The politics of economics
November 29, 2011
By Bill Keller
NYT
=================================================
I share a virtual neighbourhood with a legion of Times reporters, editors and columnists who know more than I will ever know about business and economics. (Look! Right over there: a Nobel-Prize-winning economist!) In this humbling company, on this intimidating matter, who am I to tell anyone what to think? And so my plan was, frankly, to avoid the subject.
But while there are things a columnist can ignore, our failing economic ecosystem is not one of them. So for the past several weeks my aeroplane and bedside reading has consisted of sexy documents like “A Roadmap for America’s Future” and “The Way Forward” and “The Moment of Truth” and “Restoring America’s Future” and “Living Within Our Means and Investing in the Future.” I’ve also reached out to a few economists respected for the integrity of their science and their patience with economic illiterates.
There really is a textbook way to fix our current mess. Short-term stimulus works to help an economy recover from a recession. Some kinds of stimulus pay off more quickly than others. Once the economic heart is pumping again, we need to get our deficits under control. The way to do that is a balance of spending cuts, increased tax revenues and entitlement reforms.
So, what’s the problem? Why is our system so fundamentally stuck? Partly it’s a colossal, bipartisan lack of the political courage required to tell people what they sort of know but don’t want to hear. Partly it’s a Republican Party that, for its own cynical reasons, wants no deal with this President. Partly it’s moneyed, focused lobbies that swarm in defence of specific advantages written into the law; there is no comparable lobby for compromise, let alone sacrifice.
But also, I’ve come to think something is rotten in the state of economics. Back in the very pre-digital days, the writer, A.J. Liebling, famously remarked that freedom of the press was guaranteed only to the man who owned one. Nowadays, of course, freedom of the press belongs to anyone with Internet access, from the information guerrillas of WikiLeaks to the blogger next door.
The consequences have not all been happy, though. The easiest way to stand out in such a vast crowd of microbroadcasters is to be the loudest, the angriest, the most outrageous.
Economists don’t live in caves, so there is no reason they should be immune to the centrifugal politics of this noisy world. Thus serious scholars are tempted to sign on to ideas that stretch their own credulity, and lesser economists are thrust forward for their moment of fame as witnesses on behalf of dubious claims. Economists cluster in ideological think tanks that promote political conformity rather than intellectual rigour. Politicians, with no generally accepted consensus to challenge them, can get away with plucking data out of context to bolster assertions that are based more on faith than on reality. Tax cuts pay for themselves! Protectionism saves jobs! It’s all the Fed’s fault! Deficits don’t matter! Obama is a socialist! Say it often enough and before long it’s a serious discussion on cable TV, in which the proven and the preposterous get the same respectful chin-wagging.
In the Internet age, anyone can be an expert, and anyone who says otherwise is an elitist. The other day House Speaker John Boehner put out a list of 132 economists who signed a statement endorsing a Republican menu of spending cuts, tax cuts and deregulation. All of these are legitimate things to propose, but the statement claimed the Republican list “will do more to boost private-sector job growth in America in both the near-term and long-term than the ‘stimulus’ spending approach favoured by President Obama.” Reputable number-crunchers like Moody’s Analytics and some top-tier economists of both parties said Boehner’s statement would have little or no impact on the short-term employment problem.
So, who were these 132 economists? With a few exceptions they were academics from off-the-beaten-path colleges (no offence to Dakota State University), bloggers (the Calafia Beach Pundit?) and economists from devoutly libertarian think tanks. But the news had the Right-wing tom-toms beating with excitement.
“I’ve never in my professional life seen the disjunction between the political debate about economics and the consensus of economists be as large as it is today,” said Justin Wolfers, a Wharton School economist who favours Democrats, and who tweeted withering commentary on the list of 132. Surely this dilution of authority contributes to our national paralysis.
Hubbard, the dean of Columbia Business School, says the way to weed out the quackery is for serious economists to speak up when silly ideas get a political foothold. He’s right, but once a mainstream economist has settled comfortably into a party-line think tank or joined a candidate’s brain trust, or even enjoyed the adulation at partisan cocktail parties, a degree of self-censorship takes hold.
Of course, there have always been economists who leaned Right or Left — and some outright snake-oil salesmen — but until recently the public debate about economics pretty much stayed within the boundaries of accepted science. Friedrich Hayek and Milton Friedman have become conservative icons, John Maynard Keynes and Paul Samuelson are stalwarts of the liberals, but in their lifetimes they all had a reverence for evidence (even if their acolytes did not).
Rereading some of the alternating, Left-Right weekly columns Samuelson and Friedman wrote for Newsweek in the 1970s, I’ve been struck by their shared assumptions, and by the fact that the tone was so civil. It’s not hard to imagine both men signing on to the kind of grand bargain that keeps eluding the Congress now. But if they were getting started in today’s media market, they would probably be obliged to amp up the vitriol, to sound like the old “Saturday Night Live” “Point-Counterpoint” parody:
“Paul, you pompous ass!”
“Milt, you ignorant slut!”
