Chicago's contribution to economic freedom

There is a certain irony that the city that is today synonymous with corrupt machine-style politics — thanks to the late Richard M. Daley — also brought us the 20th century’s most compelling and influential arguments for economic freedom, thanks to the assembled intellectual might at the University of Chicago’s school of economics.

Milton Friedman may still be dead, but his co-conspirator (and fellow Nobelist) Gary Becker is still very much alive, teaching at Chicago and visiting Stanford’s Hoover Institute.

Fellow Hoover Fellow Peter Robinson interviewed Becker for the WSJ, which ran Robinson’s column (alas, not the interview) on Saturday. Much of the column focused on how ObamaCare could be (or could have been) fixed to make the healthcare system more — rather than less — efficient.

More generally, Becker laments the difficulty of getting voters and policymakers to make good economic decisions:

"Of course that doesn't mean there isn't any systematic bias toward bad policy," he says. "There's one bias that we're up against all the time: Markets are hard to appreciate."

Capitalism has produced the highest standard of living in history, and yet markets are hard to appreciate? Mr. Becker explains: "People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."

Either Robinson or Becker is too kind to mention the converse problem: the public tends to underestimate the tendency of politicians to act in their own self-interest, rather than in the public interest — although a year ago Becker noted the unjustifiable pork-barrel spending in the stimulus bill.

Economist David Henderson last year coined a term for those who impute such good motivates, despite evidence to the contrary:

What should we call people who seem to regard government as the solution regardless of the evidence? I propose the term "government fundamentalists."
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Economist Jeff Hummel recently captured the essence of government fundamentalism this way: If markets don't work, have government intervene. If government intervention doesn't work, have government intervene further.

Thanks to Becker, Friedman, and others, we have intellectual theory (and evidence) that establishes the value of free markets. Now we just need more voters to appreciate that value.