Tuesday, November 15, 2016

Straight Talk on economic issues: No Wisdom without courage

...reluctance to be honest about trade has cost economists their credibility with the public.
 I've seen multiple references to Dani Rodrik's Straight Talk on Trade, which deserves the notice.

Commentary on Brexit often revisited Michael Gove's "people... have had enough of experts." Before getting too nasty with my own thoughts, some of Rodrick's work:
It has long been an unspoken rule of public engagement for economists that they should champion trade and not dwell too much on the fine print. This has produced a curious situation. The standard models of trade with which economists work typically yield sharp distributional effects: income losses by certain groups of producers or worker categories are the flip side of the “gains from trade.” And economists have long known that market failures – including poorly functioning labor markets, credit market imperfections, knowledge or environmental externalities, and monopolies – can interfere with reaping those gains.
They have also known that the economic benefits of trade agreements that reach beyond borders to shape domestic regulations – as with the tightening of patent rules or the harmonization of health and safety requirements – are fundamentally ambiguous.
Nonetheless, economists can be counted on to parrot the wonders of comparative advantage and free trade whenever trade agreements come up... They have endorsed the propaganda portraying today’s trade deals as “free trade agreements,” even though Adam Smith and David Ricardo would turn over in their graves if they read the Trans-Pacific Partnership.
This reluctance to be honest about trade has cost economists their credibility with the public. Worse still, it has fed their opponents’ narrative. Economists’ failure to provide the full picture on trade, with all of the necessary distinctions and caveats, has made it easier to tar trade, often wrongly, with all sorts of ill effects.
This is not the only topic where academia's economists lack the respect for their audience to be candid, or the diligence to develop and defend an opinion of their own.

While Rodrik, a professor at Harvard, notes the knee-jerk approval of any trade agreement from economists, I've encountered, with frustration, the opposite approach of carbon pricing from another Harvard professor. The one aspect of the American election season I paid some attention to was the rejected carbon tax proposal on the Washington state ballot. I thought an expert in economics, in the Govian sense, might have an opinion on an economics initiative.
I've noticed the assignment of reading -instead of honest communication - from other economic experts on Twitter. Stavins pointed to his endorsement of Hillary Clinton to display why he seldom endorses specific policy. Little stuff being beneath him, it was important to reinforce, "The fate of the United States and the fate of the world are really in our hands."

When was the drop deadline for that course?

Stavins isn't unique.

I try to follow Canada's ego-farcical Ecofiscal Commission, but despite my interest in the subject matter, generally find their productions intolerable. During my most recent viewing of a video on that site (and my last if I'm capable of learning), Professor Ragan, of McGill University, said early on he wanted to return, at some distant point, to the question of whether or not Ontario's solar subsidies were good or bad.
I couldn't wait to hear him return to the point.
Really, I  couldn't wait.
I soon thought, "this is painful. there ought to be a reward for listening to this."

It occurred to me that historically there is a reward for enduring.



A couple of items caught my attention after writing this.

The first was a series of tweets from Stephen Gordon, a Canadian economist and Professor at Laval University. I've Storified some of those, along with some thoughts connecting them back to my initial post:
Bloomberg has an article on Paul Romer who recently became the World Bank's chief economist, shortly after writing The Trouble With Macroeconomics. The Bloomberg article I read fully, but I'll quote from the two snippets of Romer's work I read directly.
The start:
Abstract: For more than three decades, macroeconomics has gone backwards. The treatment of identification now is no more credible than in the early 1970s but escapes challenge because it is so much more opaque...
 reminiscent of Rodrik's "Adam Smith and David Ricardo would turn over in their graves"?

The end:
10 The Trouble Ahead For All of Economics 
...The trouble is not so much that macroeconomists say things that are inconsistent with the facts. The real trouble is that other economists do not care that the macroeconomists do not care about the facts. An indifferent tolerance of obvious error is even more corrosive to science than committed advocacy of error. 
...science and the spirit of the enlightenment are the most important human accomplishments. They matter more than the feelings of any of us.
...Would you want your child to be treated by a doctor who is more committed to his friend the anti-vaxer and his other friend the homeopath than to medical science? If not, why should you expect that people who want answers will keep paying attention to economists after they learn that we are more committed to friends than facts.
Many people seem to admire E. M. Forster’s assertion that his friends were more important to him than his country. To me it would have been more admirable if he had written, "If I have to choose between betraying science and betraying a friend, I hope I should have the guts to betray my friend." 

I initially had the title of this blog post:
No Wisdom without courage.
I should not have changed it.

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