Why Do People Keep Calling Tyler a Market Fundamentalist?

I have read Tyler for about 5 years. I think that these critics either don’t understand market fundamentalism or are disingenuous. Tyler is pretty mild, all things considered.

So true Bryan, especially your point about Tyler leaning closer to Obama than to Milton Friedman. I’ve noticed Tyler has undertaken a general shift left since I started reading his blog a few years ago.

At best he is a reluctant statist whose only argument against importing scandinavian socialism here is that our population is too diverse to support it.

Deep down Tyler has been persuaded by prioritarians like Derek Parfit, the only man whose moral philosophy seems to put Tyler in awe.

I don’t have an explanation for this mis-perception of Tyler, but I can share my own early mis-perception of his online writing. In the early days of my MR reading, I took his series “Markets In Everything” to be a kind of quirky celebration of the free market. As it turned out, this couldn’t be more incorrect. “Markets In Everything” is much closer to lament and criticism (in a wonderfully unstated tone) than it is to celebration (or even curiosity).

I share the puzzlement. Tyler is sufficiently far from being a libertarian at this point that I’m not sure why anyone would even bother to accuse him of it.

I do not care what the super markets do, I am a freedom Fundamentalist.

There does seem to be something about studying government action that really makes it tempting to support the government doing something.

Maybe Tyler has drifted to the left, certainly Megan McArdle has for that reason.

As a good rule of thumb, Bryan’s writings about me reflect more about him than me. A person with my views still could not run for office in the USA — much less win — and it is not because I am too far left. (I guess Ron Paul is an exception although I wonder how radical his initial campaigns was.) The financial crisis does call for more government than is usually a good idea. That’s the new development, not any big change in my views overall. If for instance you consider the debates covered by Dani Rodrik I definitely stand on the “market fundamentalist” side, though I think that is a deliberately perjorative term. A good question to ask any market-oriented commentator is how the crisis has caused him to change any views; I am not sure how Bryan would answer this but for sure it has changed some of my views.

Milton Friedman often called himself a utilitarian, I call myself a pluralist with rights in the bundle too though not as absolutes. I’m not sure what Obama is, but in foundational terms maybe he isn’t so far from Friedman. He is more egalitarian but in that regard I don’t have so much in common with him. I’ve never been tempted by egalitarian reasoning of the sort found in today’s Democratic Party. And at times Friedman would announce a belief in rights but it is not clear how he reconciled that with his utilitarianism.

I believe, quite frankly, that Bryan considers my stance a threat to his views because I understand those views very well yet in many cases I do not agree with them and, in my view at least, I know what is wrong with them. The more Bryan can paint me as “to the left,” the less intensely he feels that threat. He can dismiss my views by classifying them with others he knows to be wrong. But the threat is still there and it is not going away…

Oh my… I wonder what, if they occur at all, the real-life analogues of this conversation are like.

Bryan, I find your argument here–and in your book–unconvincing. Many are happy to point out market failures, but nevertheless reflexively oppose regulation to address them, based on market-fundamentalist belief systems. And some of those have exerted extraordinary influence of the last three decades. I’m not sure if Phil Gramm has ever acknowledged a market failure, but if he has, I doubt that he saw regulation as a solution. Greenspan, likewise, has seen the risks of market failures, but fought hard against any regulatory prophylaxis.

But you’re absolutely right that Tyler isn’t (currently) one of these people. One example:

“Ideally we would like to make OTC derivatives more like exchange-traded derivatives and we should consider regulation toward that end. (Do note that private swaps regulators have already done quite a bit to clear up the issue of hanging and unconfirmed transactions.) At the margin the social benefits of such homogenization are higher than what the private swaps regulators will bring on their own accord. In essence homogenization and trading through a clearinghouse limits the leverage issue to a single, easily-regulated institution and therefore it limits the problem of counterparty risk.

The cost of such additional regulation will be higher transactions costs for the trades themselves and also greater contract homogeneity, which is a requirement for exchange trading, netting, and clearing. We need to make this move wisely and carefully, otherwise OTC derivatives could move to even wilder and less well regulated markets. Simply trying to shut down the OTC markets, even if that were the economically ideal vision (unlikely), would in terms of risk prove counterproductive. But the strong market positions of New York and London do make some effective regulatory action possible for OTC derivatives, especially if done in concert.”

http://www.marginalrevolution.com/marginalrevolution/2008/09/the-regulation.html

If you look back, though, before recent market failures became so obvious, you’ll be hard pressed to find him championing regulations to address the market failures that he and others have been happy to point out.

