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Brooks Wilson's Economics Blog: David Brooks on Foundational Rules and Spontaneous Order

Wednesday, October 7, 2009

David Brooks on Foundational Rules and Spontaneous Order

Mankiw refers to, "Bentham vs. Hume," as "David Brooks at his best." Jeremy Bentham was a contemporary of Adam Smith who believed that an activist government could improve societal well being. He believed that government should actively order resources. David Hume was also a contemporary of Adam Smith who greatly influenced Smith's thoughts. He believed the spontaneous order of markets best organized economic activity. As Acemoglu reminds us, all markets are constrained by law and conducted valuable historical research establishing foundational rules to maximize wealth created by spontaneous interactions. Too many rules might result in what von Mises called a hampered market economy.

David Brooks places the two philosophers in a modern setting.

Mr. Bentham knows everything. He went to Stanford, then to the Kennedy school before getting a business degree. He’s got multivariate regressions coming out of his ears, and he sprinkles C.B.O. reports on his corn flakes for added fiber.

Mr. Hume is very smart, too, but he doesn’t seem to make much use of his intelligence. He worked on Wall Street for a little while, but he never could accurately predict how the market was going to move tomorrow or the day after that.

He describes how they would approach government.
If you put Mr. Bentham in charge of the government, he’d proceed with confidence. If you told him to solve a complicated issue like the global-warming problem, he’d gather the smartest people in the country and he’d figure out how to expand wind, biomass, solar and geothermal sources to reduce CO2 emissions. He’d require utilities to contribute $1 billion a year to a Carbon Storage Research Consortium. He’d draw up regulations determining how much power plants would be allowed to pollute.

Mr. Hume, I’m afraid, wouldn’t be so impressive. If you asked him to take on global warming, he’d pile up reports on the problem. But if you walked into his office after a few days, you’d find papers strewn in great piles on the floor and him at his desk with his head in his hands.

“I don’t know the best way to generate clean energy,” he’d whine, “and I don’t know how technology will advance in the next 20 years. Why don’t we just raise the price on carbon and let everybody else figure out how to innovate our way toward a solution? Or at worst, why don’t we just set up a simple cap-and-trade system — with no special-interest favorites — and let entrepreneurs figure out how to bring down emissions?”
I would hope that, if elected, Hume would undue a few of Bentham's overzealous programs.  The original Hume did after all fight against mercantilist fetters on markets in the 18th century.  David Brooks ends on a depressing note for free marketers.
So let’s have the debate [spontaneous order vs government order]. But before we do, let’s understand that Mr. Bentham is going to win. The lobbyists love Bentham’s intricacies and his stacks of spending proposals, which they need in order to advance their agendas. If you want to pass anything through Congress, Bentham’s your man.

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