It's not rational, it's not even true

Ross Gittins (The Sydney Morning Herald's economics editor) is really starting to annoy me. Originally I was a fan of his writing but of late, especially since being bitten by the recent happiness research bug, his writing and thinking have gone downhill. Mr. Gittins' latest article, paints a weird caricature of economists as expecting everyone to be perfectly rational.

The trouble with economics is not just its assumption that all of us are rational - that is, coldly calculating and self-interested - but the way it induces its practitioners to become coldly calculating themselves.

This may be the case for some strains of economists but can hardly be said to be true of all economists. Here is the letter I sent to the editor about this article:

Dear Sir/Madam,
In his Monday 11th article, 'It's not rational to be rational', Ross Gittins asserts that all economists assume that individuals are perfectly rational and furthermore that market-based processes are therefore prone to failure. The work of economists such as: Adam Smith, Frederich von Hayek and Vernon Smith put lie to Mr. Gittins' first claim and cast doubt upon the second. Economists in this tradition start with not only the assumption that people's rationality is bounded but also that knowledge is distributed among all the participants in the economy. Working from these assumptions they find that market-based processes are a truly effective way for people to coordinate their plans, and far more effective than the fiat of government that Mr. Gittins would have decide what hours people are allowed to work. The approach that economists like Smith, Hayek and Smith take is perhaps not mainstream economics as it is currently practiced but the status of those economists as the father of modern economics and Nobel Laureates, respectively, surely counts against Mr. Gittins' claims that economists always assume perfect rationality and that markets are flawed.
Yours sincerely,
Hamish Barney

We'll see if they decide to publish this letter but given my lousy track-record so far I'm not holding my breath.