High priest of cheap chalupas

A guest post by commenter Bill:

Economists form the high priesthood of the Liberal social order. Policy analysis is normally carried out in the language of economics. Almost always, policy analysis just is cost-benefit analysis. Even arguments about inequality are really just arguments about how the cost-benefit ratios should weigh the costs and benefits of policies to particular people.

The courtier whispering in the Prince’s ear is often an economist. If a federal or state agency has a substantial policy analytic capability, then it has many economists. The government’s demand for Ph.D. economists is so vast that these good-paying, easy, benefit-laden, research-friendly jobs are considered a failure mode for a newly minted Ph.D. on the job market. A worse failure mode is to be paid even more by a firm specializing in litigation consulting (economists’ blessings are so powerful that, in significant areas of litigation, it is effectively mandatory to hire one to make the appropriate incantations in court). Worse even than that is to become a beltway bandit: to work for one of the dizzying array of firms which sell economists’ blessings to federal agencies and others lobbying Congress. Cushy jobs as talking heads for think tanks or industry research groups or (horrors) state government bureaucrats are almost beneath consideration.

This dominance is often and bitterly commented upon by humanists and by other social scientists. Though it becomes more extreme, it is not especially new. Where does it come from? One is tempted to notice that economists are smarter than humanists or other social scientists, but this explains nothing. Economists are smarter because 1) people are admitted to graduate programs largely on the basis of IQ and 2) more people want to become high priests than want to become the butt of the high priests’ jokes. So, the causation goes the other way, from high priesthood to smarts.

Tyler Cowan had an interesting article last week in the Times about the relationship between Economics and Liberalism (hat tip: Steve Sailer). Cowen writes the article to flog immigration, but the way he flogs it is interesting. The success of economics in becoming Liberalism’s high priesthood is due to the sheer, tail-wagging enthusiasm with which it has embraced Liberalism’s central conceits.

Liberalism has rival conceptions of the social good. On the one hand, Liberals conceive of the good as lying in maximizing the freedom of individuals to make their own choices—this conception is present in Nozick but also Rawls and Sen. On the other hand, Liberals conceive of the good as lying in maximizing the hedonic experience of the population a la Bentham.

The crowning achievement of economics was to demonstrate the fundamental compatibility of these two rival conceptions. As Adam Smith intuited “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest,” and “He intends only his own gain, and he is . . . led by an invisible hand to promote [society’s interest].”

Probably the greatest economists of the 20th C, Kenneth Arrow and Gerard Debreu, are justly famous for demonstrating the truth of this synthesis, that free markets promote essentially Benthamite ends, using that very most approved-of Liberal analytic tool: mathematics in the service of abstract theory, specifically the abstract theory of rational choice. Thus economics can claim to harmonize and thus buttress Liberalism’s central normative claims using both a heroic conception of man as rational chooser and the tools of science, or at least those of the conception of science Galileo plagiarized from Pythagoras: “Mathematics is the language in which God has written the universe.”

6 thoughts on “High priest of cheap chalupas

  1. Well, Arrow also came up with the impossibility theorem, by which one cannot infer societal preferences from individual preferences if the agents are rational and have a utilitarian-rational preference system. Thus, Arrow proved the futility of societal utility maximization once one arrives a Pareto-efficient outcome. This is a conclusion that many classically trained macro-economists ignore when applying representative agent models for the entire economy. So, even within the rational preferences paradigm, there are still major problems that remain unsolved, including the problem of aggregation.

    • Perfectly right. There are easy fix-ups for that, though. If you restrict attention to preferences which can be represented with expected utility, the Arrow’s Thm problem goes away—there is a way to aggregate such preferences up to a social welfare function. Sen proved this, I think. Representative agent Macro is pretty unsatisfying, though. I definitely agree with that.

  2. Policy analysis is normally carried out in the language of economics. Almost always, policy analysis just is cost-benefit analysis.

    If only!

    Liberalism does not give a damn about cost-benefit. The policy comes first, and the “analysis” is merely trotted out to support it. Where cost-benefit economics does not support liberal policy — which it universally does not, across any field of policy, which is among the reasons the Western world is broke — it is simply ignored.

    The main purpose of economists under Leftist misrule is not to point out the most rational policy on economic grounds, but to devise speciously plausible justifications for political decisions, and to manufacture statistics as necessary. This is no different from what Marxist-Leninist economists did in the USSR.

    All other academic fields have a similar purpose, which is not to discover the truth but to justify political decisions and support the hegemonic ideology.

    • The policy comes first, and the “analysis” is merely trotted out to support it.

      Yes, and the piece says as much. Blessings and incantations are things given by priests not by princes. The Pope crowns the Holy Roman Emperor, he does not (mostly) choose him or mandate policy for him. Economists I know who have been on the Council of Economic Advisers or who have worked high up in regulatory agencies all report the same thing, which is that the best one of us can do in policy-making is to remove ideas which are both very bad and which were not put in at the direct behest of a powerful interest group. In terms of making policy, we are, at best, proofreaders for the lawyers.

  3. It shouldn’t be forgotten that Liberal economics is the economic system under which we live. It has been for nearly two centuries. Liberalism is a two sided coin, one faces left and values social issues,the other one faces right and values economic issues. While they seem to have nothing in common, they are mutally supporting, after all a coin cannot only have one side.

    Liberalism is often thought of as being leftist, but that isn’t the whole story. Right Liberals often get forgotten but they are as much the enemy of Traditionists as the Left Liberals are.

    One final point, nearly all economists are Liberals and nearly all those who aren’t are Marxists.

  4. As I read Professor Cowen he is saying that economists who advise the US government should “net” the benefit to millions of third worlders moving here against the inevitable loss to US citizens to determine a rational economic policy.

    An interesting thesis. Surely, if the purpose of the US government is to save lives wherever we can save them by bringing them to America, that would certainly massively outweigh any supposed “right” that Americans have to houses, cars, vacations and iPhones.

    Has he made the same recommendations to the citizens of his national homeland? If so, what was their reaction?

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