ללא מחבר No Author

The Irony of Anti-Zionism

Feeling Persecuted Among Jews, Anti-Zionist Jews Wish For Some State Where They Might Find Refuge

Anti-Zionists fear that they cannot entrust their continued existence to the whims of the majority of their ethnic minority.

Berkeley, April 14 – A group of Jews whose ideology denies the centrality, necessity, and morality of Jewish sovereignty, and thus pits them against the vast majority of their coreligionists, has begun to sense that the animosity they face from other Jews over the issue has victimized them and rendered them dissidents, making them unsure they can rely on the forbearance of that majority to guarantee the minority’s safety and raising the question whether it might be time to consider establishing a country of their own where they can take control of their own security.

Anti-Zionists, a sliver of a Jewish population that already represents only a fraction of a percent of the world’s population, have in recent months noticed a sharpening increase in animosity from other Jews, more than ninety percent of whom identify as Zionists and see anti-Zionists as merely another variety of antisemite. The loosely-affiliated anti-Zionists fear that they cannot entrust their continued existence to the whims of the majority of their ethnic minority, and, seeking ways to ensure their future without depending on that unreliable majority, have hit upon the notion of creating a sovereign state where they can develop, sustain, and defend themselves not through the fickle mercies of the rest of Jewry.

“It might be time to consider taking matters into our own hands,” allowed Richard Silverstein, a Seattle-area blogger. “For too long, we’ve simply assumed, or been unwilling to contemplate alternatives, that the best we can do is try to be model citizens of this nation, contribute as best we can, and maybe expect the majority to accord us rights, or at least not molest us. But it’s been more than a century has passed since the inception of anti-Zionism as a movement, more than a century in which we’ve proven to the vast majority of other Jews exactly what we contribute to them, and for some reason that’s only increased resentment. There’s still outright hate that I admit flows in both directions.”

“So perhaps we should remove ourselves from the need to depend on their good graces,” concurred Max Blumenthal. “If only there were some place we could call our own home, really just our own, where we wouldn’t have to define ourselves only by contrast to the majority; where we could nurture a culture that’s truly ours and not just an outgrowth of perpetual outsider status among our own people. Most importantly, we’d be free of the immediate and direct interactions with people whose treatment of us on a good day involves spitting and insults.”

“Gosh, if only there were some visionary who could articulate something compelling for us to follow,” he added.

From PreOccupied Territory, here.

Important Notice Regarding Johnson & Johnson’s Covid-19 Vaccine

CDC and FDA recommend US pause use of Johnson & Johnson’s Covid-19 vaccine over blood clot concerns

(CNN)The US Centers for Disease Control and Prevention and the US Food and Drug Administration are recommending that the United States pause the use of Johnson & Johnson’s Covid-19 vaccine over six reported US cases of a “rare and severe” type of blood clot.

One person is currently in critical condition and another, a 45-year-old Virginia woman, died.
The six reported cases were among more than 6.8 million doses of the Johnson & Johnson vaccine administered in the United States.
Federal official: CDC, FDA taking reports of blood clots and J&J Covid-19 vaccine ‘seriously’
All six cases occurred among women between the ages of 18 and 48, and symptoms occurred 6 to 13 days after vaccination, according to a joint statement on Tuesday from Dr. Anne Schuchat, principal deputy director of the CDC and Dr. Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research.
“CDC will convene a meeting of the Advisory Committee on Immunization Practices (ACIP) on Wednesday to further review these cases and assess their potential significance,” the statement said. “FDA will review that analysis as it also investigates these cases. Until that process is complete, we are recommending a pause in the use of this vaccine out of an abundance of caution. This is important, in part, to ensure that the health care provider community is aware of the potential for these adverse events and can plan for proper recognition and management due to the unique treatment required with this type of blood clot.”

‘It’s a very rare event’

In a statement, Johnson & Johnson said it has decided to “proactively delay the rollout” of its vaccine in Europe. Tuesday evening, Johnson & Johnson said it will pause vaccinations in all of its Covid-19 vaccine clinical trials while they “update guidance for investigators and participants.”
“We have been working closely with medical experts and health authorities, and we strongly support the open communication of this information to healthcare professionals and the public,” J&J’s statement said in its earlier statement.
From CNN, here.

Who Insures the WHOLE Banking System? Nobody!

There Are No Safe Banks

By 

June 8, 2011

Occasionally, we see an official attempt at a serious discussion of what Federal Reserve System economists would like the public to believe is safe banking. This means safe fractional reserve banking. This means fraudulent safe banking. This means fantasy banking.

