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Monday, February 18 , 2019, 11:20 pm | Fair 49º


David Harsanyi: Economic Smoke and Mirrors

Those who claim to grasp the vagaries of the economy aren't necessarily the most trustworthy

Admitting you’re a fan of economics is another way of saying that you live a deeply tragic life.

David Harsanyi
David Harsanyi

That said, I can’t seem to get enough of economists who blog about human behavior or write wickedly counterintuitive books about how all the bad things we do are good for society.

Professionally speaking, economists are also vital. Where else are columnists going to find a Ph.D. to corroborate all the gibberish we put in our pieces?

But the most crucial lesson I’ve gleaned from smart men and women who practice the dismal science is this: Those who claim to grasp the vagaries of the economy enough to predict the future with any amount of certitude are charlatans.

Which neatly segues into a discussion about the reckless tenure of technocrat Christina Romer, former chairwoman of President Barack Obama’s Council of Economic Advisers and one of the chief architects of the stimulus plan.

Romer predicted — in graph form, so even I could understand — that an “unprecedented and pragmatic” $800 billion stimulus would keep the unemployment rate less than 8 percent (rather than push it to 9.5 percent).

Yet as Romer wisely retreats back to academia, we hear something new. Dana Milbank of The Washington Post reported this week that Romer peppered her goodbye remarks with rational thoughts, such as “economists don’t fully understand why” and “almost all analysts were surprised” and “failed to anticipate.”

The realization that you can’t predict the future — and mold it — could only come as a shock to an academic.

Romer’s recent remarks rationalizing the stimulus failure and advocating more spending offered us another clue into her thinking. “Concern about the deficit,” she explained, “cannot be an excuse for leaving unemployed workers to suffer.” (Indignant italicizing mine.)

That doesn’t sound especially scientific to me.

How does suffering fit into an economist’s calculations? Surely some economists believe that extending unemployment benefits is a disincentive — and thus creates more suffering? Larry Summers, Obama economic adviser, famously wrote that the unemployment extension could be “an incentive, and the means, not to work.”

So what choices are we left with? 1) Romer was completely wrong. 2) Romer was driven by ideology. 3) Economists generally have no clue. 4) Romer felt pressure to come up with numbers that comported with the outlook of her boss. 5) All of the above.

Whatever the case, Americans already place too much trust in economists, many of whom theorize and ignore empirical evidence to sell policy.

You may remember that when the president was scaring up support for government stimulus, he maintained that “economists from across the political spectrum agree” (later ratcheted up to the more wide-ranging “every economist, from the left and the right”) on the need to waste money to save the economy.

You may not remember that the libertarian Cato Institute quickly exposed this falsehood by producing 200 economists from top schools across the nation repudiating the assertion.

I can find an economist to tell you a lot of things. There are many who share my worldview. Most of them are pretty sharp. Certainly, no one can question the intellectual talent of Romer.

But we always should remember Woody Allen’s truism: “That’s one thing about intellectuals: They’ve proved that you can be absolutely brilliant and have no idea what’s going on.”

David Harsanyi is a columnist at The Denver Post and the author of Nanny State. Click here for more information, or click here to contact him.

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