David Zetland writes a well written nine page look at the limits of economics in at least the media and political level, and a look at the limits of what economic models have to offer most people. This will be a series of posts highlighting major points over time. The paper must be downloaded to read.
by David Zetland Wageningen UR – Environmental Economics and Natural Resources Group; PERC – Property and Environment Research Center
Economists Owe Ecology an Apology
March 9, 2013
Part 2 from the series Economists owe ecology an apology
Nature bats last
“When we try to pick out anything by itself, we find it hitched to everything else in the Universe.” —John Muir (1911)
“The economic problem of society is…a problem of the utilization of knowledge which is not given to anyone in its totality.” —F.A. Hayek (1945)
John Muir and fellow conservationists, environmentalists and ecologists understood the world not as a machine to bend to man’s will but as a life-supporting organism that reckless humans could damage. They worried about the conversion of wetlands to farm lands, of forests to timber, of rivers to ditches of industrial effluent. Their worries were not based on simple calculations of costs and benefits; they were based on endless observations of the delicate, surprising and endless connections among flora and fauna, rocks and rivers, air and light. They worried that we were harming the ecosystems supporting our prosperity under the dual influences of ignorance and hubris. Economists sympathetic to these views worried that complex human interactions could be mismanaged and damaged like ecosystems. F.A. Hayek, Ronald Coase, Elinor Ostrom and other institutional economists argued against oversimplifying complex systems into reduced-form models and suggested simple policies and limited actions when it came to managing society.
Their humility did not appeal to politicians who liked to direct, bureaucrats who liked to push and pull, or industrialists whose machines rested at the center of (calculated) national wealth—all of them active managers when it came to manipulating factors and adjusting accounts in a quest to achieve the optimal mix of visible costs and benefits. Machine managers disliked fuzzy, vast conceptualizations of biomes that evolved in chaotic directions; they preferred the mechanisms and flow diagrams of industrial consultants who bestrode the world delivering a future from logical minds uncluttered by doubt. Sure, they added columns and rows to “internalize the externalities” in their ledgers, but they could not add what they could not measure. Their optimal exploitation and discharge diagrams seemed complete, but they failed to include the wisdom of ages: don’t shit where you eat.
It was soon clear that the absence of evidence of problems does not equal the absence of problems; unexpected damages pulled expected outcomes off course. Although trouble could be blamed on techno-optimism, national security, consumerism, and other forces, economists deserve blame for promoting accounts, models and theories that promised to quantify life quality, optimize human action, and integrate the environment, but they failed. Not all economists should be blamed for these failures—we’ll hear from them below—but the mainstream majority can be. Their dominance and influence drove the process and created a reputation which only some of us deserve but all of us bear. Let’s review the charges.