Wednesday, September 05, 2007

Yes, bash economists

Matthew Yglesias asks if the progressive movement need do so much economist-bashing. Ezra says, in so many words, that he'll keep bashing economists until economics as a field starts bashing itself -- in the absence of real self-policing, the rest of us have to step up to the plate. In this sense, we're basically just treating economists the way we treat journalists.

It should come as no surprise that I'm closest to Ezra on this one than Matt. So long as economists refuse to actually marginalize their craziest brethren, I feel no compunction about calling them all crazy by association until proven otherwise. And it's not like this is a radical demand, right. I'm not asking that economists spend more time working on the costs of systemic unemployment, or work to develop better measures of sustainable growth -- I'm not even sure that these are, in the end, proper concepts for economics to study. Simply shouting down the "only-and-always-tax-cuts" partisans in public debate would be of inestimable value. And if people like Paul Krugman had rethought their knee-jerk committment to globalization a decade ago when it could have done some good, that would have been nice too.

3 comments:

Andre said...

I'm always confused by these "bash economists" posts.

Economics is very useful and is a key tool in policy making. This recent post by Dani Rodrik gives a couple examples with regard to development policy but it's needed pretty much everywhere. I'm sure you know that economics is mandatory at any decent public policy school. Dismissing the discipline wholesale isn't a terribly good idea because (i) it's needed to understand many aspects of public policy and (ii) you will have less credibility with other analysts in the policy community.

There simply isn't a monolithic economist political ideology. E.g., the EPI minimum wage petition. And even Mankiw is a loud proponent of a carbon tax. And yes Mankiw unofficially advises Romney but that's because he's a pragmatist who feels Romney (faults and all) best represents his political preferences. Goolsbee (Chicago school) is on Obama's advisory team. Even among so-called orthodox (although a la Quiggin I don't think this is a very useful distinction) economists there's a huge range of diversity and new ideas from behavioural economics and environmental economics are incorporated into the mainstream.

Calling all economists "crazy by association" because they fail to silence the wingnuts seems odd to me. It seems unfair because the wingnuts have a huge amount of money and political power behind their message. Besides, small government conservatives are not necessarily unsophisticated, they can't merely be "shouted down".

And bashing the entire profession just muddies the waters. Reducing the credibility of sane economists doesn't seem like a great strategy.

Finally, Krugman had a "knee-jerk" commitment to free trade? Really?

john said...

I have my preferred economists, and Dani Rodrik is among them, whose views accord with mine, so I read their stuff. (Despite my pessimism with economics, I take it seriously.) I don't pretend that their views are more "correct" in any sense, just that I don't find them maddening.

Nobody, certainly not me, is arguing that economics isn't a valuable perspective, and a powerful tool. (I'd say read the older posts that I used to do about energy.) But economics, and particularly the free-market flavour, has profited from an incredible rhetorical imperialism where it becomes the definition of whether a policy is sound or not. (Subsidize renewables? Costs too much, interferes with the market, can't do it. Build more coal plants? That's just the market at work, keep doing it!) Which would be less galling if it wasn't such transparent dishonesty: the policies that we really want to keep on shovelling money towards (losing wars, ag subsidies) are totally bulletproof to free-market analysis. Ergo, economics becomes less a tool of analysis, and more a rhetorical device for the status-quo elements in society.

Or to put it another way, if Rodrik, Dean Baker, or the EPI showed any signs of actually pushing real-world results in a positive direction, I'd be less angry about this.

"Crazy by association" may be harsh, but one of the fundamental obligations of any profession (and don't tell me economists don't count) is self-policing. (Doctors, lawyers, hell, Professors all do this!) This is, in fact, my key criticism of journalism too, so I don't think it's unfair to ask economists to do the same. We ask why the guys who got the WMD stories so wrong in the NYT are still being paid, but I think it's equally fair to ask why Jeff Sachs is welcome in polite society after presiding over the Russian disaster. (No fair account could saddle him with less than a Paul-Bremer sized share of blame.)

I find the diversity argument kind of ironic: economists have this privileged position within society, where resorting to "economics 101" is the lazy way to shut down all sorts of debates, but then you actually learn that, in fact, there's this whole deep ocean of debate about something like whether the minimum wage is good or bad. And there's relatively few "settled" issues, and of course the definition of orthodox economics has changed at least three times in 100 years. All of which in fact militates against economics' privileged position, not in favour of it. If economics does not, in fact, have a lot of answers, than we shouldn't be according it the role of the oracle, right?

