DMore and more people distrust liberal democracy and the economists who support it. But what is the nature and level of responsibility of the latter in the difficulties we encounter?
Economists often lay claim to political expertise for which they are unqualified, with, predictably, disastrous results. Despite this, wise critics claim that they still have a lot of influence on economic policy, and therefore continue to do harm. Is this situation due to a handful of individuals who have the long arm, or does it reflect a design flaw in their way of approaching things?
I lean towards the latter hypothesis. Not only did most economists fail to predict the crisis, but, according to some, they even facilitated it. The proud apostles of globalization and technological change have enriched a narrow financial and managerial elite, redistributed income and wealth from labor to capital, destroyed millions of jobs…
Yet, according to economist Alan Blinder, politicians rarely follow the advice of economists. They use their analysis like a drunk uses a lamp post: to support themselves, not to light them up. Although there are a number of them, not all economists are servile jobbers who adopt positions to please their master. Rather, the problem is that good work can be misused.
Mea culpa
I think Mr. Blinder is right, but not always. Secretary of the Treasury to President Clinton from 1999 to 2001, Lawrence Summers used all his intellectual power, knowledge and persuasiveness to ease restrictions on international flows of hedge funds, derivatives and other instruments. more exotic financiers. On the other hand, other economists (including Messrs. Blinder and Stiglitz) fiercely opposed this proposal. Many observers later claimed that these Clinton-era changes contributed to the Asian financial crisis of 1997-98 and the global financial crisis a decade later.
At the time, most economists had all more or less bought into the idea that modern economics had given us the tools to get rid of old growth-limiting regulations, many of which were based on prejudice and prejudice. myths, not science. I guess a mea culpa is in order now.
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