Market fundamentalism might be defined as a belief that market-created incentives always (or almost always) make for a more efficient market than government-created incentives.

That is like believing that natural selection always gives better results than artificial selection (breeding).

Would you rather live with a wolf, or Good Dog Carl?

That is like believing that natural selection always gives better results than artificial selection (breeding).
Would you rather live with a wolf, or Good Dog Carl?

It depends on what my desire to live with a canine is rooted in. Wolves are a much more efficient animal (in your analogy), but dogs “play nicer.”
Also; note that the dachschund (definitely spelled wrong) is a marvel of your selective breeding, and has horrible medical problems as a result of it’s bizarre genetics.

I would rather have a market evolve itself to act like a market than be forcibly changed to fit the wills of a suspect government.

I’d rather take the wolf in wolf’s clothing than the one masquerading as a dog; better performance, better security.

Isaac K,

Let the battle of metaphors commence!

Unfortunately the question is which would you rather have in your economic backyard. You may prefer that in the wilderness that there are wolves rather than poodles (I can spell that), but I prefer a poodle playing with my children…or my savings.

Robb: what would you rather have protecting your house [and savings]?
a ditzy, frenetic dachschund that flips out at everything but, ultimately, provides no security?
Or a wolf?

I can give as good as I get.
metaphorically.

[hooray for the double entendre!]

“Truth be told, Tyler is probably philosophically closer to Obama than he is to Milton Friedman.”

As are the vast majority of economists… if not leftier.

Which is probably why even Cowen’s “vestigial libertarianism” is so offensive to his peers.

Drawing together happyjuggler0’s comment about imperfect regulation and the wolf/dog metaphor, and probably stretching it beyond all usefuless:

A number of dog breeds, the pug for example, have become unable to successfully deliver their own puppies: the heads will not pass through the birth canal. The puppies must be delivered by C-section.

By analogy, will regulation bring us a system in which entrepreneurship is dead, and innovation can only be achieved by government sponsorship?

About these dog/wolf analogies: any veterinarian will tell you (my father has been one for thirty-six years) that it is precisely the pure breeds, the ones most subject to genetic pump-priming to horribly cross-breed the metaphors here, who as populations have the most health and behavioral problems. Mutts as a rule are healthier, better adjusted behaviorally, and tend to live longer. Often as not they are the result of serendipitous breeding rather than two owners trying to figure out who should get busy with whom.

So if the history of dog breeding in fact tells us anything about economics it is that a few wise regulations will get you great benefits (i.e. domestication) but that the more constrained that process becomes (breeding for protectiveness, speed, etc.) the more trade-offs you inevitably create.

I suspect a better way of expressing it is not that you simplify – and therefore kill the dog- but that considered as a system dogs who are Mutts have better symmetry. Selective breeding necessarily cuts down on that symmetry and the resulting dog is less efficient overall. To walk across the analogical bridge once more, what this teaches is that humans can select for some things in a natural system that it can’t do for itself (design a dog for quail hunting for instance) and in the economy create state institutions (like the defense department) that will do things we want or need that they system wouldn’t do by itself. In both cases there are trade offs and inefficiencies. If artificial selection and gov’t action/regulation are analogous the lesson is that both are useful for very specific goals, but create a lots of problems when you use them as general methods. Whether they are truly analogous I leave to better minds.

Jay said;

“The reason that dogs are more successful than wolves is because humans prefer them. Put them in direct competition without the massive “subsidy” from mankind and see what happens. Your average pug ain’t gonna last long.”

I would say that dogs are better in the world as it is, not in some model. That massive subsidy isn’t going away.

Noboby’s replying to Kenworthy, I see. Go buy his books, read them, come back when you’re done.

His key point: it’s the *constraints* that matter, not (just) the incentives. (i.e., Natural selection excludes the losers–prevents their propogation; it doesn’t encourage the winners.)

Market-imposed constraints breed a certain type of economy. Societal/governement constraints breed (a) different type(s).

It’s far from clear that market-imposed constraints, a priori, result in a better breed.

Market fundamentalism makes that a priori assummption.

That’s a faith-based belief. Friedman repeatedly points out the need to look at situations on a case-by-case basis.

Troy Camplin’s post rather embodies this. Make that a priori assumption, cast it as scientific fact, and build a hermetically sealed belief system upon it.

The bible is the word of god. Everything else follows.