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ECONOMICS:THE DISMAL SCIENCE OR THE IMPERIAL SOCIAL SCIENCE?

October 2, 2014

ECONOMICS : THE DISMAL SCIENCE OR THE IMPERIAL SOCIAL SCIENCE?

Lawrence H. Summers, former U.S. Secretary of the Treasury and director of the National Economic Council, tells us of the great insights of the economist Gary Becker, who died five months ago at age 83 after a career in identifying and treating new subjects for application of economic principles. Prior to Becker’s expansive looks into such applications, economists were involved in advancing understanding of their chosen discipline, proposing significant new theories and/or doing empirical testing. Their subject matter was about business cycles, trade, monopoly, inflation and investment – the topics on which I as an amateur economist write about myself. Becker redefined the subject matter to bring what economists call opportunity costs and externalities into the mainstream of the discipline for treatment.

Becker added economic treatment to such diverse social areas as addiction, charity, schooling, fertility, marriage and divorce, political influence etc. into the reach of the discipline. Some are now redefining economics away from its old designation of the “dismal science” to “an imperial social science” as its scholarly expansion continues apace into new subject areas, thanks (per Summers) due to the influence of Becker and his converts to such new areas to be treated, areas previously ignored by those in the discipline. I think Becker’s addition of subject matter to economic treatment was overdue and needed to bring the public’s attention to everyday living realities and not just the latest Dow and PE numbers.

For instance, it has long since been past due to consider some not so obvious costs we pay for such diverse and under-reported financial debits resulting from peoples’ getting sick or dying from environmental toxins, cleanup costs for toxic chemicals, the steep increase in fish prices due to depletion of fish stocks due in turn to corporate toxins released in both our fresh and salt water cesspools, soil erosion and hundreds of other different problems caused directly or indirectly from corporate and other polluters of our environment. These are costs which are assessed to all of us as taxpayers or as ultimate consumers (or victims) who buy these polluters’ goods and services or suffer death or ill health due to their unregulated or under-regulated activities in poisoning our air, water and soil, costs which need to see the light of day for public cognizance and response.

Diamond, for instance, takes a “Becker look” in his great book Collapse on the value of “one statistical life” in the U.S. – i.e., the cost to the U.S. economy resulting from the death of an average American whom society has gone to the expense of rearing and educating but who dies before a lifetime of contributing to the national economy – is usually estimated at around $5 million. Thus even if one takes the conservative estimate of annual U.S. deaths due to air pollution as 130,000, then deaths due to air pollution cost us about (are you sitting down?) $650 billion per year! This cost will not show up on any corporate or other balance sheet because the ones who pollute do not pay the costs for their pollution. We do (in the form of corporate welfare), both as taxpayers and victims and their families, and almost unbelievably, it could have been worse. Worse than untold human misery and loss of $650 billion? How could that possibly be?

It could have been worse but for enactment of the U.S. Clean Air Act of 1970 (Nixon did one thing right), which cost money to implement to be sure, but its implementation has yielded net health savings (aka benefits in excess of costs) of approximately one trillion dollars per year due to saved lives and reduced health costs. Yes, enforcement of pollution controls and other such “burdensome” rules and regulations decried by Wall Street and their corporate polluters in their myopic quest for enhancement of profits “costs money,” but not by Becker accounting. On the contrary, laws, rules and regulations did not “stifle business and free enterprise,” as corporate flacks loudly proclaim on TV and in business dirt sheets; they instead save thousands of lives and a trillion dollars per annum to the benefit of us all, including Wall Street, its flacks and congressional lackeys. Don’t wait up late to hear or see these numbers parlayed into the ether or print by the corporate-owned dirt sheets or TV outlets. Truth is “bad for business.”

Next stop – an economic (Becker) look at costs we are already paying and will soon be paying at an accelerated rate due to global warming, flooding and resulting catastrophes in property losses and relocation of refugees both domestic and foreign from the ravages of both flooding and air unfit for breathing (as well as consequential costs from within externalities we have yet to even identify). When this happens (and it will with today’s lack of rules and regulations and no planning), current fiscal deficits will look like peanuts and today’s naysaying politicians will be the subject of shame and contempt for their campaign-contributing efforts to keep the corporate welfare trough running while the environmental tsunami is building. We are already paying the costs of global warming; we just haven’t toted them up on our national balance sheet yet. We need a Becker assay, not another rendition of realignment of the deck chairs on the Titanic or Nero on his fiddle while Rome burns – or floods.

We owe much to Becker’s insights and his scholarly pursuits in bringing to our attention such matters as the economics of keeping people in prison (deterrence vs. costs), education (human capital), NGO foreign schools for girls (addressing population pressures), taxation of tobacco (economic costs of addiction) etc. What new problems will yield to economic surveillance as findings upon which we can make good policy decisions in saving peoples’ lives and money?

That is yet to be determined, and as Summers noted of Becker’s contributions: “It was not popular acclaim nor policy impact nor celebrity that he sought, although in the end he reaped all these rewards. Gary Becker sought the truth, and our progress toward it will be slower without him.”

Gary Becker was a great economist who neither sought the limelight nor impact on policy that his findings presented, and I understand his choice, but I, with all due respect to this great man and social scientist, have a different view. I want such findings to be the basis for policy-making, as many of his were in spite of his indifference to such use.

I, for instance, would welcome cost and other findings of an economist of his stature on global warming as a basis for policy-making and see little value to ignoring successful and pragmatic pursuit of truth for its own sake. Why, as one might biblically reference, “hide your light under a bushel” when the second-worse debacle-to-be is knocking at our door? (As my followers know, I consider total corporate control of human society  of a 1984 variety to be my number one fear, speaking of debacles).

Thank you, Gary Becker, for your pursuit of truth and not fame. Let’s go from there. Let’s be guided by just what the human and financial costs of economic and political choices really are and, ignoring propaganda from any source, insist that our policy-makers implement good policy choices. (A good start would be to abandon austerity and adopt Keynesianism as sound economic policy – today.)    GERALD   E

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