All fractional reserve banking rests on a legal promise: you can get your money out at any time. Yet the money that you deposit is loaned out by the bank. This means that your money is gone. Then how can you withdraw it at any time? Only if (1) the money is loaned out on a “repay instantly on demand” basis, or (2) hardly anyone will demand withdrawal at the same time. The bank will pay you out of its tiny slush fund for withdrawals. The first option assumes that the debtor is always in a position to repay at any time, which is of course ludicrous for most corporate and business borrowers. They will not agree to such terms. The second option is equally ludicrous during a banking crisis.

In other words, all fractional reserve banking is based on a legal deception of the depositors. A depositor cannot get his money back when a lot of other depositors want to get their money back. This is called a bank run. All fractional reserve banking systems eventually experience bank runs.

During bank runs, bankers call on the government to bail them out. The government and the central bank bail out only the biggest banks. They let the smaller banks go under. Then big banks buy the assets of the smaller, now-busted banks at discount prices. The government (FDIC) pays off depositors with $250,000 or less on deposit. Taxpayers therefore subsidize the buying spree of the biggest banks. This is justified as “saving the banking system.” The politicians provide taxpayer money every time.

I remember an on-camera testimony of Congressman Brad Miller, a Democrat Congressman from North Carolina, just before the TARP bailout. He said that his constituents were evenly divided between “no” and “hell no.” He of course voted for the bailout, as did most of his colleagues. He was of course re-elected.

The voters did not really care. They screamed about the bailouts, but they refused to impose negative sanctions on all of the Congressmen who voted for TARP. Until there is real pain, they usually re-elect their Congressmen. They perceive, correctly, that their opinions do not count when big banks are asking for handouts in a crisis. The voters want their lifelong bailouts, and as long as their Congressmen bring home the pork, they really don’t care. By “care,” I mean an automatic vote for the challenger at the next election. Congressmen generally understand only one thing: defeat at the next election. Ron Paul doesn’t care, and maybe Dennis Kucinich doesn’t care, but most of them care deeply.

So, the #1 goal of most politicians, all bureaucrats, and all central bankers is to make sure that the voters feel no pain — at least not pain bad enough that might lead to (1) a new Congress, (2) budget cuts for bureaucracies, and (3) the nationalization of the central bank.

A SCARED CENTRAL BANKER

On June 3, Daniel Tarullo, a member of the Board of Governors of the Federal Reserve System, which is a government-owned institution, unlike the regional Federal Reserve banks, gave a speech at the Peter G. Peterson Institute for International Economics. Peterson until 2007 was the Chairman of the Council on Foreign Relations. As such, he was among the most influential men on earth. He served as Secretary of Commerce (1972-73). He was the CEO of Lehman Brothers (1973-84). He co-founded the Blackstone Group. He is concerned about the growing Federal debt, on-budget and off-budget, which he correctly perceives as a threat to the world’s capital markets.

Tarullo’s topic was the systemic risk of the world’s interconnected banking system. This is surely a relevant topic. When I think of the international banking system, I think of Tom Lehrer’s nuclear war song a generation ago: “We will all go together when we go. Every Tom, Dick, Harry, and Every Joe.”

He focused on the Dodd-Frank law’s requirement that the Federal Reserve System establish prudential standards for “systemically important financial institutions or, as they are now generally known, ‘SIFIs.’ My focus will be on the requirement for more stringent capital standards, which has generated particular interest.”

Keep this acronym in mind: SIFIs. It means very large banks, meaning very large, highly leveraged, highly profitable corporations whose collapse would create a chain reaction in the financial markets. In the old days, SIFIs were called TBTF: too big to fail.

Tarullo made a significant admission: “It was, after all, a systemic financial crisis that we experienced and that led to the Great Recession that affects us still today.” That’s the official party line. It was used to justify TARP and the other 2008 bailouts, such as swaps at face value of liquid AAA-rated Treasury debt held by the FED for toxic assets held by the SIFIs. For a skeptical analysis of the party line, read David Stockman’s response.

Tarullo admitted that the old system of regulation failed to deal with systemic risk. Or, to put it differently, the horse got out of the barn, and now the Dodd-Frank law has increased the responsibility of the FED to regulate things better. But the FED regulated the system before. This is the standard government response: reward failure with greater responsibility.

