Economists as Public Intellectuals

From John Cochrane - a really competent economist who has a lot of common sense.
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I ran across a video by my former Chicago Booth colleague Austan Goolsbee that prompts some reflection on the role of economists as public intellectuals. (In addition to my gentle scolding of Greg Mankiw in the last post.)

Austan:

"Hi, I'm an actual economist (MIT PhD degree shown)

 
and I promise you 

Donald Trump's tax plan is a scam. ... 

This tax cut was designed to help Johnny Marshmallow (Billionaire, with monopoly man image) ...
President Trump believes that if you give more money to big corporations and billionaires that money will trickle down to you..."

Let us analyze the rhetoric of these amazing sentences carefully. 

"I'm an actual economist (MIT PhD degree shown)"

This is an argument by authority, by credentialism. He, Austan, has a PhD from a Big Name institution. What follows is therefore a result of that special knowledge, that special insight, that special training, that actual economists have. He doesn't have to offer logic or fact, which you won't understand, and you aren't allowed to argue back with logic or fact, unless perhaps you too have a Big Name PhD. What follows isn't just going to be Austan's personal opinions, it inherits the aura of the whole discipline. By implication, anyone who disagrees isn't an "actual economist."

"Donald Trump's tax plan is a scam"

This are the most interesting 7 words.

It is not, in fact, "Donald Trump's" tax plan. It is, clearly, a tax plan hashed out by Republicans in Congress, with some input from the administration, mostly the Treasury department. Almost nothing in this comes form Donald Trump. Just how many nights was President Trump up late on his laptop sweating over the income and depreciation limits of pass-through income deductions? Not many, I'd wager. So why is Austan calling it "Donald Trump's tax plan," not (say) "Congressional Republican's tax plan?"

Once you ask, I think it's obvious. President Trump is a reviled figure in the audience that Austan is aiming his video at. So personalizing it, wrapping policy up in Trump's personality, loading the actions of our complex political system into the actions of one person, though it manifestly is nothing of the sort, serves an obvious rhetorical purpose. Hate Trump, hate the plan. It is the first of many dog-whistles.

"Scam" is the single most interesting word.

"scam." noun. informal 

 
1. a dishonest scheme; a fraud. "an insurance scam."
synonyms: fraud, swindle, fraudulent scheme, racket, trick; pharming; informalcon, hustle, flimflam, bunco, grift, gyp, shakedown. "the scam involved a series of bogus investment deals"

 
(-Google dictionary)

Now, detecting "scams" is not the sort of thing that Real Economists are trained to do. We can analyze incentive effects and distribution tables, spot budget constraints, and argue over deficits and economic growth effects. But "scam" is an accusation that the intentions of those writing the tax bill are malign. Just how does Herr Prof. Dr. Austan Goolsbee, "real economist," know anything at all about the intentions behind the tax bill? To say nothing of (now that he personalized it) Donald Trump's intentions?

But I am giving Austan too much credit to treat this as an interesting or original rhetorical device. You've heard "tax scam" before, I presume. "#GOPtaxscam" was right there on a big billboard in front of Nancy Pelosi as she denounced the bill. It's already a hashtag Her official website starts with

“Today, President Trump signed into a law a GOP tax scam... 

A quick google search reveals a whole website devoted to "GOP tax scam," and its many echoes in the political media.

(I would be curious to find the source and history of the phrase. But I'm not patient enough at google searching to do it.)

So this is not clever Austan rhetoric. Austan is repeating a well-orchestrated bit of democratic party spin, talking point, or propaganda. It's the second dog-whistle.

Political parties do this. They search for some phrase that catches the ear. They aim primarily to marshal moral outrage and demonize the political opposition. Hence "scam" not "distorted incentives" or "misplaced priorities" [growth vs. redistribution]. The phrases are fairly meaningless. But if you repeat them over and over again, they start to get meaning and energize the base.

Really, Austan? Is this the best you can do? Is the role of public intellectuals and "real economists" to assert their intellectual superiority by their credentials, and then to repeat whatever buzzword their chosen political party is pushing these days, be it "tax cuts for the rich" "make america great again" or ,"tax scam?"

