As we discussed earlier, economists can’t actually forecast, and the best and the brightest of the profession often have radically different prescriptions and methodologies. And yet we’re constantly told that in times of crisis, it’s important to listen to the experts — to defer to the people that know what they’re talking about.
But why is it that economists are so useless? It’s not that they’re not smart. And it’s not that economics is a completely silly endeavour that teaches us nothing — in fact the opposite. The problem is that the economy is too complex for any individual or group to handle.
Radley Balko puts it well:
What exactly is “expert opinion,” and who gets to pick the experts? Tim Geithner? Paul Krugman? How about the 200+ economists, including three Nobel Prize winners, Cato rounded up who oppose the stimulus?
Silver is right to humbly acknowledge that he doesn’t have the answers. He’s wrong to assume anyone else does. It’s the height of arrogance to assume, as this administration and the one before it have, that you can manage a dynamic, infinitely complicated $13 trillion economy by plucking a trillion from some sectors, handing them over to others, because you’re smart enough to pull all the right levers. And it seems rather naive to assume that even if there were enormous-brained “experts” capable of pulling that off, that those experts would just happen to be the same people who also have the political acumen to ascend to the few political positions in the country powerful enough to make it happen.
Bingo. Any stimulus bill is inherently going to be about redistribution, not wealth creation. It’s about transferring resources to certain areas from either the future (long-term taxes, debt burden, inflation) or from other groups in the present (higher taxes now). That’s all the government can do: redistribute. And for a stimulus to work, it assumes that the planner knows better than the market where the mal-distribution resides, in this complicated ecosystem, and where it could be better placed. And as Balko notes, even if there were some rocket scientist economist who knew the answer, the odds that we’d find that person through some kind of meritocratic process, rather than the pundit lottery is slim to none.