The pre-crisis regulatory regime had focused mostly on firm-specific or, in contemporary jargon, “microprudential” risks. Even on its own terms, that regime was not up to the task of assuring safe and sound financial firms. But it did not even attempt to address the broader systemic risks associated with the integration of capital markets and traditional bank lending, including the emergence of very large, complex financial firms that straddled these two domains, while operating against the backdrop of a rapidly growing shadow banking system.

But things will be different Real Soon Now. The FED is going to regulate large banks on a comprehensive (macroeconomic) basis. This assumes that a committee of salaried bureaucrats who do not own the banks or have any assets of their own at risk will be able to design fail-safe rules that will coordinate the decisions of depositors and bankers inside the United States. Of course, the system is international, so the USA is dependent on decisions made by bureaucrats, bankers, and depositors around the world. But Dodd-Frank did not cover them.

A post-crisis regulatory regime must include a significant “macroprudential” component, one that addresses two distinct, but associated, tendencies in modern financial markets: First, the high degree of risk correlation among large numbers of actors in quick-moving markets, particularly where substantial amounts of leverage or maturity transformation are involved. Second, the emergence of financial institutions of sufficient combined size, interconnectedness, and leverage that their failures could threaten the entire system.

In short, the FED’s economists, who failed to foresee what would happen to a few banks in 2008, are now going to foresee what will happen to lots of banks, including multinational banks that are interconnected with SIFIs all over the world.

He assured his listeners that “No one wants another TARP program.” No one wants hyperinflation, Great Depression II, or both. The question is: What can a bunch of regulators do to prevent this? “In order to avoid the need for a new TARP at some future moment of financial stress, the regulatory system must address now the risk of disorderly failure of SIFIs.”

There is a theoretical problem here. Risk can be estimated by use of statistical analysis. An example is life insurance tables. Uncertainty cannot be estimated, such as life insurance tables during a nuclear war. These are called “acts of God,” and insurance companies write contracts to escape liability.

A systemic failure is triggered by an event that is not governed by the law of large numbers, i.e., risk analysis. It is triggered by an event that is inherently uncertain. That was why Long Term Capital Management went belly-up in 1998, despite its sophisticated formulas based on the work of two Nobel Prize-winning economists.

He referred to an international agreement known as Basel III. That is the successor to Basel II, which was not enforced and which achieved no protection from 2008. “The Basel III requirements for better quality of capital, improved risk weightings, higher minimum capital ratios, and a capital conservation buffer comprise a key component of the post-crisis reform agenda.” It all sounds so reassuring. But what authority does the committee have to impose sanctions? None. “Although a few features of Basel III reflect macroprudential concerns, in the main it was a microprudential exercise.” In short, it ignored The Big Picture.

We need to pay attention to The Big Picture. “We” means Federal Reserve economists who have formulas, but who were not smart enough to win a Nobel Prize.

Here is the problem:

There would be very large negative externalities associated with the disorderly failure of any SIFI, distinct from the costs incurred by the firm and its stakeholders. The failure of a SIFI, especially in a period of stress, significantly increases the chances that other financial firms will fail. . . .

He argued that the SIFIs must increase their capital reserves. Increased capital means lower leverage. It means a reduced ROI: return on investment. So, a SIFI will not do this without regulation. “A SIFI has no incentive to carry enough capital to reduce the chances of such systemic losses. The microprudential approach of Basel III does not force them to do so.” Quite true. So, what is the FED going to do about it? And how, exactly, can the FED get foreign SIFIs to do it?

What has been done so far? Committees have been set up. This is basic to the theology of all modern civil government: salvation by committee. “Together with the FDIC, the Federal Reserve will be reviewing the resolution plans required of larger institutions by Dodd-Frank and, where necessary, seeking changes to facilitate the orderly resolution of those firms.”

Still, we must acknowledge that we are some distance from achieving this goal. The legal and practical complexities implicated by the insolvency of a SIFI with substantial assets in many countries will make its orderly resolution a daunting task, at least for the foreseeable future. Similarly, were several SIFIs to come under severe stress, as in the fall of 2008, even the best-prepared team of officials would be hard-pressed to manage multiple resolutions simultaneously.

I see. “Some distance.” “Practical complexities.” “Daunting task.” In short, they don’t know what they are doing. The formulas are not yet clear. The appropriate sanctions are not yet on the books. So, it’s “pray and patch.” It’s bureaucracy as usual.

“I HAVE A PLAN”

He offered a five-step program. Point one is choice:

. . . an additional capital requirement should be calculated using a metric based upon the impact of a firm’s failure on the financial system as a whole. Size is only one factor to be considered. Of greater importance are measures more directly related to the interconnectedness of the firm with the rest of the financial system. Several academic papers try to develop this concept based on inferences about interconnectedness from market price data, using quite elaborate statistical models.

