Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday 16 August 2012

Why do European Economists write Letters while US Economists Endorse Candidates?

In February 2010, 20 economists including a number of academics of note signed a letter that endorsed the Conservative Party’s deficit reduction plan for the UK. Although 20 is a small number (I’m sure many more – like me – were asked to sign and did not), they made up in quality what they lacked in quantity. The New Statesman magazine recently had the bright idea of asking them “whether they regretted signing the letter and what they would do to stimulate growth”. It published the results yesterday.

Half of the signatories replied. The headline was that most have changed their mind. Actually the responses are more varied, but interesting given that they are mostly well known academics. For example Ken Rogoff simply says “I have always favoured investment in high-return infrastructure projects that significantly raise long-term growth” which you can interpret how you want. A few are brave enough to say they have changed their minds. Only Albert Marcet says that he has no regrets.

400 economists have signed up in favour of Romney for President. Of course we all know that everything is always done bigger and louder in the US, but I think Andrew Watt is right when he says that it is “unusual in Europe, at least in the countries I know, for academic economists to ally themselves party-politically in such a clear fashion”. I only know the UK well enough to judge, but in that case I think he is right, and the New Statesman responses illustrate this. They do not represent the comments of those who would support a party or ideological position come what may. The 42 French economists who wrote a letter endorsing Hollande’s recovery plan seem more in the UK tradition of supporting particular policies in their own words. In contrast the 400 seem to be signing up to something that could only have been written by a political machine.   

So if there is a difference between the US and at least some parts of Europe here, why is this? Andrew Watt wonders whether the more fluid nature of the civil service in the US has something to do with it. While that might explain the actions of those with a real chance of a top job, can it really explain what appears to be a much more widespread difference? Perhaps European economists just attach greater value to masking their political or ideological prejudices, but in a way that just moves the question sideways – why do they attach more value to this?

Yet perhaps I’m asking the wrong question here. Is the issue about US/European differences, or is it about what drives those who support the Republican Party in the US? The fact that parts of the Republican Party appear quite anti-science (evolution is just one theory), as well as anti-economics (tax cuts reduce the deficit), would surely have the effect of putting academics off publicly associating themselves with that party. I can see why that would make a Republican candidate particularly keen to be seen to have academic support, but not why so many seem happy to give their blanket support.

When I get asked to sign letters, there is always an internal debate between part of me that agrees with the cause and another that does not agree with everything that is written in the letter supporting that cause. Sometimes one side wins and I sign, and sometimes the other side wins and I don’t. Applying the same logic to the 400, the cause must be really important. Either the prospect of a Romney victory must be so appealing, or the threat of another Obama Presidency so awful, that those signing have been willing to put all their normal critical faculties and sensibilities to one side.  Or to go further, and write supporting documents in a way that either ignores what the evidence suggests or tries to suggest the evidence says what it does not, something that neither scientists nor engineers would do.

In a world still suffering greatly from the consequences of ineffective financial regulation, is the threat of marginally more effective regulation that dire? In an economy where tax rates on the rich have fallen and inequality has increased massively (whatever John Cochrane may want to believe), is the prospect of that not continuing so appalling? Is the prospect of just a bit less rather than a lot less government so terrifying that you are happy to sign up to obvious distortions like “Obama has offered no plan to reduce federal spending and stop the growth of the debt-to-GDP ratio”? It is this I find hard to understand.

Martin Wolf comments that it would be naive to think that economics could ever be as free from ideological or political influence as science or engineering, and I agree. However that does not mean that it is wrong to try and expose and reduce that influence. So it is therefore interesting if the influence of right wing politics and free market ideology is less powerful in some parts of Europe than it is in the US. Unfortunately I have little idea quite why that is and what it implies. 


  1. "A few are brave enough to say they have changed their minds." What a devastating indictment of these brave individuals. And that is preceded by the personal attack on Ken Rogoff. I mean, you actually mentioned his name.

    Not that you point out how the ideological policy they recommended was wrong, or how much pain it might be causing. That would be impolite?

    I think its important to remember that policy has real effects on real people. Consider how many real people have lost jobs. Or how many younger people haven't been able to get a first one. How many of these twenty "quality" economists or the 400 American economists (doubt their quality myself) will bear any consequence for being wrong? From the tone of your post, I would have to think not. And that would be a shame.

    Martin Wolf is right and I'm glad you agree about the ideological and political influences in economics. And everyone in search of the truth should try to expose ideological or political or just plain self-interested motivations for policy recommendations.

  2. Part of the answer, surely, is that economics teaching has gone off the rails at some of our (America's) elite institutions. That it's possible to graduate, with honors no less, without anything but partisan drivel memorized.

    I asked one of my friends who went to a US university (and majored in economics!) to explain why tax cuts should reduce the deficit. He couldn't. Yet he believed it fervently, and any refutation was interpreted as a personal attack on him by me.

    It's not even like there's a rational consistency there - it's just ideology.

    1. That's interesting, but isn't the sample size a bit limited?

      I myself have had similar run-ins with econ graduates, but I always worry about generalizing from the people I associate with personally (maybe something in my character compels me to associate with opinionated, stubborn, ideological people like that and hence my samples are biased).

      In any case, I suspect you slightly underestimate the rational consistency of many people in elite programs. People like John Cochrane (cited in the blog post) aren't irrational. Their arguments are very nicely structured and they actually follow smoothly from their premises.

      That doesn't mean they are right, of course.

      But they are much more nuanced and consistent to be dismissed as sophistry (at least not without further argument).

    2. Of course, it is *possible* to graduate while being well-educated, and some econ grads are fine. The point is that *the credentialling system is broken*.

