Friday, May 10, 2019

Is Philosophy Easy? Too Many Economists Seem to Think So

by Neil H. Buchanan

In my columns, I often address economists' substantive arguments, such as my recent columns (here and here) severely criticizing the "modern monetary theory" true believers who largely populate Bernie Sanders's and Alexandria Ocasio-Cortez's ranks of advisors.  Those critiques are not objections to economists' attempts to wade into territory where they do not belong but are instead simply about muddle-headed economics.

One of the recurring themes of my columns over the years, however, has been to observe and comment on economists who, in the now-current phrase, do not stay in their lane.  Back in 2013, for example, I wrote (here and here) about economists who, as I phrased it, try to "commit politics."  The idea was that, whatever one might think about the skill set that is drummed into economists from Day One of their first undergraduate course -- and, to be clear, my thoughts about that brainwashing exercise are not kind -- it is almost touching to watch these guys flail about when they try to discuss political issues.

The reason for their difficulty is abundantly clear.  Nearly all economists constantly reinforce the idea among themselves that they are wise and neutral scientists who have divined the truth, if only the venal and stupid politicians would listen.  When it comes time to engage with those politicians, then, economists apparently assume that politics is easy (no math required!), which means that anyone can do it.  "And if," such an economist might think to himself, "I am willing to lower myself to talk politics, I don't need to do any actual work or preparation, because it's all just a matter of instructing a bunch of simpletons with my brilliance.  How hard could that be?"

Good question.

This attitude also shows up when economists talk about legal issues, which they view as being merely a sub-category of politics (while adding in a huge dollop of contempt for lawyers -- who, after all, only went to law school).  Paul Krugman is the rare economist who has actually developed a keen set of non-economic skills when writing about political issues, but even he makes it clear that he thinks of legal issues as trivially simple.

For example, during the debt ceiling wars, Krugman went all in on the "big coin" option as a way to defuse the Republicans' hostage-taking efforts.  How did he know that that option was legal?  Because he saw somewhere that constitutional law professor Laurence Tribe had said so, which was not even quite true to Tribe's more nuanced view, but even if it were, it ignored the views of people like Professor Dorf and me (writing separately), who argued that the big coin idea was legally indefensible.  Indeed, Krugman did not merely ignore such views.  He seemed to view the very possibility of disagreement with Tribe as unfathomable.

As I argued subsequently, Krugman obviously thought that it was all very simple.  I would add now that he seemed to be following a simple syllogism: There is one easy and right answer to every legal question; Tribe is an expert on legal questions; ergo Tribe's answer to any legal question is the only thing I need to know.

Today, I want to expand this critique by noting that economists all too readily take the "this is all easy" attitude about not just politics and law but also about philosophy.  A few recent examples will illustrate what I mean.

During my recent stint in Europe, I gave my "What Do We Owe Future Generations?" talk at a dozen universities.  Each talk, however, was a very different experience for me, because the audiences were different not merely in being at different universities but also because they were from different fields and levels of education.  Two of the audiences were entirely undergraduates, one was nothing but tax graduate students, some were different types of tax law experts, some were mixtures of non-tax professors, one was a faculty composed entirely of legal philosophers (whose positive reaction to my work was gratifying, to say the least).  And one was an economics department's faculty and graduate students.

That last experience was fascinating, because it was the first time that I had given a seminar talk to an economics department since I left the field twenty years ago.  Interestingly, even though it was two decades later and to a department in a foreign country, the economists' reactions were entirely predictable, and not in a good way.

I should say that two or three of the thirty people in the room actually tried to think outside of their narrow professional box, but the rest were simply stumped by the idea that an economist would stand before them and do anything but write a bunch of equations on the board and work out the implications of his model.  I told them at the very beginning that mine would be an interdisciplinary talk, which made some of them visibly wince, but it was only after I started talking that they truly understood that I was going to talk about philosophy and political theory -- and, horror of horrors, sociology!  (Economists have special disdain for sociologists, for reasons too silly to bother laying out here.)

Many of the people in the room simply shut down, which was actually the best thing for them to do.  They had neither the knowledge nor the inclination to try to understand what I was doing, so they mostly just sat silently and smirked.  But the pattern that emerged from those who did try to engage was fascinating because the questions almost uniformly took on the following form: "Isn't this just ... ?"