By arrangement with the New York Times
November 29, 2011
By Bill Keller
NYT
=================================================
I share a virtual neighbourhood with a legion of Times reporters, editors and columnists who know more than I will ever know about business and economics. (Look! Right over there: a Nobel-Prize-winning economist!) In this humbling company, on this intimidating matter, who am I to tell anyone what to think? And so my plan was, frankly, to avoid the subject.
But while there are things a columnist can ignore, our failing economic ecosystem is not one of them. So for the past several weeks my aeroplane and bedside reading has consisted of sexy documents like “A Roadmap for America’s Future” and “The Way Forward” and “The Moment of Truth” and “Restoring America’s Future” and “Living Within Our Means and Investing in the Future.” I’ve also reached out to a few economists respected for the integrity of their science and their patience with economic illiterates.
There really is a textbook way to fix our current mess. Short-term stimulus works to help an economy recover from a recession. Some kinds of stimulus pay off more quickly than others. Once the economic heart is pumping again, we need to get our deficits under control. The way to do that is a balance of spending cuts, increased tax revenues and entitlement reforms.
So, what’s the problem? Why is our system so fundamentally stuck? Partly it’s a colossal, bipartisan lack of the political courage required to tell people what they sort of know but don’t want to hear. Partly it’s a Republican Party that, for its own cynical reasons, wants no deal with this President. Partly it’s moneyed, focused lobbies that swarm in defence of specific advantages written into the law; there is no comparable lobby for compromise, let alone sacrifice.
But also, I’ve come to think something is rotten in the state of economics. Back in the very pre-digital days, the writer, A.J. Liebling, famously remarked that freedom of the press was guaranteed only to the man who owned one. Nowadays, of course, freedom of the press belongs to anyone with Internet access, from the information guerrillas of WikiLeaks to the blogger next door.
The consequences have not all been happy, though. The easiest way to stand out in such a vast crowd of microbroadcasters is to be the loudest, the angriest, the most outrageous.
Economists don’t live in caves, so there is no reason they should be immune to the centrifugal politics of this noisy world. Thus serious scholars are tempted to sign on to ideas that stretch their own credulity, and lesser economists are thrust forward for their moment of fame as witnesses on behalf of dubious claims. Economists cluster in ideological think tanks that promote political conformity rather than intellectual rigour. Politicians, with no generally accepted consensus to challenge them, can get away with plucking data out of context to bolster assertions that are based more on faith than on reality. Tax cuts pay for themselves! Protectionism saves jobs! It’s all the Fed’s fault! Deficits don’t matter! Obama is a socialist! Say it often enough and before long it’s a serious discussion on cable TV, in which the proven and the preposterous get the same respectful chin-wagging.
In the Internet age, anyone can be an expert, and anyone who says otherwise is an elitist. The other day House Speaker John Boehner put out a list of 132 economists who signed a statement endorsing a Republican menu of spending cuts, tax cuts and deregulation. All of these are legitimate things to propose, but the statement claimed the Republican list “will do more to boost private-sector job growth in America in both the near-term and long-term than the ‘stimulus’ spending approach favoured by President Obama.” Reputable number-crunchers like Moody’s Analytics and some top-tier economists of both parties said Boehner’s statement would have little or no impact on the short-term employment problem.
So, who were these 132 economists? With a few exceptions they were academics from off-the-beaten-path colleges (no offence to Dakota State University), bloggers (the Calafia Beach Pundit?) and economists from devoutly libertarian think tanks. But the news had the Right-wing tom-toms beating with excitement.
“I’ve never in my professional life seen the disjunction between the political debate about economics and the consensus of economists be as large as it is today,” said Justin Wolfers, a Wharton School economist who favours Democrats, and who tweeted withering commentary on the list of 132. Surely this dilution of authority contributes to our national paralysis.
Hubbard, the dean of Columbia Business School, says the way to weed out the quackery is for serious economists to speak up when silly ideas get a political foothold. He’s right, but once a mainstream economist has settled comfortably into a party-line think tank or joined a candidate’s brain trust, or even enjoyed the adulation at partisan cocktail parties, a degree of self-censorship takes hold.
Of course, there have always been economists who leaned Right or Left — and some outright snake-oil salesmen — but until recently the public debate about economics pretty much stayed within the boundaries of accepted science. Friedrich Hayek and Milton Friedman have become conservative icons, John Maynard Keynes and Paul Samuelson are stalwarts of the liberals, but in their lifetimes they all had a reverence for evidence (even if their acolytes did not).
Rereading some of the alternating, Left-Right weekly columns Samuelson and Friedman wrote for Newsweek in the 1970s, I’ve been struck by their shared assumptions, and by the fact that the tone was so civil. It’s not hard to imagine both men signing on to the kind of grand bargain that keeps eluding the Congress now. But if they were getting started in today’s media market, they would probably be obliged to amp up the vitriol, to sound like the old “Saturday Night Live” “Point-Counterpoint” parody:
“Paul, you pompous ass!”
“Milt, you ignorant slut!”
By arrangement with the New York Times
============================================
deccanchronicle.com/editorial/op-ed/politics-economics-966
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