      It is just as easy, or even easier, to graduate while knowing nothing but memorized partisan drivel. Even a single example of a graduate like this is enough to prove that the credentialling system is broken, but we have several.

      As for folks, like Cochrane, their anti-empirical behavior is well-documented.

      The sample size for that is quite large, and Krugman has provided dramatic examples in the form of the behavior of *journal editors* in so-called economics journals.

      So it is just sophistry for propaganda purposes. The Sophists also constructed nuanced and consistent arguments which had no connection to reality...

  3. Yes but that said, up to now, it is the European governments who are implementing all across the continent the austerity agenda.

  4. I already had little respect for the likes of Lucas or Barro when I had to read their theories. Not that those theories were entirely stupid, but because they were so obviously biased and oriented.
    By endorsing a candidate who does not make any economic sense, those very same people now demonstrate that when we study their theories, we should pay attention to the bias first, and the sense next. Maybe that's something that European professors will want to point out to their students (maybe it is also a letter they could address to deans of US universities or the Nobel Prize committee).
    When Krugman or DeLong support Obama or criticize Romney, they also take sides, of course. But they always do it with the intellectual honesty that an academic mandate commands.

    1. Why do you think Lucas and Barro's theories are biased?

      They may not be complete or refined (I wouldn't argue either way, by knowledge of their total body of work is limited to Barro's Government Bonds as Net Wealth, and only 2/3 of Lucas's many papers), but why biased?

      Do you mean they are politically biased (i.e. they started writing their papers with a particular political goal in mind and made sure they got the "right" result) or methodologically biased (i.e. they picked a method and came up with whatever assumptions and simplifications were needed to "close" the system under their chosen method)?

  5. Obviously for a select few on the list, there is a real chance of political appointment in a Romney administration. These few can perhaps forgiven for such overt politics. If appointed, they would clearly have a great opportunity to test their work in the real world. That's a strong incentive. But what about the rest?

    You almost said the answer yourself. The Republican Party appears "quite anti-science ... as well as anti-economics". In a Republican administration then, who would get the grants? Would they be given based upon scientific or economic merit? How could they be? No, they would be based on patronage. Want a grant? Sign the website.

    And the best part about this is that there's no downside. A Democratic administration presumably would make decisions based upon merit, and they would be unlikely to turn away good work simply for political revenge.

    It's a win-win thing.

    1. P.S. Oh, there's also the network of right wing think tanks. There's lots of titles and awards and speaking engagements that come out of these, and I doubt any of them are pro bono. It can't hurt to be on this Romney list when the think tank folks are looking around for "experts".

    2. Doesn't that seem a risky strategy though?

      What if Romney loses? Then you've thrown your entire intellectual weight behind a losing candidate, with the only potential pay-off being a few grants over a few years.

      Is such a pay-off really big enough to justify such a big commitment to a potentially losing candidate?

      Moreover, polls clearly show Obama is more likely to win. If all these economists care about are grants and political favors, it seems much smarter to bet on Obama and sign a letter supporting him.

      But they didn't do that, most likely, as I will conclude later, because they do have real commitments to Romney's philosophies as socially optimal.

      I suspect economists need to have at least some inherent confidence that this is the right ideology/set of policies in the first place.

      One empirical support of this claim is that many of these economists held their views for some time before Romney ever became a candidate and they haven't signed such letters in the past.

      If all they cared about was political favor we should have seen them flip-flopping all the time, throwing their weight behind the most likely winner and/or constantly signing such letters.

      They don't act like this though, so there is something else going on. Obviously one reason is that being intellectually dishonest hurts your reputation which makes you less politically employable. But if that's the case why would these economists be intellectually dishonest now, just to get the grants?

      I think they aren't being intellectually dishonest just to curry favor. There's more to it than that. I think many of them do believe in Romney's policies being the best obtainable outcome for the economy, given their research and academic work.

      Although of course I don't dare doubt that what you said may have a role to play to at least some extent.

    3. "...with the only potential pay-off being a few grants over a few years. "

      You underestimate the ability of Wingnut Welfare to provide gravy trains for life to people who are so discredited that they are mocked the moment they open their mouths, like Wendell Cox and Randall O'Toole.

  6. @Petrov

    They don't guard against their own inevitable bias, particularly the "rationality uber alles" one that is grounded in "engineering-envy." This is where their sophisticated nuance becomes self-serving style at the expense of substance. Show me an academic who never gets something wrong and I'll give you a candidate to have tenure revoked.

    Unfortunately, the "rational" economic decision is "follow the money" - given the libertine swing of Citizens United, the practical academic economist would choose the deep-pocketed buyer of "Fox News" cargo-cult economics while retaining the seeming legitimacy of university sinecure. "Rational" and dishonest!

    And speaking of dishonest, beware of the presumption that "science" and "engineering" are inherently more internally accountable. If one reads the report of the Japanese Diet's commission on the Fukushima Accident (NAIIC) you can find evidence that between some scientists and in conversation with "engineering policy makers" there is substantial room for acts of deliberate and eventually catastrophic omission. These serve to circumvent the process of peer-review quite effectively - they lead to unsustainable positions just as does the work of a Libertarian Think Tank economist.

    Finally, it should be a given that political conjecture about "what I'll do when I get in office, particularly when it seems to contradict actions during earlier office-holding falls short of being properly referred to as "policy." We can assess Obama Policies, how are we to do the same with Mr. Obama? (That is why his tenure at Bain Capital and those back tax returns are important evidence)

  7. The 400 are paid to back the Republican Party, and so they do. Paid indirectly, mind you; it's the "wingnut welfare" system. The corruption in US academic economics departments is horrendous. Basically, groups like the Koch Foundation have paid to make sure the departments are stuffed with right-wing ideologues. At this point it's self-sustaining.


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