Markets and Morality

George Monbiot should study the subject he so often talks about


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Wednesday last week was a happy day here at the Institute of Economic Affairs (IEA). George Monbiot of the Guardian published his annual article about “dark money” in politics and how the IEA dominates the political system for the benefit of our donors. Insofar as he is believed, donations to the IEA can only increase. Thank you, Mr Monbiot!

His remarks also help to overcome whatever despondency we might sometimes feel about our influence on the thinking of politicians. It seems to many of us at the IEA that Brits are over-regulated and over-taxed. But, according to Mr Monbiot, it is only because of our efforts that Brits do not suffer even greater regulation and taxation. He may hate us for it, but we’ll take it as a pat on the back. Thank you, Mr Monbiot!

Despite his kindness, as Director of Research at an educational charity, I cannot let the errors in Mr Monbiot’s article pass uncorrected. I pointed out the main error in a response to his 2017 edition of the article. He thinks that, when it comes to deciding on the truth of what someone says, engagement with his arguments and evidence can be replaced by examination of his bank statements. This “genetic fallacy” is exposed in every introductory logic text book, including mine (please buy it here).

This time I want to expose another methodological failure present in both the 2017 and 2018 editions of Mr Monbiot’s article, a failure made famous by the philosopher of science Karl Popper.

As Mr Monbiot put it in Wednesday’s article, he believes that “… the ultra-rich [have] learned how to buy the political system.” If this were true, what would we expect to observe? For example, would the share of aggregate income tax paid by the highest one percent of earners have increased or decreased? (It has increased.) Would government spending on state schools, to which the ultra-rich rarely send their children, have increased or decreased? (It has increased.) Would Remainers or Leavers have won the Brexit referendum? (Leavers won.)

These look like disconfirmations of Mr Monbiot’s hypothesis. He does not bother to explain them away, being apparently unconcerned by consistency with observed facts. Nevertheless, I am sure he could if he tried. This is not because his hypothesis that the ultra-rich have bought the political system is true, but because it is merely a slogan. It has no testable implications. It does not answer to reality in the way that scientific hypotheses do. It is, thus, what Popper deemed pseudo-science.

There is a great irony here. We at the IEA are acutely aware of the often malign interaction between special interest groups and politics. Many of the scholars we have published – such as James Buchanan and Gordon Tullock – have made important contributions to the field of “public choice theory”, which tries to understand how political decisions are made.

No public choice economist, nor anyone at the IEA, doubts that special interest groups influence political outcomes in ways that benefit those groups but harm society altogether. Yet most public choice economists are solidly in the same “small government” camp as the IEA. Put simply, this is because they think that when many governmental favours are available, as they are when the government is big, more money will be spent on buying them and more harm will be done to society. Professor Mike Munger, former president of the Public Choice Society, ran as the Libertarian candidate to be governor of North Carolina in 2008.

If Mr Monbiot understood the topic that apparently concerns him – namely, the way in which private interests influence political decisions – he might well become an IEA donor. Alas, Mr Monbiot seems uninterested in the economic theory of the topics he discusses. He apparently prefers sloganising and moralising.

This may be enjoyable for Mr Monbiot and most of his Guardian readers. But no one should mistake this cheap thrill for the pleasure of understanding.

Former Director of Research

Jamie Whyte is the former Research Director at the Institute of Economic Affairs. Prior to joining the IEA, Jamie was the leader of ACT New Zealand as well as the Head of Research and Publishing at Oliver Wyman Financial Services. He has previously worked as a management consultant for the Boston Consulting Group, as a philosophy lecturer at Cambridge University and as a foreign currency trader.


2 thoughts on “George Monbiot should study the subject he so often talks about”

  1. Posted 28/07/2018 at 04:34 | Permalink

    It never ceases to trouble me how intelligent and educated individuals can buy into the ultra-fake news dispensed by the Guardian.

  2. Posted 28/07/2018 at 15:36 | Permalink

    Please… if you are going to call out an opinion for it’s genetic fallacy, please don’t think it’s ok to replace it with your own. The phenomena you choose to example, do not disprove Monbiot’s opinion. It is possible to give more in tax, more to public education and to support Brexit whilst still remaining in control of it’s political system.
    To go further it might be useful for you to recognise that your own faith in scientific method is founded on belief. And to understand that you have free choice. And so to question your own motives for supporting a corrupt and broken system when you could choose change.
    There’s a context in which those donations may well begin to make sense, no?

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