Justin Wolfers writes (not Justin Fox, as I mis-typed earlier) that at the recent American Economics Association meetings,
Over three days of intense discussions, I didn’t encounter a single economist who expressed optimism that Mr. Trump’s administration would be good for the economy. The optimists were those who thought Mr. Trump would not have the energy to actually implement his agenda; the pessimists’ thoughts veered toward disaster.
Pointer from Mark Thoma.
It is possible that they are correct. However, I doubt it. While I disagree with Mr. Trump on immigration and trade, and I condemn his interventions with individual business decisions, I think that these will cause relatively little harm. This harm could be more than offset by reining in regulations, replacing Obamacare, and/or tax reform.
What is true is that Mr. Trump and the professoriate have an adversarial relationship. Mr. Obama takes his world view from the faculty lounge of the sociology department, and he very much respected academic credentials. Mr. Trump is the opposite.
I think that credentialed economists deserve a bit more respect than what we receive from Mr. Trump, but much less than what many American Economics Association members seem to think we are entitled to. I think that Justin Wolfers’ colleagues are fantasizing about a scenario in which Mr. Trump causes an economic disaster so that the status of academic economists shoots up. But I do not think see this as a very likely scenario.
On the generic topic of academic expertise in government, Tyler Cowen writes,
when it comes to the nuts and bolts of governance, typically I would prefer to be ruled by the Harvard faculty, even recognizing the biases of experts. They understand the importance of applying expertise to complex problems, and they realize many issues do not respond well to common-sense fixes. The citizenry usually cannot make good decisions, or for that matter expert appointments, when technocracy is required.
I tend to focus on what I call the knowledge-power discrepancy. Joe Citizen may have less knowledge than Professor Jones, but Professor Jones could be more dangerous. That is because Professor Jones may over-estimate his suitability for telling other people what to do.
Compared with academics, business executives and military leaders have more experience with the challenge of implementing ideas. A good business executive would not take it for granted that a web site is going to work. A good general would emphasize all of the difficulties and risks of trying to shape the Middle East.
1st sentence should be Justin Wolfers
To paraphrase J.K. Galbraith, there are two kinds of economists, those who don’t know, and those who don’t know that they don’t know. We all – economists, business executives, generals, Congressmen, Senators and Presidents- would do well to act with some measure of humility.
Like a lot of Galbraith’s famous witticisms, he stole that line from someone else. A man called Ray Marshall actually came up with that.
Sad that Tyler doesn’t mention the third, classical liberal alternative — not to have the government “rule” at all. Just let the economy operate as a collection of individuals and firms, and get out of the way. Simple rules reliably enforced would be better than all this regulation.
Agree that the informed expert who wants to tell people what to do is often more harmful then the uninformed layperson who doesn’t, but are Trump/the Joe Citizen’s who elected him really acting humbly/like they’re going to have any less restraint than Obama? Trump publically interjecting himself into the Carrier, Ford and F35 “deals” doesn’t exactly fit with that, and the new pending Republican trifecta just passed a budget that adds 9 trillion to the debt and never balances.
I remember a quote from LBJ, after he became President and inherited Kennedy’s “whiz kids”, which went something like “I wish I had someone around here who had run for sheriff (and knew how to get things done)”.
As a tax lawyer I have see regulations written by the “Harvard faculty” and would prefer they be written by a reasonably competent CPA who has actually advised clients and done returns any day of the week.
I think Tyler is dead wrong.
Stick close to your desks and never go to sea
And you all may be Rulers of the Queen’s Navy
Granted the Harvard faculty is clever and well-read, I don’t see how this helps them choose the correct highway speed limit, or, for that matter, the right federal funds rate. These are people who have-no-and-want-no-skin-in-the-game; they shun the public schools, avoid public transportation, won’t drink the city water, and scorn plebeian health care. They know, in their heart, that all political problems stem from the regrettable quality of the citizens — we’re just not Harvard material.
Fine. All I ask of the Harvard faculty is that they stay off my lawn.
ps: Buckley was a Yale man. Doh.
Well, you may be right but there are a lot ways it could go wrong as wel:
1) What if repealing Obamacare goes really badly and replacement is working in 5 years?
2) A good business executive would not take it for granted that a web site is going to work. – Sorry, business executive make this mistake every day and a states did do it right. Anyway the website problems ended years ago.
3) You are worried about Immigration and trade – This could be a lot bigger than people assume and he could raise taxes on the bottom 80%
4) Trump and administration appears to replacing Russia with China despite China being less aggressive militarily. That could be a BIG danger.
Although you will like a lot Trump will do, there is a big tail-end risk hard to account for.
The quote addressed Trump being good for the economy. The economy is currently close to as good as it gets, so while he may generate a boom, that wouldn’t be good, nor would a huge deficit/high dollar/trade war. The less he does, the more likely the better. Do you mean the business acumen of Paulson saving the economy or more of the generals that got Bush into Iraq?
I suspect they are all wrong. Of course I may be wrong, but I think Trump operates in the Keynesian realm of economics that was a legitimate contribution to the field. He is working with the animal spirits in a non-equilibrium state. So, I also suspect you don’t disagree with him on trade or immigration as much as he had led you to believe.
So, the clue will be a lot of jawboning, but threats of actual legislation will fade.
Tyler’s saying there’s expertise over here and “common-sense” over there. That’s not always right. If people can’t think critically about the cliches of their own circle, or if they themselves bully outsiders into silence, they can tell themselves they’re scholarly, rigorous, scientifically-minded experts, but they’re not. Their received ideas are making them stupid.
A Harvard professor can be in denial about the data that challenges his assumptions. He can turn his back on the scientific method, ignore the results of a century of experiments, and still wield the word “science” as a bludgeon against the heretics. The entire faculty of Harvard can convince itself that this Hayek fellow is a reactionary, anti-intellectual, Austrian crank. Except that Hayek was the actual expert, and Harvard was fooling itself with fake common-sense.
My impression is that financial management folks mostly feel like you do. Very tepid optimism.
I love that we are in a climate in which the economists are scolding the markets for failing to perceive the danger they are in. Yes, the markets were wrong just before the 2008 crash. But so were the economists.
I am not going to get in a discussion on the economic prospects for the new president.
Instead, I am going to raise an objection for using the honorific “Mr.” before his name. Of course, I will grudgingly use the honorific, “President” before his name when the time comes, but never the honorific “Mr.”
For his entire life he has been one of the most disgusting human beings I have ever encountered. He has never done anything, for anyone, in his entire life. Meanwhile, he has harmed thousands of human beings to satisfy his greed and well deserved lack of self esteem. He is a disgusting example of a human being.
As a loyal American, I will call him “President”, but never, ever “Mr.”
Hey, why wouldn’t there be support from economists for Trump wanting to cull regulations? I isn’t like all our current policies were instituted by economists anyway. Do we even have free trade? I’d be apt to bet we have a bunch of statist and corporatist policies with economics sounding names on them to fool economists.
Another example, to the response of Crickets chirping, I keep shouting into the wind…or commenting on obscure, heterodox blogs…. (as with fiat money) that you can’t have free trade with an authoritarian, top-down, Communist, command-and-control, trading partner. Acting like a free trader will have benefits and drawbacks just as acting like a pacifist in a world of belligerents. We have trade deals. What makes them “free” or advantageous to us? Believing the bureaucrats? What say the professional econimists? Has anyone actually analyzed the trade deals?