Unlearned Lesson

Kevin Drum is, by my description (I don't know what he would call himself) a leftish technocrat.  My read on him is that he sees a beneficial role for government via smart people sitting at the top and optimizing systems (e.g. the economy, energy policy, climate, etc).  This is a consistent with a century-old branch of American progressivism, that distrusts chaotic outcomes of individual action and believes top-down optimization is called for.

The problem with this approach (discussed by Hayek and many others) is such top down optimization is impossible for a variety of reasons, from information to incentives.  There is simply a myriad of examples where supposedly smart government officials attempted such technocratic tinkering and only ended up with a mess.  I always supposed folks who argue for more of the same simply mentally ignored these examples.

But here is Kevin Drum lamenting the insanity of ethanol subsidies (for which he should be praised).  Ethanol subsidies are absolutely counter-productive, but have been central to our top down US energy policy for over a decade.

So what I can't understand is how he keeps these two ideas in his head simultaneously -- of this ideal of brilliant actors managing the economy from above and the reality of ethanol policy.  I suppose he could argue, as many technocrats do, that if only his guys were in power, everything would be different.  But his guys are in power, and in fact his guys have been the main drivers and supporters of ethanol subsidies.

I have written a number of times about why even smart guys fail to do smart things when plopped down in the government.


  1. caseyboy:

    Your Unlearned Lesson post underscores the theme of this one. Barney Frank and Congress ruined the residential mortgage and real estate market. I don't think we've seen the bottom of that mess yet. The government is doing its best to set the national education agenda via mandates tied to funds disbursements. That isn't going to improve things.

    Myself, I kind of like the dynamic randomness of a free market reinventing itself every day. Someone identifies a need for which someone else designs a solution. And this occurs hundreds, if not thousands of times each day across our country. And then one thing builds upon another and so on and so on.

    You cannot manage innovation in a top down silo approach. See the rise and fall of the Soviet Union.

  2. David Smith:

    Your Forbes article describes well how gov officials are strongly motivated to say no to everything but I don't see the connection to the existence of stupid policies like ethanol subsidies. Surely this is a case where multiple government officials said YES to a stupid policy.

  3. Ron Steenblik:

    I'm with you, but why do conservative bloggers always feel it necessary to blame ethanol policy on the Democrats? OK, it started under Jimmy Carter, but otherwise political support has been more regional than partisan. Dubya was a HUGE promoter of biofuels, as was his Republican Agriculture Secretary, as has been most of the Republican senators and governors in the Corn Belt. A writer responding to Kevin Drum's original post over at Mother Jones sums it up succinctly: "Check out the farm belt, aka the Red States. They are overwhelmingly Republican, and maintaining farm subsidies and the reducing the deficit seem to be their two signature issues. If the Democrats controlled the farm state delegations things might be just as bad, but they don't."