SOLO Op-Ed: Economists—A Waste of Space*

By Lindsay Perigo

Roundtable's Redoubtable Roger has just seen fit to try to debunk the venerable adage that if all the economists on earth were laid end to end, they still wouldn't reach a conclusion.

Of what and of whom do I speak? Roger Kerr, economist, Executive Director of New Zealand's Business Roundtable has just been published in the Otago Daily Times (gasp!) saying, "Do Economists Agree on Anything? Yes!"

I confess, as someone who regards most of what passes as economics as vodoo, I remain significantly underwhelmed.

"Economics is a social science," Roger tells us, "that studies regularities in human behaviour (in households, firms and the wider economy), and how people respond to incentives. Like other sciences, it is founded on theory, empirical evidence and standards recognised by members of the profession."

It would be more accurate to say that economics is a pseudo-science that describes human behaviour after the event and creates a mystique about itself which is entirely unwarranted—usually with a statist agenda. The good "economists" like Ropke and von Mises who influenced politicians like Adanauer and Erhard in West Germany were not, strictly speaking, mere economists—they were broadbased thinkers who focused on the production of wealth, the workings of supply and demand and so on while understanding (however imperfectly) the overarching crucialness of freedom as the underpinning of human interaction. Most economists, alas, spout their witch-doctory with a view to destroying freedom.

But let us continue with Roger's apologetics:

"More so today than in the relatively recent past, there is a broad professional consensus on a range of issues. This is sometimes revealed in surveys (as are areas of dissension). For example, there is a large measure of agreement among economists that modern economic prosperity is fundamentally dependent on good institutions and policies (such as secure property rights, uncorrupt government and the rule of law). Factors such as a country's endowment of natural resources and its size and location are less important."

To be sure. But we didn't need economists to tell us that—and most of them didn't, even as the great and decisive experiments of East and West Germany, and Hong Kong and Communist China, proceeded side by side.

"Similarly, the debate between central planning and market systems (which was still being waged as recently as the 1960s) is over: most centrally planned economies have collapsed. Understandings of inflation have been transformed. The Keynesian idea that the sources of inflation were demand-pull and cost-push factors (like 'excess' consumer spending or 'greedy' unions and businesses) was abandoned with the 'stagflation' of the 1970s. As Nobel Laureate in economics Ed Prescott (who visited New Zealand last year as a guest of the Business Roundtable) has written: 'All respectable economists agree inflation is a monetary phenomenon' (in the sense that it won't occur if central banks avoid excessive money creation)."

Well, I guess it's heartwarming that all "respectable" economists are thus agreed. But how many of them tell us, let alone realise, that there shouldn't be central banks to begin with?! Money is, properly speaking, as much a private commodity as any other, a frozen form of all the others, which form is the prerogative of those who trade in it. How much damage did the "free marketeers" do to New Zealand's fragile economy by their implementation of an arbitrary fiat money formula?

"Interestingly, free trade illustrates the point that much of economics is independent of ideology: Adam Smith, Karl Marx and John Maynard Keynes were all free traders, and about two thirds of economics professors in the United States (who are part of the consensus on free trade) are reported as voting Democratic."

Well, quite. And I doubt they're voting Democratic in the hope of freer trade.

"Another strong consensus of opinion recorded in a recent survey (of American Economic Association members) was against government ownership of enterprises. There was little difference between Democratic and Republican-voting economists. The empirical evidence that, on average and over time, the performance of privately owned businesses is superior to state-owned ones is now overwhelming."

Well, quite, again. And it had to be "overwhelming" before economists could reach a consensus about it! Do they know the earth is round yet?

"Some other survey findings are interesting. One found that over two-thirds of economists favour expanding competition and market forces in education – by funding government and private schools on the same per-student basis. Economists are strongly against wage and price controls. One survey of members of the New Zealand Association of Economists also found that 72% of respondents thought that minimum wages increase unemployment among young and unskilled workers. They also agreed (69%) that the share of government spending in the economy should be reduced."

Holy Hayek! This is radical stuff. Again, some of us knew all this while economists were telling us the opposite, but there you go!

"On some other issues there is more dissension. Economists are divided on climate change, although it may be fair to say that the mainstream view favours cautious early action that could be adjusted over time, depending on future scientific evidence and technology developments that lower the cost of reducing emissions."

In that case the mainstream view is rubbish. Yes, there is climate change—always has been (the current change, as it happens, may well be in the direction of cooling, not warming). No, it's not man-made, and the feeding frenzy of regulation designed to counter it would make the central planners of old, whom Kerr deems to be discarded, green as much with envy as out of conviction.

"They typically favour market-based approaches to pricing carbon and, of these, favour emissions taxes over emissions trading."

Twaddle on stilts. There is no justification for either.

"Health policy, the optimal level of public debt and the role of antitrust are other examples of areas where economists' opinions differ. And political attitudes (legitimately) influence views on the extent of income redistribution (although most economists would recognise the need to balance the case for income support against the adverse impact on economic growth and the problem of welfare dependency)."

Such appalling weasel words—only an economist could utter them! "The case for income support" (i.e. theft)?! There isn't one! But don't expect economists to tell you that. Describe the act of murder to them and they'd want to do a cost-benefit analysis before assessing it.

"Overall, however, opinion among professional economists is less divided on many big issues and less ideological than many people think. As the author of one survey concluded, 'With public discourse so marked by partisan politics, it's useful to be able to look to professional consensus as a somewhat more objective benchmark – to learn what most of those with much more knowledge and education in economics than the average TV viewer, newspaper reader or internet surfer generally believe.' Journalists and other commentators could do more to sort the wheat from the chaff in economic debates in this way."

So what exactly is Roger trying to tell us here? That the economists of the world have been laid end to end and have reached a conclusion, one that isn't as socialistic as we might expect? It's not true—but even if it were, why should we care? Most of the time most of them have been flat wrong, and when they've been right it's been long after everybody else was.

I know one economist who claims to specialise in "vertical and horizontal integration." Ordinarily I'd be all in favour of that—except that it's not the Mae West type of "vertical-horizontal integration" he's talking about. Galt knows what he is talking about, but I remain persuaded that economics, along with sociology and Wimmin's Studies and MBA degrees, is little more than another sorry feature of our Age of Crap. Descriptively it tells us nothing that an observant ditch-digger can't discern; prescriptively ... well, even the free market economists tell us their "science" is "value-free." All that talk about prosperity while prosperity is, apparently, no more worthy a goal than poverty!

Ideally, if they were to serve any purpose at all, economists would happily see themselves as handmaidens of Objectivist philosophers, demonstrating anew that the moral is the practical. But to them, there is no "moral"!

And the statist ones don't hesitate to prescribe in favour of ... statism!

So what purpose do economists serve, exactly?

Harry Truman's "fifth teat on a cow" comes to mind.

Objectivist George Reisman excepted, of course.

ENDS

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