The Becker Double Decker by Fred Foldvary
|January 9, 2007||Posted by Staff under Progress Report, The Progress Report|
The Becker Double Decker
by Fred E. Foldvary, Senior Editor
Gary S. Becker is a free-market oriented professor of economics and sociology at the University of Chicago. He received the Nobel prize in economics in 1992 for having extended economic theory to topics such as crime, education, discrimination, and the family. Becker used economic concepts such as cost/benefit analysis to show how criminals and others respond to incentives.
Professor Becker is also well known to economists for his concept of Z-goods, which are the ultimate goods that folks want. For example, you might want to hear music, which would be the Z-good. A live concert or a CD player would then be the physical X-goods that provide the Z-good. Becker showed how Z-goods are produced using our time and energy as well as the physical X-goods.
Becker began writing a monthly column for Business Week in 1985. A collection of his best columns has been published in the book by Gary S. Becker and his wife Guity Nashat Becker, The Economics of Life: from baseball to affirmative action to immigration, how real-world issues affect our everyday life. Guity Nashat Becker is a professor of history at the University of Chicago and has helped her husband in writing the columns.
The running theme of the columns, as in his scholarly work, is that our daily lives are influenced, more than we usually realize, by economic incentives. Among the proposals of the Beckers is the legalization of drugs, selling rights to immigrate, privatizing social security, and market-based health care.
The Beckers gave a talk on “Free Markets and The Economics of Life” at the Independent Institute in Oakland, California, on March 18, 1999. I was pleased to attend the presentation, buy their book, and meet the Beckers. I showed Gary Becker the entry I have for him in my Dictionary of Free-Market Economics.
The Economics of Life is a Becker double-decker, giving us the insights of the two Beckers. And Gary Becker himself is an economic double-decker, with a scholarly deck for academic economics and a popular deck for the public. It is thanks to Guity Becker’s urging that he was induced to write the columns for the public. I enjoyed meeting Gary Becker both as a distinguished economist and as a fellow writer of columns for the public.
I find little to disagree with in Becker’s economic analysis and application of economics to everyday business and personal life and their aim of making a better life for everyone, including the poor. The main problem I see is not that the economic analysis is wrong, but that it is incomplete. The Beckers realize that heavy taxes on productive effort reduce our incomes and retard progress. Gary Becker favors reducing the tax burden and the size of government, but does not go further and deeper in realizing and proposing a shift in taxation towards public revenue from rent, which does not burden the economy.
The University of Chicago is world-famous for having influenced and shaped neoclassical economics, the predominant school of thought. But there are other schools of thought that have contributed to economics, such as the Austrian school, the Geo-economics school and others such as the Institutionalists and the Marxists. A synthesis of the best of these schools gives us a more complete understanding. In particular, the geo-classical economics of Henry George, which led to today’s geo-economics, provides the insight that we can have both more productivity and more equality by shifting public revenue from taking wages to sharing rent.
The economics I use for these editorials is universalist, integrating the economic theory of all the schools of thought into a coherent synthesis. I wrote about universal economics in the book Beyond Neoclassical Economics. (My publications can be seen in Foldvary’s books).
The Progress Report does not have as many readers as Business Week, but I do think that it provides you with greater and deeper insights than you get in the more populous press. This comes from using a more complete economic understanding than that used in the other publications. You are getting a triple decker here: economic understanding, ethical insights that apply universally, and a theory of governance that deals with real-world political incentives.
I salute Gary and Guity Becker for their fine work in educating the public about the economic approach to social issues that, even if not completely, does help us understand what’s wrong and how to make it better.
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Copyright 1999 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.