Economics and the Political Processt
Abstract
I want to use this once-in-a-lifetime opportunity for pontificating to the profession, to explore ways of improving the interaction between what economists do and the political process. Tension and conflict are, of course, inherent in political decisions, especially on economic policy. Nothing can make such decisions easy. Nevertheless, it is my contention that economic policymaking in Washington in the last decade has been more frustrating, muddled, and confusing than necessary. Some of the fault lies with economists and economics; some with politicians and the political process; some in the interactions. I want to offer some suggestions for modest improvements. Most economists probably share my premise that economics ultimately ought to be more than just challenging intellectual gymnastics. It ought to help us understand how the economy works and provide a basis for intelligent political choices among economic policies. Even those who devote their energies to resolving purely theoretical issues imagine that somehow in the end their efforts will prove socially useful. The dedicated, idealistic young economist who aspires to advise a government may well envision herself someday as the wise and impartial adviser to the philosopher queen. In this daydream, the adviser presents the best forecasts that can be made of the future course of the economy. She explains the macroeconomic policy options and what is likely to happen if each is undertaken. She elucidates why market solutions are efficient, when markets are likely to fail, and what can be done when this occurs. She identifies risks and uncertainties, which fortunately are not overwhelming. She represents the best professional judgment of her fellow economists, indicating the major respects in which most economists agree and scrupulously pointing out that in minor respects the views of some of her professional colleagues might differ from her own. She remains above the political fray, identifying any values or distributional biases that may creep into her judgments and eschewing identification with interest groups or ideological causes. The queen for her part listens carefully and intelligently, asks thoughtful questions, and weighs the options. She may consult other experts on noneconomic aspects of the decisions, but these can be assumed not to be very important. She then makes final decisions-even very hard ones-and sticks to them. The decisions are carried out, the economy prospers, and a grateful nation applauds the wisdom of the monarch and her economist and the usefulness of economics. But in the real world, both economics and politics are frustratingly unlike this picture. Both are pluralistic in the extreme and appear to be getting more so. Economists and political leaders not only miscQmmunicate, but each accuses the other of incompetence, obfuscation, self-serving motives, and antisocial behavior. Economists, of course, do not wait for others to attack them; they do it themselves. Walter Heller said in his presidential address that the chorus of self criticism has risen to a new crescendo (1975, p. 1), and the selfdeprecation has not abated in the intervening decade. If a golden age of economists' self-confidence ever occurred, it is long past. Events of recent years have kept reminding us that our national economy is diverse and complex, battered by unpredictable shocks, and increasingly interconnected with the even *The Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036. The views set forth here are solely my own and do not necessarily represent the opinions of the trustees, officers, or other staff members of the Brookings Institution. I am grateful for the insights and assistance of many colleagues, especially Robert D. Reischauer, Charles L. Schultze, Mary S. Skinner, and Valerie M. Owens. *Presidential address delivered at the ninety-ninth meeting of the American Economic Association, December 29, 1986, New Orleans, Louisiana.
- Sources
- openalex