By Kevin D. Williamson
Tuesday, May 12, 2015
It is wrong to call economics “the dismal science.”
Dismal, yes; science, no.
Econometrics and mathematical modeling are enormously
valuable, but they also contribute to the pretense of knowledge, which is a
lethal intellectual epidemic to which the scientist manqués of the economics
world are especially vulnerable. There are competing factions and schools of
thought within the proper sciences, of course, but the outsize role played by
economic schools — from New Keynesians to Austrians — is evidence of the
corrupting influence of politics, which distorts economic analysis in both its
weak form (simple political affiliation) and its strong form (servile political
advocacy). And as with the scientific case of freelancing gadflies such as Neil
deGrasse Tyson, economists damage their individual and corporate credibility
the farther they stray from their fields of genuine expertise. It is no
surprise that, e.g., purported science guy Bill Nye until recently held foolish
and ignorant views on genetically modified crops, views of which he has, to his
credit, repented. Nye, who holds a bachelor’s degree in engineering, is more a
science enthusiast than a scientist, much less a scientist with any particular
expertise in agricultural genetics. There is no reason to suppose that he has
particularly well-informed views on any given question, and the temptations of
cultural affiliation — the people who are terrified of GMOs are many of the
same people who care deeply about climate change and the contents of Texas
high-school biology curricula — often lead us astray.
Paul Krugman, the New York Times columnist who used to be
a famous economist, is on his way to becoming the Bill Nye of the economics
world — minus the admirable frankness about changing his mind. Niall Ferguson,
a Harvard history professor affiliated with the Hoover Institution, took to the
pages of the Financial Times to woodshed Krugman over his relentlessly hostile
account of the United Kingdom’s economic situation under the Conservatives.
Krugman has a bug up his parietal lobe about so-called austerity policies, and
insisted that the United Kingdom was hobbling itself by failing to follow his
own pump-priming preferences. Ferguson sets the record straight:
Krugman was equally relentless in predicting that austerity would lead to recession; indeed, he insisted that the UK’s economic performance would be worse than during the Great Depression. . . .There was no double-dip recession. The UK had the best performing of the G7 economies last year, with a real gross domestic product growth rate of 2.6 per cent. In 2009, the last full year of Labour government, the figure was minus 4.3 per cent. Moreover, far from being in depression, the UK economy has generated more than 1.9m jobs since May 2010. UK unemployment is now 5.6 per cent, roughly half the rates in Italy and France. Weekly earnings are up by more than 8 per cent; in the private sector, the figure is above 10 per cent. Inflation is below 2 per cent and falling.
Krugman’s account is vintage Krugman: The Conservatives
didn’t ruin the United Kingdom’s economy, he insists, because they were
covertly slathering the economy with Krugman’s secret sauce when it really
mattered: “Cameron and company imposed austerity for a couple of years, then
paused, and the economy picked up enough during the lull to give them a chance
to make the same mistakes all over again.” There are some interesting
assumptions in that, one of which is that Krugman is able to say with a high
degree of accuracy what sort of time lag exists between policy changes and
economic outcomes in a particular national economy during a very small slice of
time, based on . . . not very much evidence.
Krugman’s blog at the New York Times is titled (as was
one of his books) “The Conscience of a Liberal.” I have never met anybody who
thinks that Krugman’s conscience is very interesting; it is — or was — his
analysis that people have found valuable. “The Conscience of a Liberal” is of
course a backhanded homage to Barry Goldwater’s The Conscience of a
Conservative, and it is telling that Krugman decided to emulate a political
candidate rather than an economist or a scholar.
There are some very hot disagreements in the sciences,
such as the dispute over the question of measurement in quantum mechanics;
however that gets sorted out, it seems likely that conscience will play at most
a minor role in it.
The intellectual vices of economics and other social
science are well-known: correlation-causality errors, confirmation bias, etc.
Without giving in to the pretense of knowledge, we could do with a little less
conscience and a bit more cold-eyed analysis — assuming that such a thing is in
fact possible. Economists have never in all their endeavors managed to deliver
a truly useful and broadly applicable model to policymakers, which is to say a
model that is prospective, connecting policy changes to real-world outcomes in
a predictable, accurate, and reliable manner. Given the complexity at work,
that probably is an impossible task, and the record of economists for making
predictions is not good; Krugman’s record is arguably worse than average,
despite his straight-faced insistence: “I (and those of like mind) have been
right about everything.” Right about everything would be a very high standard
for a marine biologist or an astronomer — but for an economist?
Policymakers should probably resign themselves to the
reality that even the best economists are not able to give them very much
useful advice, that they are still hostage to Paul Valéry’s conundrum:
“Everything simple is false. Everything complex is unusable.” The pretense of
knowledge, and the empiricist posture that characterizes so much of the current
policy debate, is at root a refusal to deal with the real complexity of modern
life, a prideful inability to admit that modest things such as the rule of law
and discipline in public finances may be the best that we can do. Every time we
are forced to endure a State of the Union address, the president thrillingly
declares that he will use his powers to remake economic realities or to simply
will new industries into existence. And he can usually find a dozen economists
in good standing to assure us that this time, things will go according to plan.
Why didn’t it go according to plan last time? Often, the
answer is, “Because the president’s advisers listened to economists from the
wrong school,” i.e. “heresy.”
If we cannot have a forward-facing economics, what are we
likely to have instead? We have a few thousand very intelligent and dedicated
men and women running regressions mainly aimed at helping us to understand what
has happened, and this is a very valuable service. We also have a lot of
just-so stories, which is what Krugman has come to specialize in: retrofitting
economic analysis to political affiliation, bending fact to the requirements of
conscience. Harry Truman famously longed for a one-handed economist: “All my
economists say, ‘On the one hand . . . on the other.’”
Maybe he should have asked for an economist without a
conscience.
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