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Have you read Andrew Potter's review?

No! It didn't come up in my google search.

"I haven't seen a single review that would lead me to believe that its author understood what Joseph Heath wrote."

Perhaps this means the book isn't as effective as it is accurate. Presumably, many of the reviewers will be among his intended audience.

True. That would be unfortunate.

I didn't actually review it, though I did write a column heavily influenced by the book:


Andrew makes a couple of good points. His one about the falling relative prices of food and clothing reminds me of another couple of points.

Suppose taxes increase by $1,000 per person, and transfers increase by $1,000 per person. Tax Freedom day gets pushed back. But net effect zero. There has to be a better way to measure the size of government.

Sorry, I'm wandering totally off-topic, but can't resist.

Q: Why might a fall in long distance phone calls increase measured poverty in Canada?

A: Because if you use the Statistics Canada "low income cutoff" as a measure of poverty (you're not supposed to, but some people do), and class as "in poverty" those households whose income is below the point where an average household spends more than x% of its income on food shelter and clothing, then any fall in the price of items other than food shelter and clothing, if it leads to a fall in expenditure on that good (which requires it be inelastic demand), will lead to an increased expenditure on other goods, like maybe food, shelter, clothing.

"Economically illiterate," along with "computer illiterate" are two expressions that literate people should avoid. Ergo, we're not going to see economists and IT experts give them up, anytime soon.

I'm reading it now. I have to say I'm disappointed not to find a chapter on the idea of GDP as the one true measure of economic progress. It's one of the most dangerous notions out there, in my opinion, and Heath ranted at length on it in 'The Efficient Society'

With respect to your post, I think of the left-right economic debate in terms of levels. The bottom level is those who go with the moral system they were taught and which generally works in most areas of life, and try to apply that directly in the economic area even though it does not work there. These people are 'level 1's in my mind and it is to them that the 2nd half of "Filthy Lucre" is directed.

Then there are those who've come through Econ 101 and have bought into the idea of markets and incentives and how the system of morality necessary in the market and in economics is quite different. These are the 'level 2's and it is these people that the first half of the book is directed at. Because these folks have moved up to a higher level, the flaws in their system are (a bit) more subtle, which is why (I suspect) that this section seems less 'hard hitting' to you.

I'm not sure if Heath can really get people on the Left to go straight from 'Level 1' to 'Level 3' (understanding the case by case nature of the public-private debate, the reasons for current public interventions, the empirical research on the various areas of dispute, when to apply market ethics when to apply non-market ethics, etc.) without passing through 2 first. It may be like Nietzsche once said, about how before going from believing in a benevolent God to realizing there is no God, it is beneficial for people to first go through a phase of believing in a malevolent God.

Very interesting comment Declan.

I would put it slightly differently.

At level 1 the market just looks like a confused mess, and the idea that it might work at all, and that prices might mean something (other than a way to determine the distribution of income) is a very strange notion.

Level 2 understands the miracle that markets work!

Level 3 says "yes but".

So, in that sense, Joseph Heath's book is backwards. It does the transition from 2 to 3 first.

But then, his "backwards" approach seems worth a try, since the "forwards" approach of traditional economics teaching may lose half the audience at the first step.

I agree, except a quibble with your comment on level 1 - my feeling is that people at level 1 see the market as the result of naked greed and pursuit of self-interest covered by a flimsy layer of rationalization. The problem is not that it is confused or doesn't work, but that it works too well (at its objective of benefitting the greedy and immoral wealthy/capitalists and screwing the moral poor/labour/environment)

And its largely true that the market is the area of society where we are expected to pursue our self-interest and greed and compete rather than cooperate, all in opposition to everything we learned in kindergarten - its just that until people learn some economics, they won't realize that the rationalization for this that is provided by level 2s and 3s is not actually all that flimsy and there is more going on here than just rationalization of greed and self-interest by the wealthy.

Of course, the fact that in addition to the valid market defense raised by level 2s and 3s, there *is* a lot of self serving rationalization of greed and self-interest being promoted by the wealthy (which Heath argues against in the first half of the book) confuses the matter even further.

Not that Joe needs me to defend him, but it is entirely possible that Joe sees The Efficient Society as his effort at bringing people from level 1 to level 2; Filthy Lucre is to get from 2 to 3.

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