Ec 101 versus the real world, ctd.

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In response to this post about the exchange in which Chief Justice John "l'etat la loi, c'est moi" Roberts asked whether it wasn't "extraordinarily paternalistic" to think "that shareholders are too stupid to keep track of what their corporations are doing," and therefore the market would correct any excessive corporate involvement in political affairs, one reader asks:

"Didn't we just learn that most investors are 'too stupid' to know about their investments BECAUSE there were many and completely hidden risk- taking ventures going on??????  And weren't some people also duped into ridiculous mortgage arrangements when there was no follow up to their ridiculous applications that showed no or insufficient income????"

Another reader writes:

"Regarding your comments on John Roberts's view resembling 'the idiot-savant faith in flawless markets that we all recall from Introductory Ec class.' I am a 38-year-old who is now in law school after pursuing a career in the arts, and I find that the Roberts/Econ view is (shockingly, to me) presented as dogma by law professors and barely questioned by law students. In my first year, a torts professor explained to our class how you could price the value of a lost child by seeing how much the parents spent on safety equipment and discounting by the percentage the equipment would save the child's life, with no ancillary discussion of how parents are pressured by marketers, wealthy parents are more able to buy silly pseudo-safety devices, or the conspicuous consumption issue. Seeing how lawyers are trained to look at the world, I am not in any way surprised at Roberts's view. He is a very smart man who has been institutionally taught that the world of theoretical economics ("assume a can opener") is a good model for the real world. It is sobering to see, but not surprising."

These offered for the record.

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James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.
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