Semi-Daily Journal

What's the theorem?

It's an implication of the theorem of the second best. If there is a sufficiently large distortion elsewhere in your model, then any given policy could improve matters no matter how perverse. Philosophers will note that this argument basically goes through on the logic of the word "sufficiently"; but the argument can be formalised.

Oh but is there always an argument second best for any policy? What if there is an argunment that shows the policy to be third best sometimes fourth best sometimes, fith sometimes, etc. but never second?

Nah. Remember that when you're creating existence theorems, you get to "draw your targets round the bulletholes". The theorem would be of the form "For any policy P, there is some set of economic distortions D such that P is the optimal policy". That would be an existence theorem for a second-best argument for any policy. I increasingly doubt that it could be formalised because "policy" is too loose a concept, but something like it could.

Isn't there a corollary to the effect that a move towards an optimal solution from a second best condition may make things worse?

Always love your comments guys, always look forward to them.

Leftist to Robert Barro and like is any decent minded person about. We were and are about these "compassionates" and find them cold-hearted boors, clever, but cold-hearted boors. Perfect for the "compassionates" in the Administration. Yuch. Leftist student, indeed. How about radical right Robert?

Brad Brad Brad

What kind of "ist" is Bobby Barro, or Bobby Feldstein, or Glenny Hubbarb? The radical right has labels enough for all with whom they disagree. We too is from the community and do not find the dears so impressive.... Ah, they is the real "ists." Duh.

Bobby

Please please be very proud of what you have done with the PKarchive. The archive is simply wonderful and we could not be more grateful to you. PK and you are wonderful, the critics are fearful loons.

I'm not sure where Robert Barro's quote leaves us. Sure, it is a nice and dismissive turn of phrase, but it sounds like he is really saying this:

"once you leave efficiency and the competitive market, anything might happen, so let's keep thinking as if everything is an efficient competitive market".

If so, isn't that convenient for his worldview?

Thanks Anne :)

I don't have enough brain to wrap around this. Does this mean: given a defined set of criteria C on which a judgement is made concerning a set of arguments A, (A1,A2,A3, etc.), that when applied to policy P, when the economy is in condition E, it can be detemined that A1 is better than A2 is better than A3 is better than ... Ax?

My brain hurts. There should be a warning to non-economist who visit your site Brad.

Heres a better principle...for any policy decision there are any number of other policy paths that are as plausible but more fair than anything these idiots currently in the white house can come up with. its called the principle of pluralism.

Heres a better principle...for any policy decision there are any number of other policy paths that are as plausible but more fair than anything these idiots currently in the white house can come up with. its called the principle of pluralism.

Barro is a ideological crank, not better than the average National Review economic writer, only better trained.