The economics-politics divide

1 Aug, 2020 at 12:13 | Posted in Politics & Society | Leave a comment

polDuncan Weldon made a good point recently when he tweeted that the “disconnect between British political discourse and opinion of mainstream economic opinion feels extreme” …

Which poses the question. Why is there the disconnect Duncan notes? Here are some (non-exclusive possibilities):

– The transmission mechanism from academic economics to policy is broken. This is partly a supply-side problem. Academics are more concerned with bureaucracy and writing unreadable, unread and unreplicable journal articles than they are with communicating good ideas to the public. And even if they were interested, they’d be ignored by the media.

– The rise of politics. Politicians – with a few exceptions – aren’t much interested in ideas. They need salesmen, not economists (or sociologists or philosophers for that matter). Who needs intellectuals when you have focus groups?

– Interests. Economic ideas gain political prominence if they promote, or at least don’t retard, the interests of powerful groups. Post-war full employment was feasible in part because Fordist capital needed mass markets of affluent workers. When, however, those affluent workers squeezed profits in the 70s, union-bashing became acceptable. So too did freer markets and lower taxes. Today, though, good economic ideas attack powerful interests. Landlords don’t want a land value tax. Bankers (or at least their bosses if not shareholders) don’t want higher capital requirements. And so on. It’s hard to imagine sensible economic policies which do not attack the interests of landlords or bankers.

Chris Dillow

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