Moreover, I'm serious when I say that there's a bunch of stuff that simply shouldn't be decided on economic grounds. Clearly, national defense is something where economics plays a subsidiary role -- a country in a dire security situation makes economists find a way to make things happen, it doesn't ask whether the country can afford to protect itself. (The role of Galbraith and Keynes in WWII is an example.) To pick a more contemporary example, climate change is something that we have to address, and then figure out a way to afford it. Instead, we spent two decades with free-market economists arguing that we couldn't afford it, and shouldn't try even if we could.

And yes, read Krugman's pre-2001 stuff in the NYT. He spent a lot of time writing about how stupid all those smelly hippies were in Seattle, 1999 and how the critics of the WTO didn't know anything. He says now he's changed his mind because the data's changed, but frankly I don't think it's changed enough relative to the stuff I was reading back then.

Andre said...

My comments are in bold.

But economics, and particularly the free-market flavour, has profited from an incredible rhetorical imperialism where it becomes the definition of whether a policy is sound or not.

Some economists may argue that economic efficiency is “the definition of whether a policy is sound” but I doubt they’re very prevalent. I certainly haven’t encountered this viewpoint much. Most would probably argue that other values (including equity) should play a big role in the policy process.

(Subsidize renewables? Costs too much, interferes with the market, can't do it. Build more coal plants? That's just the market at work, keep doing it!)

I don’t really buy this example. I think most economists are in favour of Pigouvian taxes. Externalities are well-established in the economics literature. Similarly, since innovation is a public good, arguments for public subsidy of innovation are well established. There is a real concern about cronyism and government picking winners though.

Which would be less galling if it wasn't such transparent dishonesty: the policies that we really want to keep on shovelling money towards (losing wars, ag subsidies) are totally bulletproof to free-market analysis. Ergo, economics becomes less a tool of analysis, and more a rhetorical device for the status-quo elements in society.

Or to put it another way, if Rodrik, Dean Baker, or the EPI showed any signs of actually pushing real-world results in a positive direction, I'd be less angry about this.

There are plenty of “progressive” policies widely advocated by economists (e.g., green taxes). They don’t get adopted because of entrenched power interests and public shortsightedness (among other reasons). This isn’t the fault of economists.

"Crazy by association" may be harsh, but one of the fundamental obligations of any profession (and don't tell me economists don't count) is self-policing. (Doctors, lawyers, hell, Professors all do this!) This is, in fact, my key criticism of journalism too, so I don't think it's unfair to ask economists to do the same. We ask why the guys who got the WMD stories so wrong in the NYT are still being paid, but I think it's equally fair to ask why Jeff Sachs is welcome in polite society after presiding over the Russian disaster. (No fair account could saddle him with less than a Paul-Bremer sized share of blame.)

There’s a big difference between being honestly wrong about a policy prescription and failing in one’s professional duties. I would be careful about possibly conflating the two.

I find the diversity argument kind of ironic: economists have this privileged position within society, where resorting to "economics 101" is the lazy way to shut down all sorts of debates, but then you actually learn that, in fact, there's this whole deep ocean of debate about something like whether the minimum wage is good or bad. And there's relatively few "settled" issues, and of course the definition of orthodox economics has changed at least three times in 100 years. All of which in fact militates against economics' privileged position, not in favour of it. If economics does not, in fact, have a lot of answers, than we shouldn't be according it the role of the oracle, right?

I’m not sure economics has quite the privileged position you imply. But, in any event, much of the disagreement is over values not analysis. For example, it is pretty much accepted everywhere that welfare supports have entry effects. They will have a negative impact on employment and productivity. There are debates about the relative size of the entry effects but the overall debate tends to be one of values. Whether the poor are “deserving” of support and/or whether the growth in welfare rolls and decline in labour participation (what some call increased dependency) is acceptable in exchange for less material suffering.

To pick a more contemporary example, climate change is something that we have to address, and then figure out a way to afford it. Instead, we spent two decades with free-market economists arguing that we couldn't afford it, and shouldn't try even if we could.

The lack of action on climate change has very little if anything to do with economists. Economic analyses going back to the early 90s suggest the abatement has positive net benefits (e.g., see Nordhaus or Cline or Pizer). The people that say it is too expensive are usually not economists.

And yes, read Krugman's pre-2001 stuff in the NYT…

I haven’t read this stuff. But even if it is glib, his advocacy of free trade could hardly be considered “knee jerk” as you wrote, since he spent years and contributed a large body of scholarship on the issue (whether or not you think it is incorrect or misguided).