Oh, boy. Academic papers! Yes, my friends, academic papers, written by Ph.D.-holding economists who have never run a bank or anything else. That will do the trick!

Others have proposed using more readily observed factors such as intra-financial firm assets and liabilities, cross-border activity, and the use of various complex financial instruments.

So, the experts do not agree. Surprise, surprise! Then whose system will win out? None. A committee will decide how to coordinate all these proposed solutions.

Second, the metric should be transparent and replicable. In establishing the metric, there will be a trade-off between simplicity and nuance. For example, using a greater number of factors could capture more elements of systemic linkages, but any formula combining many factors using a fixed weighting scheme might create unintended incentive effects.

You know: transparency. It’s the new mantra. It’s a revision of Woodrow Wilson’s “open covenants openly arrived at.” Trust them!

“Systemic linkages.” “Formula combining many factors.” “Fixed weighing scheme.” Yes! Yes! I believe!

On the other hand, using a small number of factors that measure financial linkages more broadly might reduce opportunities for unintended incentive effects, but at the cost of some sensitivity to systemic attributes of firms. Whatever the set of factors ultimately chosen, the metric must be clear to financial firms, markets, and the public.

Clear. It’s all so clear. Doesn’t it appear clear to you? It does to me.

This is transparency, all right: the transparency of the wardrobe worn by the emperor, who had the best tailors money could buy.

Tarullo went on and on. The fifth point was the corker: international cooperation with independent agencies, all according to Basel III standards, which will be imposed by 2019. They promise!

Fifth, U.S. requirements for enhanced capital standards should, to the extent possible, be congruent with international standards. The severe distress or failure of a foreign banking institution of broad scope and global reach could have effects on the U.S. financial system comparable to those caused by failure of a similar domestic firm. The complexities of cross-border resolution of such firms, to which I alluded earlier, apply equally to foreign-based institutions. For these reasons, we have advocated in the Basel Committee for enhanced capital standards for globally important SIFIs.

Achieving and implementing such standards would promote international financial stability while avoiding significant competitive disadvantage for any country’s firms. I would note in this regard that it will be essential that any global SIFI capital standards, as well as Basel III, be rigorously enforced in all Basel Committee countries.

I have summarized half of his speech. The rest of it is equally concrete, realistic, and inspirational. You can read it here.

CONCLUSION

This is the best the FED has to offer. This is one Board member’s proposed solution to systemic risk, which is in fact systemic uncertainty. It is a salaried bureaucrat’s proposed solution to the inherent uncertainties imposed by fractional reserve banking — a system whose major players are politically protected from failure, and which therefore subsidizes high leverage and high returns . . . until the day the dominoes begin to fall.

We are asked to believe that Federal Reserve economists can design a coherent, enforceable system of controls to protect the world from leveraged banks that overestimate the ability of their formulas to protect them from uncertainty. We are asked to believe that salaried economists at the FED and all other major central banks can produce a better formula, and then impose it in ways that profit-seeking bankers cannot evade.

My conclusion: we will all go together, when we go.

June 8, 2011

From LRC, here.

‘Trust the Doctors!’ (Unless They Disagree with You, Of Course…)

Nearly 100 Israeli Doctors Issue Letter Demanding That State Not Vaccinate Children Against COVID-19

Nearly 100 Doctors and medical professors signed their names to a letter requesting that the Israeli health system refrains from vaccinating children under any scenario unless the disease were to become dangerous to them.

According to a report by Channel 12 News, the doctors explained that “there is no room to vaccinate children at this time.” The doctors added that based on agreed-upon medical values, including “caution, humility, and do no harm” that there is not enough evidence or threat to vaccinate children against the disease. The doctors explained further that not enough is known about the disease and the various vaccines that have been produced to combat it.

Among the signatories of the letter are such well-renown Doctors as Dr. Amir Shachar, director of the emergency room at Laniado Hospital, Dr. Yoav Yehezkeli, an expert in internal medicine and a lecturer at Tel Aviv University, and Dr. Avi Mizrahi, director of the intensive care unit at Kaplan Hospital.

In the letter that was addressed to “the chiefs of the Israeli Ministry of Health, to our fellow doctors around the country, and to the entire public.”

They noted that “the increasingly prevalent opinion within the scientific community is that the vaccine cannot lead to herd immunity, therefore there is currently no ‘altruistic’ justification for vaccinating children to protect at-risk populations.”

