Which economists?

Binyamin Appelbaum makes a big call in the New York Times:

As the quarter century of growth that followed World War II sputtered to a close, economists moved into the halls of power, instructing policymakers that growth could be revived by minimizing government’s role in managing the economy. They also warned that a society that sought to limit inequality would pay a price in the form of less growth. In the words of a British acolyte of this new economics, the world needed “more millionaires and more bankrupts.”

In the four decades between 1969 and 2008, economists played a leading role in slashing taxation of the wealthy and in curbing public investment. They supervised the deregulation of major sectors, including transportation and communications. They lionized big business, defending the concentration of corporate power, even as they demonized trade unions and opposed worker protections like minimum wage laws. Economists even persuaded policymakers to assign a dollar value to human life — around $10 million in 2019 — to assess whether regulations were worthwhile.

Peter Boettke points out the obvious:

The problem with narratives like Appelbaum’s isn’t that he is suspicious of the pretensions of economists, it is that he is blaming the wrong culprit for the mess we’re in.  Here it is important that everyone of these critics read Gregory Mankiw’s very important piece, published BEFORE the financial crisis, on the macroeconomist as scientists (read Chicago New Classical and Monetarists) and the macroeconomists as engineers (read MIT/Harvard Keynesian and New Keynesians).   The Chicago folks — and the Austrian, Virginia, UCLA, etc. folks — did not go to DC, did not write laws, didn’t attempt to orchestrate economic miracles abroad, or stimulate growth at home.  They taught, they lectured, the researched and wrote papers in journals and published books, and a subset of them wrote opinion editorials and did interviews in various forms of popular media.  In short, they were teachers and students of society.  They did not get paid to be experts for the government in general.  They were not advisors.  But others were — from Keynes to Larry Summers — the line is long.  Just look at the number of central bankers that were PhD students under Stan Fischer at MIT.  Can you trace that same lineage to Milton Friedman?  How about to F. A. Hayek?  Mises?  Right, I didn’t think so.

It wasn’t the free-market economists who were the social engineers.

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6 Responses to Which economists?

  1. Empire 5:5

    Great post.

    Appelbaum peddles propaganda.

    NYT publishes #fakenews.

  2. Rafe

    They saved Chile from taking the road to Venezuela.

  3. Pyrmonter

    @ Rafe – stop taking the Latin American Left at their word. Their demonisation of ‘Chicago’ is no more than branding, creating a foreign deus ex machina to explain why their own policies invariably ended in disaster.

    @ Doomlord – One of the best posts in months. It deserves more comments.

    As a contribution:

    When Pyrmonter was a student, several economists of a previous generation were well known as public figures, to whom respect was extended across much of the political spectrum: Coombs, most famously (and with the greatest partisan affiliation – Labor loved him; Liberal respect was required (Menzies had been his patron), but the more thoughtful could see what he’d been up to, and associated him with many of the follies of Whitlam), but also Karmel, Corden, Arndt and Melville. By and large they could all (Melville, of an earlier generation, perhaps excepted) be said to be of the first or second generation that had harnessed ‘Keynesian’ ideas to the machinery described in the 30s by Shann and Hancock, the ‘state as a vast social utility’. Of them, at least Corden and Arndt could claim some sound theoretical work. They reflected, for good and bad, what had been a fairly ‘meritocratic’ system of public service.

    30 years later, few of those names mean anything to anyone (though one of them is still living). What has come after them? Our economic technocrats continue to have vaunted educations: fewer now educated in the UK, more in the US, but overwhelmingly with PhDs, mostly from the top US institutions. By several measures, they’re better educated than ever. Yet, for what are they known? Aside from the Doomlord and (deep breath) John Quiggin, has anyone outside Australia heard of any of them? Have they taught abroad? We seem to have developed a quite strict filter for working at senior levels, but I wonder whether it hasn’t produced rather skewed incentives: while John Stone (as perhaps the most extreme example) was always a slightly improbable Treasury Secretary, is it possible to imagine that anyone with such clear views about the workings of organised labour, and of political Labor, could rise to such an office today?

  4. Tim Neilson

    By several measures, they’re better educated than ever.

    Should that read “better credentialled than ever”?

    Quiggin. Angels and ministers of grace preserve us.

  5. Pyrmonter

    @ Tim N

    Credentialed, indeed. Something similar could be said of those engaged in parliamentary politics. Can anyone detect that Paul Fletcher has Firsts in both Law and Economics? That Treasurer Josh, who spurs TAFKAS to write such copy, also has a pair of Honours degrees in those subjects, capped by an Oxford Masters? This is not new, mind – look at both Abbott and Turnbull.

    In defence of Quiggin – while he mostly writes nonsense (and is sponsored by the deep pools of darkness in the Labor movement, including the ETU) and has been very rude to the Doomlord, he engages publicly and has a measure of consistency, and some welcome skepticism toward some of the rent-seekers (nuclear promoters, for example) circling the bureaucracy.

  6. Frank Walker from National Tiles

    In defence of Quiggin – while he mostly writes nonsense (and is sponsored by the deep pools of darkness in the Labor movement, including the ETU) and has been very rude to the Doomlord, he engages publicly and has a measure of consistency, and some welcome skepticism toward some of the rent-seekers (nuclear promoters, for example) circling the bureaucracy.

    He attacks nuke and enables Accionia and Babcock and Brown?

    I’m really unconvinced he gives the public any value whatsoever.

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