08 January, 2009

The selective blindness of "political" economists

Economist Arnold Kling puts something into words far better than I have been able to when he draws parallels between today's standard prescriptions for bailouts and the god-awful military tragedy that was the Battle of the Somme.  After listening to a discussion by Joseph Stiglitz and Martin Feldstein, interviewed by Charlie Rose, Kling notices that the experts were unwilling--or unable--to draw the obvious conclusion that what they were proposing hadn't worked, and instead argued for much more of the same:

I was reminded of the Battle of the Somme, one of the worst policy blunders of all time. Having experienced nothing but failure using offensive tactics up to that point, the Allies decided that what they needed to try was....a really big offensive. Just as Feldstein and Stiglitz pay no attention to the on-the-ground the housing market, the British generals ignored the impact of machine guns on men advancing over open fields.

My guess is that in 1916, anyone who doubted his own ability to direct an enormous offensive involving hundreds of thousands of soldiers would never have made it to general. Similarly, today, anyone who doubts the ability of a handful of technocrats to sensibly allocate $800 billion would never make it into government or the mainstream media.

The Stimulus and the Somme, Arnold Kling | EconLog | Library of Economics and Liberty

2 comments:

LFC said...

Contra Kling, the British generals at the Somme didn't "ignore the impact of machine guns"; they assumed, very wrongly as it turned out, that a pre-attack bombardment could and would destroy/neutralize the German gun emplacements.
I don't find the stimulus-Somme analogy all that convincing, though I understand what Kling is trying to say.

Dan McIntosh said...

You have a good point. But they do share a certain hubris. Maybe that's required to make critical decisions. But with the economists I have to wonder. Don't they realize how little their models fit reality? Have they convinced themselves that they really "know" what they are doing? Or are they beyond caring?