Suhit Anantula forwarded an open letter to Krugman from Arnold Kling. In it, Kling told Krugman that he (Krugman) was using too many M type arguments (M for “motivation”) and not enough C type arguments (C for “consequence”) when Krugman argues for or against certain policies. I think that Kling’s letter is worth reading. And I believe that Kling is mistaken.
Kling takes Krugman to task saying that he should eschew M arguments and concentrate on C arguments to make his point. Economists, Kling claims, have always employed C arguments to evaluate public policies and that is what Krugman should stick to.
Here is what I believe. Public policies are made by humans. Humans are motivated by self-interest. It is therefore important to understand the motivations of the humans involved in policy making to comprehend why a certain policy was advocated. In most cases, the consequences of a policy are not completely known a priori and there is considerable uncertainty in the actual outcome of a policy. Depending upon the motivation of the policy maker, the policy maker has the freedom to claim that a particular consequence would necessarily follow. By identifying the motivation of the policy maker, one can control for the biases in the claimed benefits of the policy.
My position is not that C arguments are worthless when evaluating policies. It is rather that C arguments are not sufficient when it comes to understanding why a certain course of action is actually taken from a menu of choices.
To take a specific example, consider the so-called US “war on terror”. Suppose one were to make the C argument that “invading Iraq would not stop terrorism, but instead would intensify terrorism by inducing more Islamic terrorism.” Would that argument be sufficient to deter those advocating the invasion of Iraq? It would be if those people were indeed ignorant of the possibility of inducing more Islamic terrorism and having heard the C argument, would change their minds. But those who pushed for the invasion of Iraq are not stupid. They would have already worked out C argument for themselves, anyway. Yet, if inspite of understanding the consequences of their chosen policy, they still go ahead of with the invasion of Iraq, then one has to ask what their motivations are for doing so. If one finds that the benefits of an invasion (to the policy makers) is greater than the cost of the war (which the policy makers do not bear), then one can explain comprehensively why the invasion was undertaken.
In a purely academic environment, debating the pros and cons of a specific policy is best undertaken with C arguments. But in the real world, people are motivated by self-interest and have a certain amount of control over what course of action to take, rather than being dispassionate observers of a world that they don’t have any control over.
A diverse set of issues — from why the Bush administration invaded Iraq, to why worthless expensive PCs are foisted on poor rural Indians — can be better understood by the simple device of following the money and asking what is in it for the advocates of a particular policy and how it benefits them.