Seven Deadly Economic Sins

Abstract

You have heard of the Seven Deadly Sins: pride, greed, lust, envy, gluttony, wrath, and sloth. Each is a natural human weakness that impedes happiness. In addition to these vices, however, there are economic sins as well. And they, too, wreak havoc on our lives and in society. They can seem intuitively compelling, yet they lead to waste, loss, and forgone prosperity. In this thoughtful and compelling book, James Otteson tells the story of seven central economic fallacies, explaining why they are fallacies, why believing in them leads to mistakes and loss, and how exorcizing them from our thinking can help us avoid costly errors and enable us to live in peace and prosperity.

Free market capitalism and societal inequities: Assessing the effects of economic freedom on income inequality and the equity of access to opportunity, 1990–2017

“…Indeed, many argue that globalization has driven these conditions and that rising populism and antidemocratic movements might be attributable to rising inequalities driven by free-market, capitalist conditions, which hamstring political processes favoring more equitable distribution of incomes and wealth (Rodrik, 2011;Stiglitz, 2019). Others argue contrarily that the political malaise might be attributable to policies and processes that have focused on equity at the expense of growth, where lack of growth has stymied the advancement of a middle class (Otteson, 2021;Phelps, 2018). Naturally, whether inequality itself is problematic might hinge crucially on the question of whether or not free-market policies are also commensurate with opportunity-increasing policies.…”

“…The results caution against policies that might seek to redistribute by trading off growth-promoting policies for the sake of equalizing incomes. Such efforts may not just damage growth, but may also constrict justice and equity in the long run (Friedman, 1962;Hayek, 1944;Otteson, 2021).…”

“…Adam Smith and the physiocrats recognized that a system of mercantilism, which promoted state interventions and monopolistic practices, does not benefit growth and productivity as much as free markets do. They argued that inequality might rise under free-market conditions but it was unlikely to be problematic because self-interested individuals cooperating for mutual gain-selfinterest is, thus, a positive force where cooperation comes about without coercion because people are free to transact (Haney, 2009;Otteson, 2021). Smith also saw a role for government, which was to ensure that markets remained free and competitive and that states should provide public goods, such as schooling and infrastructure that would enhance productivity (Tanzi, 2011).…”

“…Since today's rich might not be tomorrow's rich because of dynamic market conditions and individual endowments determining success (such as effort, talents, etc. ), then as long as all people have access to the same opportunities, free markets should also be the more moral determinant of the distribution of wealth, based on talent and mutually beneficial exchange rather than political power and societal privileges (Otteson, 2021). The advantages of free markets, thus, must rest on the relationship between free markets and access to opportunities since those with the current advantages may not want to give up their privileges.…”