Roger et al.,

Robbins was an egregious offender, true, but hardly the "most" egregious.
Today some half our profession, perhaps a majority, write only
apologetically about diminishing marginal utility.  With them only "Pareto
optimality" is permissible.

And of course Pareto preceded Robbins, as did Edgeworth. The mindset that
they pioneered served to rationalize flattening the personal income tax,
substituting sales taxes for property taxes, capping the base of the payroll
tax and excluding property incomes, lowering estate taxes and corporate tax
rates, et hoc genus omne ad infinitum, step by step inexorably from then to
now.

There is obviously a diminishing marginal utility for potatoes, and they
spoil. Adam Smith noted as to housing, however, the utility from "display of
riches" does not diminish so fast, or at all. And you can spread durable
capital over many years.  So he favored taxing housing beyond some middling
value.  Veblen saw that "competitive emulation" may overpower diminishing
marginal utility, at least for many people - witness W.R. Hearst once, and
Larry Ellison and Ted Turner and the Sultan of Brunei today.

Once we have too many potatoes, there is the future to provide for; after
our futures there is a future dynasty to immortalize. So there is hardly any
limit to what Virgil called "auri sacra fames", the accursed hunger for
gold, since it lasts forever.  Equally durable, of course, and more
displayable is land. Isaiah and Amos put that in the literature long ago.
Not only does land last forever, it is harder to lose and steal than gold.

Pareto preached, and others preach today that we cannot justify taking from
the richest to help the poorest because we cannot make interpersonal
comparisons. The obvious answer is that neither can we justify keeping
things the same. We can't justify anything, we just have nihilism. Surely
someone must have developed that thought and planted it in the history of
thought literature.  If any learned readers can direct me to it, please do
so.

Thank you, Mason Gaffney

-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On
Behalf Of Roger Sandilands
Sent: Saturday, June 08, 2013 4:30 PM
To: [log in to unmask]
Subject: [SHOE] moral sentiments

Mason: Lionel Robbins was one of the most egregious offenders in this
regard. He opposed Pigou (I think it was) on progressive taxation on the
grounds that it was impossible to make interpersonal comparisons of utility
and so one could not argue that a dollar to a millionaire is not worth as
much as it is to a pauper. Unscientific, you see. Currie, who knew him at
the LSE, 1922-25, once suggested I write my PhD on "The errors of Lionel
Robbins". Sadly, Robbins succeeded Young to a chair at the LSE after Young's
untimely death in 1929.

CheeRS
   By the way, when you see Larry Boland you might ask him what he made of
Currie. They were colleagues and on his part Currie respected Larry. I think
Zane and Larry were wary of each other. I met up with one of Larry's best
students last year in Cambridge - Stan Wong, though Stan left academia and
economics to be a hot-shot lawyer advising world-wide on regulation policy.
________________________________________
From: Societies for the History of Economics [[log in to unmask]] On Behalf Of
mason gaffney [[log in to unmask]]
Sent: Saturday, June 08, 2013 10:00 PM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series

Roger Sandilands' excerpts from A.O. Hirschman dust off some old memories
that help me understand why I never took Hirschman seriously. Could we call
him a pioneer of "Freakonomics"? Now I look forward to defenses from the
Hirschman champions who came forth in large numbers to tell us he was one of
the greats.

Re "morality", I've never heard or seen anyone dismiss Adam Smith on the
grounds that he wrote about moral sentiments. Pareto and his fans have, it
is true, dismissed progressively graduated income taxes, and estate and
property taxes, on the grounds that moral sentiments are just subjective. A
few on this list might even agree, but if so, let them please come out with
it explicitly - it's worth an open dialogue.

Mason Gaffney

-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On
Behalf Of Roger Sandilands
Sent: Saturday, June 08, 2013 6:41 AM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series

Fidel objects to my "ideological motives" in criticising Raul Prebisch's
protectionism; and Ana Maria objects to my writing 'immoral' in connection
to Albert Hirschman's "principle of the hiding hand" in favour of industrial
protectionism. She says such words are inappropriate for a historian of
thought.


I actually wrote, "to my mind immoral". Note that we all have value
judgements; the only difference is in whether we make them explicit. I made
mine explicit, but I'd like to know on what good grounds - moral or
otherwise - an economist can justify the "hiding hand" principle.


Hirschman urges planners to conceal the true risks of their own pet projects
that would not otherwise be approved, or to urge private investors (risking
their money, not Hirschman's nor that of the planners he is advising). He
then explicitly supports this by invoking Christian morality to support "an
economic argument" for a "preference for the repentant sinner over the
righteous man who never strays from the path". Cute, but to my mind dubious
economics and, yes, even more dubious morality.



And what about Hirschman's policy advice based on his "theory of unbalanced
growth" (about which M June Flanders has written much): deliberately approve
projects for which there is no demand (but lots of nice backward and forward
supply-side linkages) so that while those projects go bust the resultant
bottlenecks and shortages elsewhere will then induce others to invest
profitably there?

Or his complacency over rapid population growth because it too leads to
"development-enhancing" bottlenecks?



Or his urging that the development agencies bring caravans full of the
"cornucopia of modern civilisation" to the edge of villages so that their
tradition-bound inhabitants can be wrenched out of their deplorable lack of
rational economic aspirations? But maybe he didn't explicitly use the word
deplorable.

- Roger Sandilands

________________________________
From: Societies for the History of Economics [[log in to unmask]] On Behalf Of
Ana Maria Bianchi [[log in to unmask]]
Sent: Saturday, June 08, 2013 12:29 AM
To: [log in to unmask]
Subject: Re: [SHOE] OUP series

Roger Sandilands also employs the word "immoral" to refer to Hirschman's
hiding hand principle, which I think he should not do, as historian of
thought.

----- FIDEL AROCHE <[log in to unmask]> escreveu:
>

Dear all,
Roger Sandilands disaproves Raul Prebisch's contributions to economics on
the grounds that Mr Prebisch was a "protectionist". It's sad to see that
ideological motives are used as arguments against a man whose heterodox
ideas proved to be so useful, even if so many blame him for phenomena beyond
the scope of his work.

> I wonder also what's Mr Sandilands opinion about earlier contributors to
development economics who advocate protectionism as well, on different
grounds, such as Hamilton and continue to be heared by advocates of third
party liberalism (never to be practised at home), such as the USA.

>
Regards
Fidel Aroche


2013/6/6 Roger Sandilands
<[log in to unmask]<mailto:[log in to unmask]>>

I have to say that I am very lukewarm toward Oscar Ugarteche's suggestion of
Raul Prebisch - and the main reason he gives (his influential support to
ECLA for the kind of import substituting industrialisation protectionism
that theAsian NIEs early rejected in favour of more outward-oriented
policies that propelled them to much more rapid growth than in Latin
America).

Likewise, one of my last choices would be Albert Hirschman (another
protectionist and type of "structuralist" whose work in Colombia in the
early 1950s was rightly opposed by the more thoughtful economists there, and
whose ideas on backward and forward linkages, to be promoted through the (to
my mind immoral) "principle of the hiding hand" -- the duping of investors
into putting their money {not Hirschman's} into projects whose benefiits are
deliberately exaggerated and whose true costs are concealed by civil
servants).

Nevertheless, I respect Michele Alacevich's canvassing of Hirschman's name.
His recent book, The Political Economy of the World Bank: The Early Years
(Stanford UP, 2009) contains a very full description of Hirschman's bitter
conflicts with Lauchlin Currie in Colombia, though perhaps with not enough
insight into the relative depths of their economic visions, perseverance,
and actual achievements.=