Monday, July 28, 2008

Close to the ground

Hey, it's John McCain time again! The Free Exchange blog has this (under the nifty headline 'Tsk-onomics'), on the familiar topic of McCain's support for the gas tax 'holiday'. Congress doesn't like it, economists don't like it, so far so familiar.

Apparently McCain's getting slammed for being rubbish at answering questions on this, and other, policies he's advocating, but let's leave that to the analysts. There's a fun exchange quoted from a George Stephanopoulos chat with McCain:

STEPHANOPOULOS: Not a single economist in the country said it’d work.

MCCAIN: Yes. And there’s no economist in the country that knows very well the low-income American who drives the furthest, in the oldest automobile, that sometimes can’t even afford to go to work.

I think it's neat that presidential candidates get chips by opposing economists, and I don't mean that as an offended economist; I think it's interesting. Anyway, is there any merit in that particular McCain quotation? Or, to paraphrase: is economics too far from the ground? Is it too esoteric to properly understand the actual, real implications of its preditions, its recommendations?

The classic case, I think, might be the globalization debate, the protectionism debate: typical economist's position might be 'trade good because it allows specialization based on comparative advantage, cheap stuff, more to go around etc'; the counter-argument could run 'trade bad, erodes localism which we like, hurts those people whose livelihood depends on those things that their country will stop producing when trade makes it cheaper to get those things from other countries'.

Now, sure, the response to the latter is usually 'yes, yes, we know some people lose out, compensate the losers', but is that particularly constructive? Are we blind to the real, tangible content of the disagreement with the 'economist's answers'? Do we splutter and get indignant with John McCain because he had bad policies, or because we don't really get the argument?

When we say 'your gas tax holiday plan sucks, aha!', we lose friends and alienate people; could we actually make economists a little cuddlier and meet McCain halfway? How can we deal with the problems he's referring to, that people feel like they're struggling to get by? We don't deal with it by ridiculing, that's for sure. There's no need to compromise if you think a gas tax holiday isn't right, so by all means make that case, but every time an economist is painted into a corner as an enemy of the prosperity of the common man, we must argue our way out double-quick, as a matter of principle and credibility.

2 comments:

eren said...

you rightfully say "...every time an economist is painted into a corner as an enemy of the prosperity of the common man, we must argue our way out double-quick, as a matter of principle and credibility..."

I guess the solution is quite clear: Given the model in their mind, economists should talk their way through the pros and cons of such policy proposals as if they teach an EC101 class. Then they should convince the public why their model and its assumptions match better with the reality than the underlying assumptions of the model McCain implicitly has in mind. I guess that politicians can afford 'economist bashing' thanks to the common illusion that each policy involves explicit and implicit trade-offs. I feel that people are more likely to believe in the existence of 'free lunch' especially when there are short term gains to be made.

eren said...

I made a mistake in one of the sentences in my previous post. Here is the correct version:

you rightfully say "...every time an economist is painted into a corner as an enemy of the prosperity of the common man, we must argue our way out double-quick, as a matter of principle and credibility..."

I guess the solution is quite clear: Given the model in their mind, economists should talk their way through the pros and cons of such policy proposals as if they teach an EC101 class. Then they should convince the public why their model and its assumptions match better with the reality than the underlying assumptions of the model McCain implicitly has in mind. I guess that politicians can afford 'economist bashing' as long as they can avoid talking about implicit and explicit trade-offs each policy involves. I feel that people are more likely to believe in the existence of 'free lunch' especially when there are short term gains to be made.