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Paul Romer Likes Anarchy and Thinks It’s Government

Summary:
Mr. Romer’s answer is to do with this moment what Burning Man does every summer: Stake out the street grid; separate public from private space; and leave room for what’s to come. Then let the free market take over. No market mechanism can ever create the road network that connects everyone. The government must do that first. In all of this, Mr. Romer has been creeping further from the economists toward the urban planners. By the time he got to Burning Man in August, he was thinking of himself as a University of Chicago-trained economist, once indoctrinated in the almighty free market, now in open revolt against his roots. They “invented a sense of superordinate civic order — so there would be rules, and structure, and streets, and orienting spaces, and

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Mr. Romer’s answer is to do with this moment what Burning Man does every summer: Stake out the street grid; separate public from private space; and leave room for what’s to come. Then let the free market take over. No market mechanism can ever create the road network that connects everyone. The government must do that first.

In all of this, Mr. Romer has been creeping further from the economists toward the urban planners. By the time he got to Burning Man in August, he was thinking of himself as a University of Chicago-trained economist, once indoctrinated in the almighty free market, now in open revolt against his roots.

They “invented a sense of superordinate civic order — so there would be rules, and structure, and streets, and orienting spaces, and situations where people would feel a common purpose together; where people could become real to one another,” Larry Harvey, one of the founders, recounted in an oral history before his death last year.

“It had gone beyond a bit of pranksterism in the desert,” he said. “We had made a city, and no one wanted to take responsibility for it.”

To Mr. Romer, this was a teachable moment. “Anarchy doesn’t scale!” he said.

The above are all quotes from a fascinating article in the September 5 New York Times. It’s Emily Badger’s “A Nobel-Winning Economist Goes to Burning Man.” It’s a fun read.

When you read the article, you can feel Paul Romer’s excitement for cities that work well. So I have little difficulty with what he’s trying to do.

But he has chosen strange words to describe it. Take a look at the first paragraph quoted above. It’s not that the government did something and then let the market take over. The market, if by “market” we mean “voluntary action,” took over from the start.

It takes some doing to go to a completely anarchist (“anarchist,” remember, means “no government”) set up, see how well it is working, and get from it the idea that “Anarchy doesn’t scale.”

I hasten to add that I’m not sure anarchy does scale, which is one reason I’m still not an anarchist. But how would you look at Burning Man, which proceeds despite government barriers, and conclude that anarchy doesn’t scale.

Near the end, Ms. Badger writes:

In Mr. Romer’s Nobel lecture, he implored people to think of cities, especially in the developing world, as places where people get the benefits of interacting with one another. A global economy built on ideas no longer has to be zero-sum, he argued. Everyone can use ideas at the same time. Someone living in America benefits if someone in India becomes better off and invents a vaccine.

I haven’t read his Nobel lecture but I sure hope he didn’t say “A global economy built on ideas no longer has to be zero-sum.” I hope that’s Ms. Badger’s mistake rather than his. One of the basic principles of economics, which surely Paul must know, is that trade is positive-sum with or without new ideas.

By the way, Paul’s excellent piece “Economic Growth” is in The Concise Encyclopedia of Economics and his bio is in the Encyclopedia also.

David Henderson
David Henderson is a British economist. He was the Head of the Economics and Statistics Department at the OECD in 1984–1992. Before that he worked as an academic economist in Britain, first at Oxford (Fellow of Lincoln College) and later at University College London (Professor of Economics, 1975–1983); as a British civil servant (first as an Economic Advisor in HM Treasury, and later as Chief Economist in the Ministry of Aviation); and as a staff member of the World Bank (1969–1975). In 1985 he gave the BBC Reith Lectures, which were published in the book Innocence and Design: The Influence of Economic Ideas on Policy (Blackwell, 1986).

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