I’ve just begun reading Lanny Ebenstein’s new book, Chicagonomics: The Evolution of Chicago Free Market Economics.
After briefly describing utility maximization theory (the view that individuals act to achieve their own greatest happiness), Ebenstein states on page 11:
“…Chicago economists have typically advocated public policies that are intended to result in the highest standard of living possible for all people—not a small group among them. The goal of free market economists from Smith to the present is to maximize everyone’s happiness…” [Emphasis added]
(Note: Ebenstein uses this passage and the concept of utility maximization theory to justify his obsession with egalitarian measures—high progressive taxation and income redistribution—to lessen income inequality.)
First of all, we must address to ourselves the fact that a policy’s “intentions” are not the same thing as (and are often the opposite of) its results, as Milton Friedman eloquently pointed out in a video which Ebenstein should be advised to watch.
Second, is the final sentence of that passage not a load of hogwash? The idea that you and I want economists (let alone even believe they’re informed enough) to spend their days in ivory towers conjuring up ways to maximize our own happiness is just creepy! Nor is it necessary. Consider that the iPhone wasn’t invented because some economists were concerned with our welfare, but the Americans with Disabilities Act of 1990 was the direct result of economists and politicians acting to “maximize the utility” of a certain demographic. How did that turn out for the disabled, do-gooder economists?
The best thing an economist with Ebenstein’s mindset could do is to immediately retire from the profession. It’s enough to allow to private individuals and profit seeking enterprises the discretion over “maximizing” their own “utility.”
If one is truly a free market economist, he ought to spend his days improving his ability to combat the fallacies and half-truths presented by interest groups who lobby government officials for plausible sounding policies which in the end will result in unintended consequences.