"Tax scam" is particularly loathsome for an honest intellectual as it is useful as partisan rhetoric. It does not appeal to any actual analysis of the tax code, or the troublesome fact that Obama himself wanted to cut corporate taxes, and ran a few dollars of deficit along the way. Instead it just attacks the motivations of the other side. And then people like Austan complain of partisanship.

"This tax cut was designed to help Johnny Marshmallow" (Billionaire, with monopoly man image)"

This is a flat out ... untruth. I'm trying to be polite. Perhaps Austan's analysis of the general equilibrium burden of taxation reveals that in the end Johnny Marshmallow gets a better deal out of it than Joe Working Stiff. But it is simply untrue that the tax cut was designed to that purpose. The clear design was to lower the cost of capital, thereby increase investment, and thereby raise productivity and wages. This is the clear public statements of the designers. We can argue whether it will work as designed. But if you're going to attack motivations you have to deal with the constantly repeated statements of the designers, and the absence of any evidence for the contrary view. "Real Economists" have no special training in journalistic or historical analysis, for assembling evidence on intentions. And it shows.

"President Trump believes that if you give more money to big corporations and billionaires that money will trickle down to you...

" Again, here is a statement of a fact, by a PhD academic, with not a whiff of evidence. Just where in the MIT PhD program do they train you to make statements of fact with no evidence? How does Austan know what President Trump "believes?"

"Trickle down" is another dog-whistle calumny, another bit of rhetorical propaganda, another deliberate placing of evil words in an opponent's mouth, another big lie (let's be frank about it) that Austan and company hope that by passing around over and over again will become truth.

I would be very interested to see any quote from anyone who worked on this tax bill advocating that it will work by "trickle down." The argument for it is that it works by incentives. A better prospective rate of return gives companies a better reason to invest. Period. "Trickle down" is a pejorative version of Keynesian economics, not of incentive economics. It was invented by critics of tax reform.

Austan has plenty of company. Larry Summers, usually excellent at offering actual economic analysis in defense of democratic party causes, seems to have lost his bearings. After eight years of very influential commentary that the economy is in "secular stagnation" and requires massive deficit financed government spending, after complaining that the roughly $10 trillion added to the national debt during the Obama years was inadequate, Larry now proclaims in a Washington Post oped that the economy is on a "sugar high," and that the prospective $1.5 trillion in additional debt over the next 10 years

will also mean higher deficits and capital costs, it will likely crowd out as much private investment as it stimulates. 

His "10,000 people will die!" attracted a lot of attention.

Perhaps something about Trump's style causes people to become unhinged. But it does not escape notice when economic analysis changes sharply the minute after an election, and I think Larry lost a lot of his reputation for economics-based analysis.

Alan Blinder, in an amazingly weak attack on the tax bill in the WSJ did a better job. Why do I say weak? Tot up Alan's arguments: 1) Republican senators and representatives overdid their back-slapping and Trump-congratulation at the signing ceremony. 2) Trump was wrong to claim it's the biggest cut in history. Reagan and Bush were bigger. 3) The new tax bill, like the old one, is full of special provisions and deductions. 4) The personal tax cuts expire, to fill budget rules, unless congress extends them. 5) it raises the deficit 6) The process wasn't open enough 7) a revenue neutral, distribution-neutral, broaden the base, cut the rates reform like 1986 -- and like the one Paul Ryan started out with before it went through the congressional sausage machine -- would have been better.

Alan repeated the "trickle down" calumny, and like Larry his concern about the deficit is a bit of a sudden conversion. But other than that, he makes a good honest effort with a weak hand. I agree with 3 and 7, and don't think it's my job to comment on 1, 2, 4, and 6. But that it could have been better seems a weak argument for throw it all out.

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This all builds up to some positive thoughts. What is a good role for policy-engaged economists, or even economists who want to transcend institutional boundaries and become public intellectuals? What are some useful rules to follow?

