The Corner

Economists as Rent Seekers

Over at Cafe Hayek, economist Russ Roberts of George Mason University has a really great blog post explaining the resurgence of Keynesian economics. He thinks economists have embraced Keynesian economics in recent years not because the theory is correct, but because they wanted to be part of the game that is played in Washington.

There is truth in both of those arguments but I think it is useful to add some public choice as well with economists as rent seekers–if you want to be a player, you have to be willing to play. So those economists who argue for the virtues of intervention get a chance to play. Those who oppose intervention remove themselves from any chance of riding the government gravy train.

It’s a bootlegger and baptist argument–economists favored discretion and ad hoc intervention to save the economy knowing it is good for their own income and power. There’s also some groupthink involved. When everyone is touting the virtues of job creation via fiscal policy, you feel a little lonely suggesting it’s a sham. Finally, there is some risk aversion. Once you have some input into the policy process, better to do something than do nothing. Did Ben Bernanke really want to preside over the next real Great Depression while doing nothing? Better to do something, even if it’s flawed. The fact that you gain enormous power along the way would help any mortal man come to the view that doing something is better than doing nothing.

Economist John Taylor likes that theory. However, he sees the Keynesian resurgence as a sign that, ultimately, politics trumps economics, and also that there may have been a lack of research on the “no stimulus” side.

I tend to think that these movements are cyclical. It is easy to believe that government is the solution to everything, in spite of decades of evidences that it isn’t.

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Most Popular

Culture

What Self-Help Guru Tony Robbins Was Trying to Say

Tony Robbins must have known immediately that he'd made a huge mistake in how he responded to a question about #MeToo. Last month, at one of Robbins's popular, sold-out seminars, audience member Nanine McCool told the self-help guru that she thought he misunderstood the #MeToo movement. You can see the entire ... Read More
Sports

The Dominant-Sport Theory of American Politics

I think it’s safe to assert that President Trump has an unfortunate tendency to do and say (and tweet) embarrassing things. When he does, we all join in the condemnation, and often it’s not so much for the substance as for the style. The president of the United States should be dignified, measured, slow to ... Read More
Film & TV

Little Pink House Speaks Truth to Power

Coming soon to a cinema near you—you can make this happen; read on—is a bite-your-nails true-story thriller featuring heroes, villains, and a history-making struggle over . . . the Constitution’s Takings Clause. Next February 24, Little Pink House will win the Oscar for Best Picture if Hollywood’s ... Read More