What is it about economists that make people so cross? Some of my best friends are economists and they are perfectly nice, reasonable people – some of them even have a sense of humour and everything. But apparently I am being sadly misled. They are fundamentalists. In the more hysterical versions of the argument they are even the devil, offering us Faustian bargains that are bound to turn out badly.
Well I’m sorry but this is absolutely ridiculous. There is a good defence of economists here, and an excellent, considered, piece on the state of economic thinking – and how far it is from this caricature – here. I’m not going to rehash those arguments – read the blogs. But what I find really strange about this argument is how economists – academics, on the whole, who have little real power though some of them have a great deal of influence – are blamed for the actions of politicians.
Paul Vallely asks ‘how are we to decide what is apt for the market to determine and what must be decided by other values’? Actually, it’s no mystery – it’s called politics. He asks if it’s ok to outsource torture, for example. An economist might have a view on that (I struggle to imagine what it would be), but as we saw from the big arguments about rendition, it’s actually a political decision. To blame economists for foreign policy choices made on the basis of Middle East politics and the global balance of power seems pretty extraordinary to me. Which areas of life we commercialise and which we don’t are political decisions – look at the very different decisions taken by governments about the role of markets in health care.
Economists can tell the people who actually make the policy what they think the consequences of different choices might be, or what might be a good way to achieve a particular objective. And as even economists’ harshest critics point out, they will often disagree quite strongly with each other over their analysis of both those questions. Then it’s politicians who decide – on the basis of ideology, political expediency and sometimes even common sense, which pieces of this sometimes conflicting advice they will take.
Sometimes, as with the financial crisis, those political choices – about how to regulate the financial sector, for example – turn out to be pretty disastrous. And yes, economists, some of them with their own financial interests in mind, were pushing governments to make these bad choices. But others were warning loud and clear that it was all going to end in tears. In the end, governments made the bad choices and we are all living with the consequences.
But I am mystified as to why these bad political choices are used as evidence to condemn a whole academic discipline. We don’t look at the atom bomb – the development of which was a product of political choices about defence spending – and blame ‘physics’ for evermore. Reading a bad book doesn’t make people write articles condemning the whole of literature. Yes, some economists are prone to arrogance and to making vastly overstated claims about the certainty of the conclusions. And in the world of policy influence economists hold a special place which is quite annoying to other disciplines who feel they have something useful to say. And some of them misuse that power. But don’t forget who makes the actual decisions here, and who should be ultimately responsible if they are decisions that you don’t like.