Dr. Krugman,

I have been an author for a number of years at a blog called “Critical Thinker Applied”. Steve Horwitz of the Austrian School has occasionally provided a guest essay and commented on various essays. I was a bit taken back when he responded to a rather provocative op-ed piece I wrote called “Smart” is the new dumb. While I am not an economist, I have done some research and posted articles on some of the issues I have with Austrian Economics. Of course, Steve did not like my article which concerned my idea that the government is more like a large business conglomerate than some different kind of large, homogenous, monolithic beast. I compared the electorate to shareholders or board members who could fire politicians (management) for doing a bad job. In particular, Steve wanted to claim that the government could not retain knowledge as well as private sector business and could not be as efficient as private sector business. My idea is not so black and white. I pointed out that there are parts of government like the GAO that can be just as efficient as business and retain knowledge. I also pointed out that business can fail to retain knowledge and become inefficient at times. His rebuttal was that studies proved voting has “built-in bias that do not assure the same sort of corrective processes”. In my response I asked him,

“It appears as if you question the whole ideal of democracy as a self-correcting process, albeit bumpy and messy but a progressive form of self governance. If voting is irretrievably flawed with “built-in bias, under your systemic analysis wouldn’t that indict democracy in general? Isn’t voting the cornerstone of democracy? Are we to suppose that the unbridled governance of the market is sufficient to replace the flawed governance of democracy?”

I am perplexed by his seemingly somewhat ambivalent and arbitrary designations of government and the private sector. I am sure he must be aware that even shareholders and board members vote. If voting is fatally flawed when it comes to government, how is it that this flaw does not follow into the private sector?

Best Regards,