This from the Economist of 29 August reviewing an American book, “The Economists’ Hour”, by Binyamin Appelbaum, which I thought historically instructive:.
Few economists worked at the Federal Reserve in the early 1950s. Those who were on the staff of America’s central bank were relegated to the basement, at a safe remove from the corridors where real decisions were made. Economists had their uses, allowed William McChesney Martin, then the Fed’s chairman. But they also had “a far greater sense of confidence in their analyses than I have found to be warranted”. They were best kept down with the surplus furniture and the rats.
The world changes, and it can be hard to say why … Despite the clout of a few individuals such as John Maynard Keynes, economists as a class were once held in almost universally low esteem by serious policymakers, who saw them as trumped-up statisticians with strange views about human behaviour. But in the decades after the second world war, the profession clawed its way out of the basement and up to extraordinary influence.
The review continues:
The rise was made possible by charismatic intellectuals such as Milton Friedman, who in that era spotted the chance to nudge history in their preferred direction. For nearly half a century rumpled theorists held the ear of politicians around the world. Their period of triumph ended in a fog of financial crisis, economic conflict and resurgent nationalism.
Of course economists still seem to have the ear of politicians and most politicians still seem to consider economics very important. I’m quite sure this is because economics can pseudo-scientifically offer justification for a small state and other spending restraints that are so important for those who want to preserve their positions of power and influence and promote the message that some things are not possible for democracies and there are dire consequences for a state which upsets important people.
Indeed while the Conservative and Labour manifestos never mentioned the economy at all till 1950, the economy is now viewed as essential to the political process – probably the essential OF the political process.
That should be fine as long as we realise the economy’s function is to provide for all the population and perhaps we should add that it should maximise passions and the pursuit of leisure. But the ‘dismal science’ of economics has been taken over by vested interests. By those who are convinced that the current version of neoliberal capitalism is somehow essential to life. Economics has become a method of control.
No wonder the review points out that:
Joseph Coors, a beer magnate, created [the think tank] the Heritage Foundation as a sort of public-relations firm for capitalism. It was soon publishing economists with friendly messages. “Let’s get taxes cut under any and all circumstances,” Friedman wrote for the think-tank in 1978. Rather than being the tale of an academic discipline’s unlikely rise to influence, Mr Appelbaum’s book can be seen as an account of the easy ascent of a few ideas that appealed to the wealthy and powerful.
The Heritage Foundation is Trump’s favourite think tank and we see the same systems prominent in the UK with the ‘Taxpayer’s Alliance’ (which seems to be completely unfunded by any alliance of taxpayers) or the Institute of Economic Affairs, both of which misuse economics, and persuade some economists to impart the idea that only the rich can have what they want because it is some sort of immutable, essential feature of any economy.
These so-called think tanks would have us believe that they are the champions of evidence based policy making.
When what they are really champions of, is policy based evidence making…