Ross Gittens in the CT Nov 2nd 2015 wrote that the only advice economists give governments is to put a price or tax on things. A good illustration of how this blinkered view creates absurdities is Leo Dobes article of CT Nov 11. Dobes says, in referring to people who build large houses on small blocks, that “the loss of greenery and the associated lifestyle reduces their psychological enjoyment of their residence”. He then says that the difference between what a person is willing to pay for a large house on a small block and the actual market price represents the net happiness or satisfaction the person obtains from buying a large house on a small block. This is nonsense.
Cost benefit studies are tools to justify political decisions. The ABC TV series Utopia illustrates their absurdity. Next year we might get a series called “Tax it or Lose it” to give us a few laughs around the current tax conversation.
There are other economic tools. We can use computational thinking to test models of the economy. We can run real experiments on the economy. We can make rational decisions without putting a price on everything. Let us stop telling economic fairy tales. Let us have the debate we should have around the political issues of unemployment, disadvantage, unearned rents, obscene uneven distribution of wealth, damage to our environment and to our social fabric. Let us create a science of economics.