For a while now, my friend Greg has been talking about the use of moral arguments in economics. I understand morality to be an analysis of the world in terms of good and bad. But "moral" is not a word I use much, so I had trouble understanding Greg's posts. Like they were written in a foreign language. (Sorry, Greg!)
Finally, it woke me up at one in the morning and I realized that my recent exchange of comments at heteconomist.com was just the sort of thing Greg has been talking about. Pete Cooper writes in praise of Darrell Delamaide's "terrific article at MarketWatch" and lists Delamaide's key points. First among these being
The true problems are mass unemployment and home foreclosures...
Yeah, those are bad things. And that is a moral judgment, not that I actually noticed. I objected to Peter's selection of problems, saying
unemployment and foreclosures are problems for people. Not for the economy. If you want to fix the economy, you have to look at the economy’s problems.
Tom Hickey didn't like that:
“The economy” is the real process of people’s choices and behavior based on these choices...
I am saying that the economy is based on people and the choices they make...
People have problems, not “the economy,” and Peter identified some of these problems. If you said, “the country” (the people collectively), I would agree. But “the economy”?
So I gave an example:
Tom, if there is too much money in circulation (and if we accept Milton Friedman’s model for the sake of this example) then inflation is the economy’s solution to that particular imbalance. A general increase in the level of prices will dissipate the “excess” money and thereby correct the imbalance, and inflation will fizzle out of its own accord as the excess money is absorbed into the price level. BUT it is NOT anybody’s DECISION to correct that imbalance that way!
After that, there was no more discussion of whether the economy has problems. Instead, Tom waxed philosophical:
persons are never to be considered as means or treated simply as means, because they have absolute or intrinsic value. This is the foundation of liberal democracy as stated in our founding documents...
Then he quoted the Preamble, and concluded:
Peter is correct. THE problem is income, hence employment. ALL attention should be focus on that as an ethical matter
As an ethical matter. There it is, morality again. We want the economy to be "good" to us. And Tom tied it back to the founding fathers, making "good" a core principle.
I would say that morality and ethics might be useful for establishing objectives. But they are not useful for economic analysis. I think morality and ethics divert attention from the effort to understand and solve the economic problem.