Wednesday, May 03, 2006

J. K. Galbraith

The Guardian has managed to, inadvertantly, get the central point right in their account of J. K. Galbraith's life and legacy. A lot of what they said was the usual rubbish:
"A third was the convenient view, so entrenched in the 1980s, that while the rich ought to be given more to make them work harder, giving more to the worst-off would only make them work less. Hypocrisy will sleep more sweetly tonight for the knowledge that Galbraith is no longer around to look down from his very great height and skewer it."

Even the most basic understanding of incentives can tell you why jobs which very few people can do and which need to be done well pay far more than less skilled work for which there is less demand. This is the market's method of allocating scarce labour to the tasks which the economy needs done. It is not hypocrisy. That passage highlights where the Guardian's analysis of Galbraith was stronger:
"Consistently in his lectures and writings he put great themes into the language, themes which lit up the study of economics for those who had never been taught it."

His work on 1929 is a perfect example of this. The story of an irrational free market getting its inevitable comeuppance is a story which has wide currency in the wider world but can't survive economic and empirical analysis. Galbraith was a superb writer but a non-economist's economist.

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