From my review of a recent book by Sandra Peart and David Levy.
I am more concerned with the Shaman problem. Given a choice between an economist who claims to have a low-cost solution to a problem and an economist who says that no such solution exists, the political process will choose the economist who promises a cure.
Though the problem is generally that no solution is inconceivably expensive, but as long as it rewards the favored and burdens the unfavored, it is defended as natural order.
It’s a sign of emotional maturity to be comfortable with an absence of certainty.
Given the choice between a poll that shows that people don’t know or don’t care about an issue and one that shows sharply divided opinion, the divided poll gets published. It’s a clickbait world.
That’s one reason I really appreciate your blog and the others I read: you are willing to admit when you aren’t sure.
On the spectrum between absolute fake news and real news, willingness to admit doubt is a useful proxy for truthfulness.
As a student of Levy’s and a fan of yours (Arnold) I have the most difficulty parsing this paragraph of the review:
“[I]f factionalism played no role in economic analysis, the economists’ opinions on the wisdom of deficit spending would not depend on which political party is in power…”
The faction subject to internally reinforcing approbation is the discipline on the whole. Competition among partisans within that faction is insufficient to threaten the power of the coalition of Economists. Those that would threaten this collusive position are denied access to bread and wine and labelled heterodox.
Economists will want to protect the role of economist as decision-maker with respect to deficit spending first, and then insist that an economist from their team fill that role. But apart from the Knight-Buchanan tradition the move has been towards a certainty that an expert economist should make the decision.
When “Ordinary People” employing wisdom embedded in proverbs are not invited to the conversation the result is an efficient but no-so-robust policy that generates approbation for the economist.
The Supply-side “Tullock Problem” and the Demand-side “Shaman Problem” are both consequences of the successful capture of rents by Progressives (Leonard 2016). We now have Economists at the pinnacle of the clerisy. We must ask them what we should do, and they must pretend that they can give the correct answer.
To do any less might force them back into plowing.
https://www.youtube.com/watch?v=wz-PtEJEaqY
Isn’t there also a demand for doom-predictors that confidently predict economic disaster for any proposed change they find politically undesirable?
Anybody who claims “no such solution exists”, is far too much like those who, for thousands of years, claimed “man cannot fly”.
“Economic problems” are mostly human action problems; I reject the implication that no policy available to the gov’t can reduce the human caused problems. Often the policy which reduces the problem is … LESS gov’t action. DE-regulation, privatization, ending gov’t corruption by stopping the need for gov’t approval.
A variation of the Shaman problem is this: an activist gov’t policy is proposed over an alternative free market (limited gov’t) policy which has no guarantee of “solving” the problem, but even if it does solve it, it might take a long time.
Gov’t activism is desired due to the impatience of democratic elected politicians for ‘credit’ on solving a problem, rather than letting the free market / free people solve their own problems peacefully.
It’s also related to the desire to get a free lunch — or at least a lunch somebody else pays for.
You conclude: “In economics, the list of solvable problems and proven remedies is still quite short. ”
I claim this is false. Highly limited gov’t, yet with strong protection of private property and enforcement of contracts freely entered into, will reduce most poverty in virtually any country.
The failure of economics is that too many proud (Nobel winning and otherwise) Economists believe, wrongly*, that they can recommend gov’t policies with both specific and overall benefits that are long term superior to the benefits from market capitalism.
It’s great for you to call each of them a Shaman, tho.
*Hong Kong, Switzerland, Singapore; increasingly Estonia