Break Up Economics — continued

by
Peter Radford
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from Peter Radford

What?  Surely not!  How dare he suggest such a thing.

What, you are correct in asking, am I talking about?

The recent speech by a Department of Justice official who dared suggest that it is getting quite difficult to find a truly neutral technocratic expert to give testimony in court.  Imagine the cheek.  How dare he question ‘expertise’.  Especially economic expertise, which is, surely, the gold standard.

Why did he say what he said?

Because academics are apparently so eager to be bought.  Especially those at so-called ‘top’ schools.  And especially those who engage in teaching either business or economics.  Outside consulting contracts and sponsored research have become such an infection that many of the ‘big names’ are tainted by these activities and are not strictly speaking neutral in their opinions.  Or, at least, have the appearance of bias simply by virtue of their non-academic pursuits.

This is hardly a new problem.

Anyone with a half decent memory can recall the lunacy being passed off as research just prior to the Great Recession.  Many, if not most, of the perpetrators of that research as still happily teaching/consulting as if nothing happened.  Protected, most of them, within the walls of tenure they operate with both immunity and impunity, whilst peddling, amongst other things, the fiction that the only way to cure inflation is to hammer the workers.

Bias much?

The recent FT editorial criticizing economics as being a cartel — my words, not theirs — is a slight sign that the world is getting fed up with a discipline that reeks of hypocrisy, thinks price gouging is jolly good fun and leads to ‘efficient’ outcomes, and yet still has no coherent clue about where growth comes from, which is one of the biggest task we have assigned it.

We only have to go back to the immediate postwar years and the inflow of cash into big academic departments to fund economists to get an inkling of where the wheels came off.  Is it truly a coincidence that economists suddenly became besotted with markets, declared the state an economic persona non-grata, and started talking about the ‘road to serfdom’ or the ’right to choose’?  We only need to ask who funded the folks who thought that stuff up and wrote those books.  Oh!  Those people.  The ones who benefitted from deregulation knower taxes.  Yes, those people.  The rich.  The people who fund universities.

It isn’t necessarily that corruption is rife.  It is the appearance of it that matters.  Something about revealed preferences might apply here.

And spare me your comments.  You know this is a problem.  Fix it.

Yes, it is a difficult problem, especially in an era of giant donations to the biggest institutions — most of whom can afford not to take such donations — and the consequent influence that donors expect to exert on academic activity.  Academic freedom comes at the cost of turning down, not accepting, such donations.   Universities that are so easily bought ought to reflect on their diminished ethical stature.

If you want to make millions as a consultant to the rich and big corporate players, go ahead.  But quit teaching.  Don’t pretend to be neutral.  You aren’t.  Get out.  And get out now.  Play in the market.  Good for you.

This is because economics plays a special role within the realm of social studies.  It affects people’s lives through its significant influence on policy.  It has, therefore, an obligation more intense than the other disciplines that surround and augment it.  It needs to act with caution not bravado.  It needs to admit when it knows little and not hide its ignorance behind unnecessarily complicated explication.   And above all it needs to come down off its arrogant perch and get on with improving itself.  For instance, it still seems to think that mid1800s physics is still the way to go.  The world of science moved on.  Economics simply dug in and pretended it didn’t.

The recent spate of silly comments flowing from the mouths of advocates of price theory are a case in point.  Price gouging is not a good idea.  People genuinely dislike the uncertainty of prices that hop about all over the place.  The notion that hamburgers ought to cost more at lunch hour is absurd on its face.  That the underlying economics of price theory suggest otherwise is simply an acknowledgment of the disconnect between academia and the real world.  It is not clever, it is dumb to pen articles proclaiming the joys of price gouging.  Especially if you are a tenured professor safely hidden away from the realities of market forces and their potential implications for your own salary — the hypocrisy is simply disgusting.

So, no, I am not surprised that someone at the Justice Department expressed a fear that so-called ‘experts’ are actually covert advocates of an ideological perspective that has significant social consequences.  And that, as such, they are not really reliable as neutral witnesses.

In fact, I think the emerging transparency about the state of economics, and its historical attachment to certain sources of funding are a good thing.  We need to break up that cartel and get some healthy competition into the discipline.  We can apply some vigorous economic theory to economists.

Now there’s a thought.

Remember, though, there’s no such thing as ‘involuntary unemployment’.

Or, so I heard.