In a new paper (here
or here)
based on my talk
at the IMK anniversary in Berlin, I discuss the intermediaries
between academic economists and politicians. Very few politicians
have much knowledge of economics themselves, and so rely on
intermediaries to transmit that knowledge. One important
intermediary, particularly if you are not in government, is the
media, and another is what Paul Krugman called policy entrepreneurs.
In government you have the civil service. In the case of fiscal
policy, central banks are a potential intermediary.
In the paper I look at how needless austerity could represent a
failure in that transmission mechanism. I do not think for one moment
that they are as important a reason as political opportunism by those
on the right that want a smaller state. But I still think they are
important, particularly in helping to explain why so many on the left
feel unable to counter the populist line that the government must
‘tighten its belt’ even in the midst of the deepest recession
since the war.
It is also important
in explaining how opportunist politicians can get away with it. Just
imagine if central banks had used their models to quantify the impact
of austerity, and had made that analysis public. Imagine also if
there had been some authoritative way of conveying the wisdom of the
majority of academic economists, like the National Academy of
Sciences in the US or the Royal Society in the UK. In the UK and US I
think that might have made a difference.
