One of the best insults I have ever read came from Ezra Klein, who is now editor-in-chief of Vox.com. In 2007, he described former US House of Representatives majority leader Dick Armey as “a stupid person’s idea of what a thoughtful person sounds like.”
It is a funny line that applies to quite a few public figures. US Representative Paul Ryan, the chairman of the House Budget Committee, is a prime current example. However, maybe the joke is on us. After all, such people often dominate policy discourse. And what policymakers don’t know, or worse, what they think they know that isn’t so, can definitely hurt you.
What inspired these gloomy thoughts? Well, I have been looking at surveys from the Initiative on Global Markets, based at the University of Chicago. For two years, the initiative has been regularly polling a panel of leading economists, representing a wide spectrum of schools and political leanings, on questions that range from the economics of college athletes to the effectiveness of trade sanctions. It usually turns out that there is much less professional controversy about an issue than the cacophony in the news media might have led you to expect.
This was certainly true of the most recent poll, which asked whether the American Recovery and Reinvestment Act — US President Barack Obama’s “stimulus” — reduced unemployment. All but one of those who responded said that it did, a vote of 36-1. A follow-up question on whether the stimulus was worth it produced a slightly weaker, but still overwhelming 25-2 consensus.
Leave aside for a moment the question of whether the panel is right in this case (although it is). Let me ask, instead, whether you knew that the pro-stimulus consensus among experts was this strong, or whether you even knew that such a consensus existed.
I guess it depends on where you get your economic news and analysis. However, you certainly did not hear about that consensus on, say, CNBC — where one host was so astonished to hear yours truly arguing for higher spending to boost the economy that he described me as a “unicorn,” someone he could hardly believe existed.
More important, over the past several years, policymakers across the Western world have pretty much ignored the professional consensus on government spending and everything else, placing their faith instead in doctrines most economists firmly reject.
As it happens, the odd man out — literally — in that poll on stimulus was Harvard professor Alberto Alesina. He has claimed that cuts in government spending are actually expansionary, but relatively few economists agree, pointing to work at the IMF and elsewhere that seems to refute his claims. Nonetheless, back when European leaders were making their decisive and disastrous turn toward austerity, they brushed off warnings that slashing spending in depressed economies would deepen their depression. Instead, they listened to economists telling them what they wanted to hear.
It was, as Bloomberg Businessweek put it, “Alesina’s hour.”
Am I saying that the professional consensus is always right? No. However, when politicians pick and choose which experts — or, in many cases, “experts” — to believe, the odds are that they will choose badly. Moreover, experience shows that there is no accountability in such matters. Bear in mind that the US right is still taking its economic advice mainly from people who have spent many years wrongly predicting runaway inflation and a collapsing dollar.
All of which raises a troubling question: Are we as societies even capable of taking good policy advice?
Economists used to assert confidently that nothing like the Great Depression could happen again. After all, we know far more than our great-grandfathers did about the causes of and cures for slumps, so how could we fail to do better? However, when crises struck, much of what we have learned over the past 80 years was simply tossed aside.
The only piece of our system that seemed to have learned anything from history was the US Federal Reserve, and the Fed’s actions under former Fed chairman Ben Bernanke, continuing under Fed Chair Janet Yellen, are arguably the only reason we have not had a full replay of the Depression. (More recently, the European Central Bank under Mario Draghi, another place where expertise still retains a toehold, has pulled Europe back from the brink to which austerity brought it.) Sure enough, there are moves afoot in the US Congress to take away the Fed’s freedom of action. Not a single member of the Chicago experts panel thinks this would be a good idea, but we have seen how much that matters.
And macroeconomics, of course, is not the only challenge we face. In fact, it should be easy compared with many other issues that need to be addressed with specialized knowledge, above all climate change. So you really have to wonder whether and how we will avoid disaster.
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
Ursula K. le Guin in The Ones Who Walked Away from Omelas proposed a thought experiment of a utopian city whose existence depended on one child held captive in a dungeon. When taken to extremes, Le Guin suggests, utilitarian logic violates some of our deepest moral intuitions. Even the greatest social goods — peace, harmony and prosperity — are not worth the sacrifice of an innocent person. Former president Chen Shui-bian (陳水扁), since leaving office, has lived an odyssey that has brought him to lows like Le Guin’s dungeon. From late 2008 to 2015 he was imprisoned, much of this