Thursday, December 17, 2009

Practical Economics

I know that several of you are much more knowledgeable than I am on this topic, so consider these to be cries for help rather than pontifications. Even though I'm going to phrase them like pontifications.

It seems like one of the major things that holds Economics back is insufficient data. There are some big schisms in Economics, and I think they could be healed with better data. More to the point, I think that Economics could become MUCH more productive and more helpful in engineering a brighter tomorrow if Economists had enough high quality data.

So why don't we go collect that data?

The argument goes that it would be unethical to perform economic experiments on live populations. Utter nonsense. Our Congress has no such qualms.

Speaking of Congress, you'll notice that legislators do not presume to design aircraft carriers or information systems (though they do weigh in pretty heavily on requirements). So why are they designing our economic system? Wouldn't it be preferable if they farmed that work out to experts?

So what I'm proposing is the establishment of several special economic zones around the country. These would be the labs for economic research, and the schools for economic engineering. The policies in the special economic zones should be set according to the aims of research, but with the limitation of always trying to achieve desirable outcomes in terms of human welfare. I don't think that cramps the science mission too much. It would be desirable to choose economically troubled cities where experimentation has the highest probability of doing good, and where any negative outcomes can be conveniently blamed on the history of the place (sort of kidding about that last point).

The administrators of special economic zones should have wide freedoms to implement policies, without regard to federal or state law, so long as those policies were consistent with the research plan. Results should be carefully collected and reported. Standard measures should be collected and compared for all of the special economic zones, in addition to the data that is collected specifically for the local research plan.

In the interest of human welfare, policies that restrict emigration from the special economic zones should be prohibited. This is a necessary limit on the research objectives. If Keynesville experiences economic implosion, it's not humane to force the residents to suffer through that.

What are the most serious problems with such an idea? Could it ever be possible?

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