That is, these economists essentially spent 90 minutes interrupting me to tell me that everything I was talking about not only could be explained by economics but already has been explained by economics.  "Isn't this just a sub-category of set point theory?"  "Isn't this just solvable by applying Pareto-optimization?"  "Isn't this just a steady-state growth model?"

The interesting thing is that the answer to those questions was not "no."  Instead, the answer was always "yes, but recasting my issues in your preferred framework does not actually answer the question so much as relocate the same difficult philosophical inquiry behind an economic facade."

The Pareto-efficiency question was especially interesting, because the guy who asked it (who was uniquely non-antagonistic for an economist) first misstated the facts by claiming that economists view budget deficits not as a potential burden on future generations but merely as one more case of Pareto-efficiency.  But even if he were correct, the point is that one cannot carry out said Pareto-efficiency analysis without at least implicitly making a series of judgments about the costs and benefits to include and exclude from the calculation.

Indeed, the decisions about which factors to measure and how to weigh them are almost never made explicit, allowing the value judgments to be conveniently hidden, which then makes it easier to pretend that economics is non-normative and is thus scientific and objective.

Again, this went on for an hour and a half, with each person saying in one form or another that what I was saying was easy, because the questioner could translate the question into econo-speak, and (once one sets aside  those pesky value judgments) the question could then be answered with an existing mathematical model.  Philosophy is easy!  And it is, if all one does is hide the philosophy rather than confront it.

An even more interesting example of this problem, however, came the following week at a conference where a Swedish economist decided to give a paper about taxation to a group of progressive legal scholars.  In that way, he was at least showing a willingness to engage with non-economists, but perhaps he should have thought twice (or more) before doing so.  Rather than, as above, hiding the philosophy and failing to confront it, he simply asserted that there was one and only one simple answer to a deep philosophical question.

The question: "What is a just system of taxation?"  His answer: "Only a tax system in which everyone pays what he wants to pay.  Every other system is unjust, because it is coercive."  It was a truly fascinating talk, because he simply could not conceive of the idea that there is any other way to answer the question of tax justice.  That he also made jaw-droppingly insane statements -- "There will be no free-riding problems, because people will know that those are possible, and they're better able to avoid free-riding problems than the government could be" was my favorite -- made it difficult to take seriously, but the point here is that the guy was saying, in essence, "Philosophy is just a bunch of words, and I can use words, so my words will persuade everyone.  This is easy!"

And this attitude is hardly limited to one young Swedish economist.  Conservative economist Greg Mankiw -- who, notwithstanding all of the criticism that he has richly earned throughout his career, does deserve credit for being the only prominent Republican-affiliated economist to oppose Stephen Moore's now-ended candidacy for a seat on the Federal Reserve Board -- regularly makes "philosophy is easy" moves in his public statements.

Most prominently, Mankiw has argued multiple times that inequality is not a problem because people are paid what they deserve.  Actually, saying that he has "argued" that point is not quite right.  He has, to my knowledge, never explicitly defended the claim that the only proper measure of fairness is to leave "market outcomes" undisturbed.  He simply assumes that to be true ("philosophy is easy") and then says that rich people are rich because the market rewarded them for their virtue (variously ascribed to entrepreneurial ability, superior foresight, greater self-restraint, and so on), and who are we to take away those hard-earned rewards?

Of course, even if one wants to walk down that road, Mankiw also blows past the fact that his economic conclusion only works if there is no "surplus" beyond the earned payments to capital and labor.  That is, he not only assumes it to be obvious that people should be able to keep everything that they "earned" but also that everything that they have received was earned in the first place.  (In economics terms, he assumes both perfect competition and constant returns to scale.)

Those assumptions are, to say the least, contestable.  And although I have never been able to figure out whether Mankiw is being devious or merely obtuse when making his claims, his public statements are fully consistent with my description here of someone who simply thinks that there are no difficult questions outside of economics.

As I noted, my recent experiences continue to confirm what I had seen for years from the inside.  The culture of the modern economics profession creates and reinforces the arrogant presumption that everything but technical economics is unworthy of serious study, because everything else is just a bunch of words, and talk is cheap.  Why listen to anyone else?