How Economists Can Stay Relevant Under Trump … Economists are going to have to approach things a bit differently if they want to stay relevant in the Trump age. Political economy research is going to become more important. Some humility wouldn’t hurt. And they should look someplace other than the federal government to test their ideas. This is what I took away from this past weekend’s American Economic Association’s annual conference, where I heard a panel with five Nobel-winning economists on the topic of “Where is the world economy headed?” – Bloomberg
God willing, they can’t. Economics, as a profession is part of central banking. Almost no economics, with the exception of Austrian economics rejects central banking.
But economics as a part of central banking includes price fixing. Whenever central bankers meet they fix short term interest rates as a matter of course. Short term rates then influence longer term rates.
Price fixing itself is not endorsed by economics. It is a contradiction because economics as a profession seeking to create an environment where economics can go to work effectively. Every price fix tears down the functioning of economics.
One lesson of Trump’s election is that technocracy — the idea that wise, expert leaders should steer policy for the good of all — is out of favor. Economists may still be the toast of the American and British elite, but that elite has been sidelined by a populist wave.
Free trade, although not the most important issue facing the country, was a hugely symbolic battle. The elite, supported by the vast majority of the econ profession, took the virtues of free trade as a given; the general public disagreed vehemently with the expert consensus.
The eventual victory of the populists has caused many economists to question whether the public will listen to them again in their lifetimes.
This is another reason why economics should severely restrain itself as a profession. (And possibly go out business.) Economics has encouraged technocracy, the regime of the few making decisions for the many.
Economics is the study of the discipline of work and as such does not include statements and proscriptions encouraging a small handful of people to make economic policy.
Economics as a matter of course should back the free market. The free market IS economics. When economics backs something other than the free market, it is not backing functional economics anymore. It is backing something else.
Technocracy is also a price fix and a very obnoxious one. When just a few make economic decisions for the many, the fabric of economics is increasingly threadbare. The best economics encourages a wide variety of financial actors to make decisions in their own enlightened self-interest.
Economics is all about freedom but modern economics is all about restricting freedom and choosing who can make economic decisions for others. This is exactly the reverse of what it should be.
Ultimately economics is not much needed as a profession because it is proactive. It tries to tell government and corporations what to do to make business and profits better but in doing so only makes the economic climate worse.
We don’t need more economic advice and nostrums. We need fewer economics and certainly fewer economic proscriptions that encourage people to “do” things beyond buying and selling.
The best thing that economics could do in the modern era is to shrink itself drastically and return to a science advocating free market solutions. It should advocate as little government as possible and the greatest amount of self-determination for the most people possible.
Conclusion: If it did this, It would become a real profession again, albeit a smaller one, surviving in the nooks and crannies of academia. But that is where it should be.