A Review of
Advice and Dissent: Why America Suffers When Economics and Politics Collide
(Author: Alan S. Blinder)
Economist and Washington veteran Alan Blinder has come to understand very deeply the contrasts between economists and politicians. Economists are rational, correct, and naïve, while politicians cynically use economists to rationalize whatever they want to do.
Blinder is very clear-eyed about this, and eloquently describes today’s condition—so well that I’m obliged to include more quotations here than usual. But his is an extremely Washington-centric perspective, which I will comment upon later.
I’ll start with this early statement of the challenge:
To influence public policy debates, economic knowledge must be made accessible, intelligible, and believable to the body politic— even if it’s just a matter of getting the basic facts straight. That is why people like me occasionally write books like this. There aren’t many of us, however, and the writings of economists reach only a tiny fraction of the electorate. Compare our meager audience to the recipients of the daily avalanche of cable news, blogs, tweets, and posts. The real need lies in rooting out the misconceptions that permeate mass public opinion like unsightly weeds in a garden. With economic illiteracy as widespread as it is today, a popular democracy is painfully vulnerable to the self-serving machinations and hucksterism of economic snake-oil salesmen.
What can be done to ameliorate the problem? A higher caliber of economic journalism, particularly on television, would help. So would more and better economic education in the schools— and I don’t mean mainly universities here, but high schools and middle schools. But those are tall orders that will not be filled soon, for journalists and schoolteachers proficient in economics are in perilously short supply. And individual citizens have little incentive to educate themselves on economics.
It is apparent that Blinder recognizes the potential value of greater public understanding of basic economics, though he quickly pooh-poohs any grounds for hope. I, of course, would contest his pessimism: in the internet age, there are other ways of educating people besides via news or long courses, and I think in fact many citizens would like to have a greater understanding of economics if the required effort/pain were minimized. But it is right to recognize the degree of difficulty.
He then devotes much of the book to the pragmatic difficulties faced by politicians, and the downhill slide we’ve witnessed in public discourse. He explains how the economist’s perspective tends to focus only on long-term or macro effects:
Economists instinctively champion the broad public interest and rebel against special pleading. We do so even when the promised benefits from a policy, like a broad trade agreement, are diffuse and barely visible to the general public while the costs imposed on affected industries are concentrated and palpable— clear signposts of political losers.
…Unfortunately for us, however, the body politic neither speaks this language, nor understands it, nor shares our way of thinking about social policy. What economists find natural, ordinary citizens often find strange. Our advice frequently elicits dissent— or even bewilderment. Perhaps most fundamentally, the concept of economic efficiency is foreign to most voters. What’s more, I suspect that few people would place it high on their list of priorities, even if they understood it. Instead, the average voter is viscerally concerned with fairness— which is a terrible blind spot for some economists.
He describes the relatively unique, outlier form of government that was instituted at the founding of the United States, with the heavy “checks and balances” enshrined in our Constitution (what Fukuyama has termed a “vetocracy”), and explains:
One implication of Madison’s Curse is that prodigious political energy is required to get anything meaningful accomplished. You must somehow rouse the slumbering electorate and mobilize the relevant interest groups. In such campaigns— and they really are campaigns— slogans and symbols are more effective than learned dissertations, for mass politics displays little tolerance for complexity. So elected officials must care at least as much about what sounds good as about what is good.
And he laments the downward spiral that we have witnessed in our age of modern media and social media:
While policy without politics is neither feasible nor desirable, politics comes in degrees. The trick for any society is to maximize the high politics— the mediation of competing interests and ideas— and minimize the low politics— politics as gladiatorial combat. This is something America has been doing poorly for years now, with the 2016 presidential campaign taking us to new lows.
Gamesmanship has been elevated to absurd heights in contemporary Washington, where politics may eclipse professional football as the town’s favorite sport. Political clashes nowadays are often not over ideas at all, nor even about policy. They are simply about winning and losing. Winning and losing what is considered less important than hurting your opponents.
The obligatory calls to action in the last part of the book are rather tired. A lot of it is what politicians “must learn to appreciate,” and that the electorate must start demanding compromise. Okay, sure. Blinder does, though describe a couple interesting, if wonky, ideas. For example, when drafting fiscal legislation that involves pain, he recommends dramatically-postponed effective dates for phase-in.
More controversially, he also suggests “moving the line” in terms of agency powers, that is, protecting selected parts of the bureaucracies responsible for economic policy from meddling by elected officials. (The prototype of course is the Federal Reserve, the relative independence of which is widely acknowledged as a good thing.) Whether or not one approves of Blinder’s instinct here, it certainly does reflect his elitist sentiment.
Which bring me to my biggest criticism of the book: in Chapter 11, he ridicules the economic illiteracy of Americans, citing their acceptance of supply-side economics, and their belief in the possibility of reversing the shrinking share of workers engaged in manufacturing, and citing a study where Americans performed poorly on word problems about finance. He concludes:
A more economically literate public would be a blessing. Such a citizenry would find it easier to distinguish between support and illumination, and would likely demand more of the latter. That makes it a fine Holy Grail to pursue. But pursuits of Holy Grails have a way of taking a long time— and coming up empty.
It’s a case of what I call “expert amnesia” (and Steven Pinker called “the Curse of Knowledge”): Blinder’s long life in an advanced-economics bubble makes economic principles seem crashingly obvious to him… and since average Americans can’t understand them, they must be stupid and unredeemable. Most of them are not.
Of course, economics needs to be made interesting to them, and needs to be explained in ways they can understand.