompetence, intellectual dishonesty, and immoral shilling for their plutocratic patrons.

Eight year olds understand that theft is morally wrong and harmful. Excluding sociopaths, only theoclassical economists think that if they assume an incentive or the non-existence of an incentive they can predict results without determining though a real factual inquiry whether their assumptions are correct. When they make those assumptions about incentives implicitly they are most vulnerable to disastrous error.