Economists Are Not To Be Trusted

I was prowling around my hard disk and stumbled across an article I’d saved a long time ago and then completely forgotten about. Specifically, it was “The Tyranny of Economists: How can they be so wrong, so often, and yet still exert so much influence on government policy?” by Robin Kaiser-Schatzlein, which was published in the New Republic way back in September of 2019.

It is partly an essay by Kaiser-Schatzlein and partly a review of a book, The Economists’ Hour: False Prophets, Free Markets, and The Fracture of Society, by Binyamin Appelbaum. Both Appelbaum and Kaiser-Schatzlein agree that something went terribly wrong sometime starting in the 1980s when free markets and deregulation became dogma and Economists became the unquestioned priests of that dogma. Suddenly, any governmental interference in the economy was seen as an unmitigated evil, while a cadre of economic consultants and professors were given the power to, effectively, determine things like life and death--quite literally, as their “cost benefit analysis” of what an individual life was worth might well determine product liability laws.

But, say both authors, the most amazing thing about the rule of the economists was that the economists themselves were, as a rule, always wrong. Notes Kaiser-Schatzleim, “If you look at the economic theories put forth during the economists’ hour—from Friedman’s monetarism to Arthur Laffer’s supply-side economics... the theories often demonstrably did not do what they were supposed to do. Monetarism didn’t curb inflation, lax antitrust and low regulation didn’t spur innovation, and low taxes didn’t increase corporate investment.”

So why, then, both authors ask, did society and government continue to believe them? Because, of course, the economists were telling the Power Elite exactly what it wanted to hear, regardless of the actual evidence. Again, quoting Kaiser-Schatzleim, “...what economists’ ideas did do, quite effectively, was divert wealth from the bottom to the top. This entrenched their power among the winners they helped create.”

In other words, the economists were prophets of the great god Mammon, and Mammon’s most powerful worshipers responded accordingly.

Where the two authors disagree is in what happens next. Appelbaum thinks that the free market economists have proven themselves so wrong, and so alienated the vast majority of us, that in the end they will be overthrown. Kaiser-Schatzleim isn’t nearly so optimistic.

Which is correct? I have no way of knowing. But I am fascinated that these ideas are being, finally, mooted about. Basically, no one has dared discuss such things (at least in professional settings) since Ronald Regan and Maggie Thatcher converted the world to free market fundamentalism.

So...I wonder... could it be? Just perhaps? In some fashion...

Once again we shall remember that economists ...and particularly free market economists...are neither scientists nor gods...but rather all too human...

And all too prone to confuse their own biases and misunderstandings for rigor, and wisdom, and...

The inevitable.

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About me: I’m a writer and former journalist who has published material on everything from computers to the Jazz Age. (Among my small claims to fame is that I interviewed Steve Jobs just after that talented if complicated man got kicked out of Apple, and just before the company’s Board came begging him to come back.)

Please check out my new book, Padre: To The Island, a meditation on mortality, grief, and joy, based on the lives and deaths of two of the most amazing and unconventional people I ever met, my mother and father.

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