They added that even today it is unclear whether the vaccine prevents the spread of the virus and for how long it confers protection and noted that new variants “that may be more resistant to vaccination are popping up all the time.”

The letter continues, “We believe that not even a handful of children should be endangered through mass vaccination against a disease that is not dangerous to them. Furthermore, it cannot be ruled out that the vaccine will have long-term adverse effects that have not yet been discovered at this time, including on growth, reproductive system, or fertility. Children should be allowed a quick return to routine; the many tests and broad isolation cycles should be stopped, and no separation between the vaccinated and unvaccinated should be created in the public sphere. Vaccination of at-risk populations should be allowed, and under the almost complete vaccination of this population – it is possible to return to full routine (with periodic adjustments) even in the presence of COVID-19 virus.”

“Therefore, we fear that at this point in time, there is under-reporting of side effects. Moreover, a causal link between events – if any – will only emerge in due course, as more and more events of a certain type accumulate. For example, if there is a serious health event that happens to 12 young people a year in Israel (ie – an average of 1 per month), while the vaccine also causes this serious event infrequently, it will take many months until it is clear that there is an increase in the incidence of the event, and that there is a connection between the vaccine and its appearance.”

“Do not rush to vaccinate children as long as the full picture is not clear. Coronavirus disease does not endanger children, and the first rule in medicine is, do no harm. The full picture is expected in many months, and possibly years. Moreover, one must wait for such documentation not only from Israeli data but from global data. In this context, it is worthy to add that black box warnings – about severe or life-threatening side effects – accumulate months and years after drug approval, due to the fact that severe but rare toxins appear, naturally, only over time.”

“We believe it is not appropriate to impose the inconvenience of vaccination on the pediatric population, where coronavirus is not dangerous, especially at this stage when the efficiency, in the long run, is not at all clear. Pediatrics in Israel is one of the best in the world, and pediatric intensive care – above all. It is extremely rare for a child to die of a viral disease, and this can happen, unfortunately, as a result of various types of viruses. We do not think it is right to manage private life and public health policy as a result of an ongoing fear of a viral illness that is very rarely liable to harm our children’s lives. ”

“In view of the fact that the vaccination of the vulnerable population reduces hospitalizations and mortality from Covid – we believe that the negative effects of the virus will be much smaller when the majority of the at-risk population is vaccinated, as begins to appear to be the case in the country, and this without the need to vaccinate children,” they explained.

“We believe that our children should be allowed to return to the routine of their blessed lives immediately, and should not be vaccinated against Covid-19. Asymptomatic children’s tests, which have no clinical significance but cause widespread indirect damage, and the mass isolation cycles in education frameworks, should be stopped immediately. It should be emphasized to the public that even vaccinated people can be infected and infect others, and that the same rules of conduct apply to everyone without connection to vaccination status. We must stop pointing the finger of blame at the unvaccinated, and we must stop violating the rights of the individual. We must immediately stop all forms of exclusion and separation between people in the public sphere.”

(YWN Israel Desk – Jerusalem)

From Yeshiva World, here.

Mainstream Economics Is Superstition

Government Intervention Is Unscientific

– December 2, 2019 Reading Time: 5 minutes

 

Sit in any time beyond the first month of a typical ECON 101 class and here’s what you’ll be taught: free markets work well, but only under conditions that seldom prevail in reality – a regrettable fact that requires the state to intervene to correct each of the many market failures.

The apparent science on display seems impressive. Curves are drawn on the whiteboard to portray the difference left by free markets between marginal private cost and marginal social cost, between marginal private benefit and marginal social benefit, and the resulting failure of markets to produce socially optimal quantities of outputs and to attach to these outputs socially optimal prices.

Gazing at the curves – or, if the class is especially mathematical, studying the equations – reveals the remedial action that must be taken if society’s welfare is to be optimized. Shift this curve upward, or that one downward – or in the equations modify this coefficient that way or that coefficient this way – and, voila!, society is engineered to optimality with the aid of Scientific Economics.

It all seems to be so objective and free of any taint of ideology. After all, you can see it right there in the graph, in black and white: the marginal private cost of operating the oil refinery is lower than is the marginal social cost of doing so. Only a libertarian ideologue objects to using government to bring marginal private cost into equality with marginal social cost. This libertarian stubbornly elevates his ideology over the public good, for, as the graphs and equations make clear, bringing marginal private costs into equality with marginal social costs yields net social gains. Such engineering is Kaldor-Hicks-Scitovsky efficient. (It’s impressive to have scientific terms that non-specialists must google.)

