Public pronouncements of economists, once they enter Washington, become virtually useless. In order to serve, they must compromise their objectivity and support the goals and spin of the Administration.
Of course, they don’t have to enter Washington at all. All they have to do is adopt a team, either Republican or Democrat. A prime example of the latter is Paul Krugman who consistently ties himself in knots trying to support one party and their positions. (To be fair, Krugman sometimes criticizes when he believes his team is not strong enough according to his political/economic ideology, something he could not do if he were employed by the team.)
The more political an economist, the less value his/her opinions have. Some of the best economists would not serve in political positions for just that reason. Milton Friedman declined service on several occasions, suggesting that he could be more effective if he provided advice as an outsider. In that way, he believed his views would not be compromised by having to toe a political line.
A trail of academic research, coupled with the no-holds-barred internet media, is often embarrassing for economists that go to Washington. Christina Romer has this problem with current advocacy for positions that contradict her (and her husband’s) research on the effectiveness of various macroeconomic policies.
Larry Summers has similar problems as discussed by Jerry O’Driscoll below:
What Causes Unemployment?
April 18, 2010
by Jerry O’Driscoll
Last week, there was a testy exchange between the Editors of the Editorial Page at the Wall Street Journal and the Director of the National Economic Council, Lawrence H. Summers. On the April 13th Page, the editors quoted Summers from a 1999 essay on the causes of long-term unemployment. According to Summers 1999, there are two causes: “welfare payments and unemployment insurance.”
Summers 2010 has a different view and the Journal printed hisletter on April 16th in which he accuses the editors citing him “out of context.” The true cause of the current unemployment is deficient aggregate demand. Extending unemployment insurance bolsters consumer spending, “thereby contributing to employment.”
The editors countered with an even more lengthy quotation from Summers’ 1999 essay on the microeconomic causes of long-term employment. They observe, correctly in my view, that Summers’ new theory amounts to the proposition that “pay people for not working, and more people will work!” And they address a central issue occupying us at TM: whether macroeconomic effects outweigh microeconomic incentives.
It is instructive reading.
Our Only Asset is Freedom
Government Economic Propaganda
More On Going Back To School
Governments Go Madoff
What Future?
Recent Comments