To the exasperation of the libertarian-minded Caplan, most Americans do not think like economists. They are biased against free markets and against trade with foreigners. Absurdly, they think that the American economy is being hurt by too much spending on foreign aid; they also exaggerate the potential economic harms of immigration. In a similar vein, Scott L. Althaus, a University of Illinois political scientist, finds that if the public were better informed, it would overcome its ingrained biases and make different political decisions. According to his studies, such a public would be more progressive on social issues like abortion and gay rights, more ideologically conservative in preferring markets to government intervention and less isolationist but more dovish in foreign policy.
If the public doesn’t know how to think, is there a solution? Caplan has some radical medicine in mind. To encourage greater economic literacy, he suggests tests of voter competence, or “giving extra votes to individuals or groups with greater economic literacy.” Until 1949, he points out, Britain gave extra votes to some business owners and graduates of elite universities. (Since worse-educated citizens are less likely to vote, Caplan dislikes efforts to increase voter turnout.) Most provocatively, perhaps, in an online essay Caplan has suggested a curious twist on the tradition of judicial review: If the Supreme Court can strike down laws as unconstitutional, why shouldn’t the Council of Economic Advisers be able to strike down laws as “uneconomical”?
Let’s back up a bit, shall we?
One of the reasons physicians enjoy a vastly better reputation than lawyers or economists is that there is no medical specialty dedicated to protecting the interests of viruses or cancer. Ethical issues abound in modern medicine, but physicians still treat patients one individual at a time and the life and health of each patient is of paramount and often exclusive importance. We might invoke a distinction and say that there is usually no serious conflict of interests between what we might call positive medicine and normative medicine – the health and physical well being of the patient comes first even if the physician has good reason to believe that the world would be a better place without him. Moreover, as far as other competing interests are concerned, even Peter Singer’s addled and adoring minions have not yet taken up the cause of the interests of malignant cells.
Lawyers also labor for the most part at what we might call the micro level, representing one party’s rights and interests to the exclusion of and often in opposition to the interests of others. Well, they can go get their own lawyers, can’t they? Still, like a life threatening disease, litigation is often a zero sum game and, win or lose, the parties to the dispute can’t help but notice that there are lawyers fighting for the ‘cancerous’ interests of their opponents. Part of the bad reputation lawyers suffer comes, ironically enough, from the professional ethics of the profession that requires the lawyer, once retained, to be a zealous representative and advocate of his client’s interests. Whatever qualms he might have about the plight of the sympathetic tenant about to be evicted from her apartment, his client landlord nonetheless has legal rights, too, and it is his lawyer’s obligation to see to their enforcement and protection. Still, helping to oust widows and orphans on to the streets isn’t an optimal public relations strategy.
Economists, by contrast, tend to work at the macro level as advisors to policy and decision makers who, in turn, take personal credit for decisions that work out well and blame their advisors when they turn out badly. Still, like lawyers and physicians, economists have a certain expertise noneconomists do not have. Their knowledge is far from perfect or complete, but they nonetheless really are useful in figuring out how best to achieve certain sorts of results. They are especially good at advising on questions of economic efficiency and the effect of incentives on behavior.
Note, however, that efficiency is, itself, a normative concept and, more importantly, that what sorts of behavior should be encouraged or discouraged is, except in terms of economic efficiency, a question beyond the positive knowledge of economics. Most of us agree that, all other things equal, efficiency is a good thing. Waste not, want not, as our mothers used to say. Whether economic efficiency is of paramount importance, however, or whether some of those other considerations should take precedence in matters of public policy is a question about which economics itself can shed no light.
Milton Friedman famously drew the distinction between positive economics and normative economics – between how the cause and effect of economics in fact works and how we should use that knowledge, arguing that economists should attend exclusively to positive economics. (Ronald Coase, in turn, famously noted that Friedman’s most widely read article to that effect was essentially normative.) Disputes over Bryan Caplan’s thesis need to take the distinction into account.
Unlike the general public whose opinions regarding free trade or immigration may well be the product of little more than ignorance and bias, professional economists insofar as they are applying positive economic theory to the question of the impact of trade or immigration on the economy tend not to differ wildly in their conclusions. There is no serious dispute over the basic mechanics of price theory among economists and even the major disputes of the past century over macroeconomics are far less in dispute than they were fifty years ago.
Thus, for example, in Christopher Hayes’s review of Caplan's book the other day when he mentioned hundreds of economists who supported a raise in the minimum wage, it would have been far more intellectually honest to note as well that those economists were not denying the general truth that a raise in the minimum wage will increase unemployment but only that under current economic conditions such effect would be minimal and outweighed, in their opinion, by other factors. But the other factors here are critical, for at least some of those economists were making normative claims, not merely positive ones – they were saying, in effect, “we prefer to accept the minimal bump in unemployment (among, for example, teenage part-time workers) in return for other effects we favor.”
This is a complicated topic about which I may feel compelled to write more. For now, however, this is the bottom line. If there were, in fact, clear and overriding economic goals and principles adopted by the nation as the economic equivalent of our constitutional principles, having a supreme court of economists overrule politically motivated legislation that violated those principles might not be such a bad idea. But, of course, we don’t.
Most people, if they understood economics better, would be inclined to support free markets and open immigration unless the effects of those policies adversely affected them in particular (e.g., if they were among the few to lose their jobs as opposed to the many to enjoy lower prices). Still, some people who do understand the economics involved nonetheless still prefer protectionism over open markets; that is, they are willing (for us all) to pay the price of bad, that is, inefficient economic policy.
Those of us who prefer economic efficiency should be more candid in admitting that fact and, more to the point, that any such view contrary to the purely economic view is “irrational” in only a very crabbed and technical sense. By the same token, those who favor bad economic policy for whatever other normative reasons they might believe or assert should be sufficiently honest to admit as much, as well.
Maybe, just maybe, if both such sides were more candid about such matters the voting public might be a little better informed and a bit less “irrational,” too. I wouldn’t worry about the public becoming too “rational,” however. After all, in their roles as private citizens and voters, many professional economists can be every bit as “irrational" as the rest of us.
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