Sunday, March 21, 2010

The Chicago School, rational markets, and Mideast peace

According to the Chicago school of economics, human beings are rational and always make decisions based upon dollars and cents. So is that true? Let's do an experiment: Let's find some human beings who are in conflict, and pay them to not be in conflict.

So where do we start? Ah, I know, there's a kerfuffle over there in the Middle East right now, something about Israel and Palestinians. Oh I know, we could just pay the Palestinians to give up their notion of "Right of Return"! And we could pay the Israelis to turn over the entire West Bank and Gaza to the Palestinians, with no settlements! Since human beings are rational, they would all accept the payments, and peace would break out in the Middle East as everybody sings all sixty-six verses of Kumbaya, right?

Err.... not so fast. It turns out that if you offer a Palestinian money to give up his notion of a "Right of Return", it actually makes him *less* likely to have peaceful thoughts about Israel and Israelis. Similarly, if you offer an Israeli settler money to give up his piece of the West Bank, he's actually *less* likely to consider giving up his piece of the West Bank.

But... but... rational markets! Rational markets! Rational Markets! Warning, warning Will Robinson, does not compute, does not compute, whooo whooooot whooooooot whoooooot BOOOM! Uhm, that explosion you just heard was Chicago heads exploding. Well, if they weren't too busy doing a Sgt. Schultz and insisting, "I hear no-think! I see no-thing!" and utterly ignoring, like, reality, when reality disagrees with their ridiculous notion of "rational markets"...

-- Badtux the Snarky Penguin


  1. I had a visit from Adam Ozimek today.

    I'm just going to keep beating the reality drum.

    It's kind of fun in a plodding, tedious kind of way.

    jXb the unicorn riding trombonist

  2. Glibertarians/Chicagoschoolers take no account of human emotions. The world would work just as they think it should if everyone was Mr. Spock. Only, as opposed to uber-logical Vulcans, we emotional Earthlings are driven more by the limbic part of the brain than by our frontal lobes. Maybe that's why ultra-Glibbies come across as so unhuman. (Thing is, they have emotions too, they just deny that they do until theirs comes out in some creepy way frequently involving deviant sex.)

  3. Pudd'nhead Wilson's New Calendar (per Mark Twain) notes, "SATAN(impatiently) to NEW-COMER. The trouble with you Chicago people is you think you are the best people down here; whereas you are merely the most numerous."
    Milton Friedman's successor's prescient epitaph?


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