Jim says almost everything I’d like to say on the subject. After asking a series of clarifying questions and sketching counterfactual scenarios, Jim writes:
I hold the belief, quite strongly, that the net effect of the GM bailout will be negative. More precisely, I hold the belief that over a series of many such decisions, a mindset that would have been stringent enough not to have sanctioned the GM bailout is likely to lead to better overall economic outcomes for America. This belief is ideological – not in the sense that I just hold it for inexplicable reasons that cannot ever be changed by empirical analysis – but in the sense that I don’t believe that human beings currently have the capability to conduct the kind of analysis that should convince a rational observer to change his mind about the GM bailout in isolation from a more profound paradigm-shift-like change in his beliefs about the world.
The GM bailout is not an isolated case of this problem. And as I’ve argued many times, impressive-sounding empirical analysis is typically insufficient to measure the effect of important economic interventions like the stimulus program. If you can’t even measure what effect already-executed programs have had, how likely is it that you can predict the effects of future programs?
Acceptance of this degree of ignorance doesn’t cut equally against all ideological positions. It leads naturally to a call for decentralized decision-making, experiments, and entrepreneurial groping toward knowledge. [Emphasis added]
I often say that I’m not in the persuasion business. Rather, I’m in the provocation business. Our worldviews are embedded in friendships, loyalty, aspirations, and much else. The kind of person we want to be shapes the kind of argument we’re inclined to believe. I think I’m doing my job well when I interrupt the pattern, and prompt a reexamination of received views, partly because I enjoy reading people who prompt me to do the same.