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The 'good-citizen' economist

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Wednesday, June 27, 2012, 12:01 a.m.

What role should economists play on the public-policy front?

Here's a tempting answer: “The economist should use his or her expert knowledge of the facts, as well as of how various parts of the economy interact with each other, to advise political leaders on which policies are best for the economy.”

This tempting answer isn't awful. Economic-policy advice offered by people who specialize in economics should weigh more heavily than does economic-policy advice offered by noneconomists such as Hollywood actors, career politicians, community activists, and business people. (Don't be startled by my mention here of business people. Expertise at running a business or managing a financial portfolio is emphatically not, contrary to popular mythology, the same as expertise at understanding the logic of how economies work.)

But nor is this tempting answer very satisfying to this economist. It's not that we economists don't have a consensus among ourselves on many important policy issues. For example, regardless of individual ideological leanings, a great majority of economists support globalization and are skeptical of government-imposed controls on prices.

Rather, my lukewarm regard for the economist as policy adviser stems more from my fear that the economist who spends much time offering policy advice will use his time uneconomically.

Politicians — despite staging poses to the contrary — seldom really seek the advice of economists. Politicians instead seek re-election.

Whenever there is — as there is often — a conflict between heeding the advice of the economist and heeding the advice of the pollster, 99 times out of 100, the politician will ignore the economist. (Politicians who do the contrary do not long remain politicians.)

So the economist bent on advising politicians will either too often find that her time and effort have been wasted, or she will, step by step, be corrupted into offering only economic-sounding apologies for policies that are politically expedient.

There's a far better use of whatever time the economist devotes to communicating with noneconomists — namely, challenging the many popular misconceptions that distort the general public's understanding of the way economies work.

Communicating with the general public (unlike advising government officials) doesn't offer even the illusion of affecting public policy in the near term. Helping improve the public's economic understanding will not pay off in better economic policies for years. The reason is that people seldom change their minds quickly on matters that are governed chiefly by preconceptions. And nearly all of the general public's notions about economics are determined not by systematic reasoning, but by preconceptions that people happen to stumble into.

So the economist who chooses to converse with the general public must be patient. He also must have no need to inflate his ego with evidence that his advice leads directly to changes in public policy. He must rest content with no more than the hope that, if he does his best, he might help to improve policy sometime in the uncertain future.

And “doing his best” on this front does not involve the economist impressing the general public with his cleverness or erudition. Instead, it involves repetition of basic truths, most of which were well-known to Adam Smith in the 18th century.

The (let us call him) “good-citizen” economist must work diligently to disabuse the general public of its most misleading instincts. Chief among these is the instinct that high demand for firms' outputs is a principal cause of economic prosperity.

In my next column, I'll explore this misleading instinct more deeply.

Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.

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