Usually, "actual economics" finds little of value in either political party's propaganda. Echoing that propaganda is a sure sign of empty analysis, so avoid it.

Actual policy is usually a very messy political compromise of any clear economic vision. Peggy Noonan had, I think, the right attitude in last Saturday's Wall Street Journal:

The fair way to judge the tax bill was never through the mindless, whacked-out rhetoric on both sides—the worst bill in the history of the world, the best thing since Coolidge was a pup—but through the answer to one question: Will this bill make things a little better or a little worse?...

 "mindless whacked-out rhetoric" is spot on -- and a spot on characterization of what Austan offered in place of actual economics. A little better or a little worse is a good frame for analyzing any policy proposal.

Actual economics is most delightful because it offers answers outside of the usual morality play. Focus on incentives, not who gets what out of the tax code. Point out the missing budget constraint. Notice that the behavior you deplore is a rational response to a misguided incentive, not a sign of evil.

Politics thrives on demonization. But it is a fact, which people who have tasted Washington like Summers and Goolsbee have done should know better than the rest of us, that the vast majority of people in public life are good people, and have the same goals. Democrats and Republicans, even many from the outer fringes of the parties, fundamentally want a better life for all Americans, and prioritize those in tough circumstances more than others. They disagree, and deeply, about cause and effect mechanisms to reach that common goal. It is not good politics to point this out, nor good for advancing one's particular solution to a problem through the political process. But it is much better policy analysis, and much better scholarship to acknowledge the truth.

Don't play politician. You're trained to be an economist, not a politician. Ed Lazear tells a good story of once offering political advice to President Bush, and being quickly shut down. Bush told him to give the best possible economic analysis and leave the politics to Bush.

Now, one can make some room for economists actually working in the government. A treasury secretary must, once the internal give and take is over, sell the imperfect product. But that can mostly be done with creative silence, and does not extend to parroting propaganda. Economists who used to work in government, and presumably wish to return also must to some extent show they are part of the team. But articulate, analytical and a bit one-sided support need not dip to propaganda and demonization. And our political system could do with a little more self-restraint, politeness, abstention from calumnies and demonization too.

Obviously, bending over backwards to point out deficiencies on both sides of the partisan divide, and good things on the other side, when one can, is useful to establish some credibility.

Doing otherwise also further tarnishes the brand name of economics, and academia, and science in general. When Austan wraps his political dog-whistles in "I'm an Actual Economist" and shows his PhD, honest citizens don't so much update the deep truth of democratic party propaganda, they update on what academic credentials mean, and what academic research and analysis is. No, 99% of us are not here to scream one party's talking points are the utter truth, and the others scheming evildoers.

It does more than tarnish some vague reputation of "actual economists" (I may be kidding myself that we have much!) Austan's employer is a non-partisan, non-profit, explicitly forbidden to engage in political activity as a condition of receiving tax-deductible gifts, to operate as a non-profit, and to receive federal funds. The reputation if not the tax status of academia is in question. Universities are widely perceived, and not altogether incorrectly, as hotbeds of partisan political activism. Congress is waking up, and the tax bill also started to rein in our privileges.

While faculty are entitled to our opinions, and to express them, and to engage as private citizens in political activity, and to speak as we wish, when we drag our professions in, the response is natural. If Austan had merely started "Hi, I'm an actual ex-Democratic administration official, hopeful to get a new and better job in the next Democratic presidency, and ..." I would have little objection at all.

Ad-hominem attacks, attacks on an an intellectual opponent's motivation, especially with no documented evidence at all for that attack, used to be strictly out of bounds for "actual economists," and scholars in general.

In fact, productive discussion is usually enhanced when one ignores motivations that are there and documentable. It's better to win on logic and fact and ignore motivation. Contrariwise, when you see an argument my motivation, which Austan made three times in as many sentences, you should infer that the arguer has neither fact nor logic to offer.

That agreement not to impugn motives is the only hope for a productive conversation, either in academia or in politics. Once you say "scam," that's over.