It is wrong to call economics “the dismal science.” Dismal, yes; science, no.
Econometrics and mathematical modeling are enormously valuable, but they also contribute to the pretense of knowledge, which is a lethal intellectual epidemic to which the scientist manqués of the economics world are especially vulnerable. There are competing factions and schools of thought within the proper sciences, of course, but the outsize role played by economic schools — from New Keynesians to Austrians — is evidence of the corrupting influence of politics, which distorts economic analysis in both its weak form (simple political affiliation) and its strong form (servile political advocacy). And as with the scientific case of freelancing gadflies such as Neil deGrasse Tyson, economists damage their individual and corporate credibility the farther they stray from their fields of genuine expertise. It is no surprise that, e.g., purported science guy Bill Nye until recently held foolish and ignorant views on genetically modified crops, views of which he has, to his credit, repented. Nye, who holds a bachelor’s degree in engineering, is more a science enthusiast than a scientist, much less a scientist with any particular expertise in agricultural genetics. There is no reason to suppose that he has particularly well-informed views on any given question, and the temptations of cultural affiliation — the people who are terrified of GMOs are many of the same people who care deeply about climate change and the contents of Texas high-school biology curricula — often lead us astray.
Paul Krugman, the New York Times columnist who used to be a famous economist, is on his way to becoming the Bill Nye of the economics world — minus the admirable frankness about changing his mind. Niall Ferguson, a Harvard history professor affiliated with the Hoover Institution, took to the pages of the Financial Times to woodshed Krugman over his relentlessly hostile account of the United Kingdom’s economic situation under the Conservatives. Krugman has a bug up his parietal lobe about so-called austerity policies, and insisted that the United Kingdom was hobbling itself by failing to follow his own pump-priming preferences. Ferguson sets the record straight:
Krugman was equally relentless in predicting that austerity would lead to recession; indeed, he insisted that the UK’s economic performance would be worse than during the Great Depression. . . .
There was no double-dip recession. The UK had the best performing of the G7 economies last year, with a real gross domestic product growth rate of 2.6 per cent. In 2009, the last full year of Labour government, the figure was minus 4.3 per cent. Moreover, far from being in depression, the UK economy has generated more than 1.9m jobs since May 2010. UK unemployment is now 5.6 per cent, roughly half the rates in Italy and France. Weekly earnings are up by more than 8 per cent; in the private sector, the figure is above 10 per cent. Inflation is below 2 per cent and falling.
Krugman’s account is vintage Krugman: The Conservatives didn’t ruin the United Kingdom’s economy, he insists, because they were covertly slathering the economy with Krugman’s secret sauce when it really mattered: “Cameron and company imposed austerity for a couple of years, then paused, and the economy picked up enough during the lull to give them a chance to make the same mistakes all over again.” There are some interesting assumptions in that, one of which is that Krugman is able to say with a high degree of accuracy what sort of time lag exists between policy changes and economic outcomes in a particular national economy during a very small slice of time, based on . . . not very much evidence.
Economists have never in all their endeavors managed to deliver a truly useful and broadly applicable model to policymakers.
Krugman’s blog at the New York Times is titled (as was one of his books) “The Conscience of a Liberal.” I have never met anybody who thinks that Krugman’s conscience is very interesting; it is — or was — his analysis that people have found valuable. “The Conscience of a Liberal” is of course a backhanded homage to Barry Goldwater’s The Conscience of a Conservative, and it is telling that Krugman decided to emulate a political candidate rather than an economist or a scholar.
There are some very hot disagreements in the sciences, such as the dispute over the question of measurement in quantum mechanics; however that gets sorted out, it seems likely that conscience will play at most a minor role in it.
The intellectual vices of economics and other social science are well-known: correlation-causality errors, confirmation bias, etc. Without giving in to the pretense of knowledge, we could do with a little less conscience and a bit more cold-eyed analysis — assuming that such a thing is in fact possible. Economists have never in all their endeavors managed to deliver a truly useful and broadly applicable model to policymakers, which is to say a model that is prospective, connecting policy changes to real-world outcomes in a predictable, accurate, and reliable manner. Given the complexity at work, that probably is an impossible task, and the record of economists for making predictions is not good; Krugman’s record is arguably worse than average, despite his straight-faced insistence: “I (and those of like mind) have been right about everything.” Right about everything would be a very high standard for a marine biologist or an astronomer — but for an economist?
Policymakers should probably resign themselves to the reality that even the best economists are not able to give them very much useful advice, that they are still hostage to Paul Valéry’s conundrum: “Everything simple is false. Everything complex is unusable.” The pretense of knowledge, and the empiricist posture that characterizes so much of the current policy debate, is at root a refusal to deal with the real complexity of modern life, a prideful inability to admit that modest things such as the rule of law and discipline in public finances may be the best that we can do. Every time we are forced to endure a State of the Union address, the president thrillingly declares that he will use his powers to remake economic realities or to simply will new industries into existence. And he can usually find a dozen economists in good standing to assure us that this time, things will go according to plan.
Why didn’t it go according to plan last time? Often, the answer is, “Because the president’s advisers listened to economists from the wrong school,” i.e. “heresy.”
If we cannot have a forward-facing economics, what are we likely to have instead? We have a few thousand very intelligent and dedicated men and women running regressions mainly aimed at helping us to understand what has happened, and this is a very valuable service. We also have a lot of just-so stories, which is what Krugman has come to specialize in: retrofitting economic analysis to political affiliation, bending fact to the requirements of conscience. Harry Truman famously longed for a one-handed economist: “All my economists say, ‘On the one hand . . . on the other.’”
Maybe he should have asked for an economist without a conscience.
— Kevin D. Williamson is National Review’s roving correspondent.