Friday, 25 August 2017

Selfishness isn't always the driver

In yesterday’s post, I referred to the response by a group of LSE economists to the suggestion made by a group of economists led by Professor Minford of Cardiff University that a so-called ‘hard’ Brexit would boost the UK economy substantially.  Part of the LSE group’s critique of the report by Minford et al was that “Minford uses a 1970s style trade model in which all firms in an industry everywhere in the world produce the same goods and competition is perfect. There is no product differentiation – a German-made car is identical to a Chinese-made car. Importantly, trade does not follow the gravity equation – everyone simply buys from the lowest cost producer”.
This idea of a ‘perfect market’ where everyone acts in accordance with his or her own best financial interest, seeking to maximise income and minimise spending, is at the heart of a lot of thinking on what is often referred to as the ‘right’ of politics.  Many of them really do believe that we are all motivated by one and only one factor, and that our behaviour in response to events can be predicted from that.  It helps to explain the bemusement of many of the Brexiteers when they discover that the EU27 are considering factors other than exporting cars from Germany or Prosecco from Italy.  I think that they generally don’t get the idea that people might just be considering other factors rather than solely economic ones.
It isn’t just in relation to Brexit that we see this tendency.  We’ve seen it time and time again from the Tories in the Assembly who argue – and seem genuinely to believe - that increasing income tax rates will lead to an outflow of wealthy people whilst reducing them will lead to a corresponding inflow.  There is, as has been discussed before on this blog, no hard evidence of which I’m aware to justify this belief, but the theory says it should be so, so it must be so.  Empirical evidence is not necessary to justify or support beliefs derived from theory, from their perspective.
Today, there was another example of the same sort of thinking.  The Adam Smith Institute has come up with what they see as a wizard wheeze to persuade young people to vote Tory – scrap air traffic duty on flights to Ibiza.  Seriously.  OK, there are a few other suggestions as well – including one to make it easier for young people to travel to ‘English-speaking countries’ to replace the lost European opportunities post-Brexit, and another to legalise cocaine – but the basic underlying point is an attempt to appeal to what they see as the naked self-interest of young people.  Or, perhaps I should say, a certain type of young people, since some of the suggestions make me wonder whether they’ve ever spoken to any young working-class people at all.  But then, they don’t need to speak to anyone; their theory says that people will act in their own selfish interests at all times, and the theory must be right, no?
At one level, I find it deeply depressing that anyone could believe that selfishness is the sole motivation of all humans, but at another level, the fact that they are so divorced from the complex reality of modern life in the developed world shows the extent of the opportunity available to present an alternative vision for humanity’s future.

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