It’s a Scientific Fact: Economic Reality is Highly Complex and Often Unobservable

But the reality is that this allegedly scientific case for intervention is not close to being as scientific as it is widely believed to be, especially by economists.

Curves and equations are often very useful tools for helping us to think clearly about reality. But these curves and equations are seldom realities on which researchers can gather actual data. While Jones does incur particular costs by increasing her factory’s output, those costs are not observable to outsiders. Nor are Jones’s costs the same as the costs to Smith who increases his factory’s output by the same amount as does Jones.

Also not observable are the marginal social costs of these factories’ operations. The factory across town might indeed spew pollutants into the air that my neighbors and I breathe. But I challenge anyone to objectively quantify the cost that each of us experiences as a result of a one-percent increase in the factory’s output – then of a two-percent increase – then of a three-percent increase… and then to add these costs together in order to construct a genuinely objective marginal-social-cost schedule.

This challenge cannot be met, although meeting it can be faked. The best that can possibly be done is for a fair-minded researcher to estimate – inevitably using her own subjective evaluations – the costs that I and each of my neighbors individually bear. But how does this researcher know my discount rate – or, rather, know the length of time over which I regard as relevant my exposure to the factory’s emissions? She doesn’t. She can’t possibly know such a thing. And what’s true for her knowledge of my discount rate is true for her knowledge of my evaluation of the precise degree to which the factory’s emissions negatively affect my present well-being.

This researcher – assumed here to stick as closely as possible to the scientific tenets of economics – knows that the preferences, risk tolerances, and discount rates of all individuals affected by the factory’s output differ from each other. Therefore, to scientifically quantify “marginal social costs,” this researcher must get not only such ungettable information about me; she must also get such ungettable information for each of the many individuals who is or who might become affected by the factory’s emissions.

Even ignoring the fact that preferences, risk tolerances, and discount rates can and do change in unpredictable ways, this researcher’s task is undoable.

This impossibility is no small matter. If the researcher overestimates the social costs of the factory’s emissions, she – in league with government officials – imposes her own “social” cost on others. She obliges the factory to reduce output to a level below that which is textbook optimal. The cost to society of this suboptimal level of output might well be as large as, or even larger than, the cost to society of simply leaving the factory free to operate without government attempts to “internalize” on it the social costs of its emissions.

The Scientific Appearance Is a Mirage

At this point the mainstream economist pushes back. He doesn’t deny (How could he?!) that, as a technical matter, getting precise information on marginal social costs is practically impossible. But he insists that such an ideal standard is inappropriate. “We can estimate the divergence between private and social costs closely enough,” the mainstream economist assures us, “and then have government act on those estimates. It’s better than doing nothing.”

While it’s true that the perfect should never be allowed to obstruct the good, there are at least two looming problems with this mainstream-economics approach – problems that warn against trusting it to serve as a reliable guide to government policy.

First, as explained above, there’s no good reason to think that estimates made of social costs by even well-intentioned and sparklingly brilliant government officials will be close-enough to accurate to trust that a government empowered to correct market failures will, on the whole, raise social welfare. The assumption that such officials will typically perform well enough on this front is based on no science; it’s merely an assumption – or, rather, an aspiration.

Second, there’s no good reason to think that government officials in reality face incentives that prompt them to behave as their doppelgängers in textbooks behave. The entire case for using government to correct alleged market failures is built on the belief that self-interested actions of private decision-makers lead them to seek private benefits at the greater expense of the public. But if we assume that people act self-interestedly in their private spheres we must make the same assumption about people’s motivations in public spheres.

Yet despite more than a half-century of warnings from public-choice economists, mainstream economists continue to assume, without much apparent thought, that government officials act in a way that is categorically different from the way these same persons would act were they in the private sector: private persons are assumed to act to promote their own self-interests, while government officials are assumed to act to promote the public interest.

What, however, could be more unscientific than this assumption of dual motivations? It is justified neither by science nor by common sense, but it is crucial to the “scientific” case for government action to correct market failures.

My argument is not that markets are perfect. (They certainly are not.) Nor is my argument that a highly informed and well-meaning deity could not intervene in markets in ways that improve their performance. (Such a splendid creature certainly could.) My argument is that because economists advise government officials rather than deities, the economic case for using government to correct market failures is scientific only in the most superficial sense. Deep down it’s mostly superstition.

From AIER, here.