I am generally skeptical of “accepted wisdom” on many policy debates. People involved in policy-making are generally politicians who carefully craft justifications (i.e. cover stories) where self-interest and common good cannot be disentangled easily. These justifications can easily become “accepted wisdom” even if incorrect. I am not saying that “accepted wisdom” is without value or that it is always wrong, but more often than not it is accepted at face value without question.
My favorite example is “antitrust”. In the United States, the Sherman Act (the antitrust bill) was first introduced in 1889 (passed in 1890). The justification often given is that it was meant to promote competition as proposed by economists. However, as often pointed out, the bill was passed well before the topic of competition in economics had been unified into a theoretical body. It was also rooted in protectionist motives. Moreover, the bill was passed after the industries most affected saw prices fall faster than the overall price level and output increase faster than the overall output level (see here here here here and here). Combined, these elements should give pause to anyone willing to cite the “accepted wisdom”.
More recently, economist Patrick Newman provided further reason for caution in an article in Public Choice. Interweaving political history and the biographical details about senator John Sherman (he of the Sherman Act), Newman tells a fascinating story about the self-interested reasons behind the introduction of the act.
In 1888, John Sherman failed to obtain the Republican presidential nomination – a failure which he blamed on the governor of Michigan, Russell Alger. Out of malice and a desire of vengeance, Sherman defended his proposal by citing Alger as the ringmaster of one of the “trusts”. Alger, himself a presidential hopeful for the 1892 cycle, was politically crippled by the attack (even if it appears that it was untrue). Obviously, this was not the sole reason for the Act (Newman highlights the nature of the Republican coalition which would have demanded such an act). However, once Alger was fatally wounded, Sherman appears to have lost interest in the Act and left others to push it through.
As such, the passage of the bill was partly motivated by political self-interest (thus illustrating the key point of behavioral symmetry that underlies public choice theory). Entangled in the “accepted wisdom” is a wicked tale of revenge between politicians. At such sight, it is hard not to be cautions with regards to “accepted wisdom”.