All Economists advicing Government should read this

Alan Blinder has a superb account of what economists should know before advising Governments. One keeps wondering of the deep chasm between economists thinking of a good economic policy and governments designing the actual policy (which usually is seen as inefficient). Blinder has some ideas:

Before going further, let me clarify the title, lest anyone be misled. This will not be another one of those tiresome lectures about how wonderful it would be if only those foolish and feckless politicians would listen to the well-reasoned and disinterested—if not downright brilliant–advice of economic experts. Or, to be more accurate, it will not be only about that, for I will actually have a good deal to say about how and why good politics is often the mortal enemy of good economic policy. But my main, and more important, message is just the opposite.  It is that a considerable portion of the blame, perhaps even most of it, lies with us economists.

I will argue that several critical ingredients are missing from what economists typically offer as good advice—ingredients which, if provided, would make the recipe more palatable politically without impairing the economic nourishment.  Indeed, I will use standard economic concepts throughout to illustrate how the supply side of the market for economic advice could be improved. 

You can think of this as a lecture on a particular type of market failure—a mismatch between the demand for economic advice by politicians and the supply of economic advice by economists—and what might be done to remedy, or at least to mitigate, it.  The market for economic advice is one in which supply most emphatically does not create its own demand, much as we suppliers might wish it would.  With Say’s Law violated so grossly, I will be a good Keynesian and argue that demand ought to be allowed to create its own supply.  And I’ll mention a few concrete ways in which this can be done.

🙂

The lecture is so good that I just don’t know what to point in this post. Read the whole thing for details and humor.

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3 Responses to “All Economists advicing Government should read this”

  1. How FOMC works? « Mostly Economics Says:

    […] did not know the meaning of FOMC, one can just imagine the case with others. That is why reading this Alan Blinder speech is so important. We econs need to understand a few basics before working with the […]

  2. Mankiw on US political system « Mostly Economics Says:

    […] is the same everywhere. That is why all economists must read this note from Blinder before advising governments/taking up policy […]

  3. Robinhood tax!! « Mostly Economics Says:

    […] the name and the broad idea, it might be pushed by politicians and the public as well. As Blinder says in this superb piece for economists advising governments – Getting a good name for a proposal/reform is  as critical […]

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