Rationally Speaking Podcast Rationally Speaking #51 - Joseph Heath on Economics Without Illusions
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Jan 1, 2012 Author Joseph Heath discusses debunking economic fallacies from both the right and left, emphasizing the importance of understanding incentives and rule-following in human behavior. He explores the government's role in providing insurance through social security and challenges myths about capitalism and overproduction. Finally, he recommends a book on the Soviet economic system.
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Price Subsidies Help The Rich More Than The Poor
- Fiddling with consumer prices to help the poor (e.g., subsidizing electricity) often helps the rich more and encourages overconsumption.
- Heath ran numbers for Canadian electricity: rich households receive about $3 for every $1 the poor receive under subsidies.
Pareto Efficiency Is A Moral Principle
- Pareto efficiency is not value-free; it embodies a moral 'no-harm' principle that improvements benefiting someone without hurting others are better.
- Heath notes Rawls influenced making distributive justice compatible with efficiency in economics teaching.
Many Economic Disputes Are Value Conflicts Not Facts
- Some political disagreements reflect deep value conflicts (e.g., U.S. emphasis on liberty) not mere factual errors.
- Heath contrasts Canadian pragmatic welfare-efficiency tradeoffs with U.S. principled libertarian willingness to sacrifice welfare for rights.