According to Smith, outsiders see economics, particularly
macroeconomics, as “inherently political” and as “being mostly about
redistribution.” Economists, on the other hand, are far more aware of the vast
body of settled science in their field (or dogma, if you prefer), and see
themselves as students, not of distributional fairness (whatever that is) but
of efficiency.
I think Smith is right, and I hope most people will agree:
It’s utterly unsurprising that economics is viewed this way. Noneconomists
mostly encounter economics in policy debates – as the source of rationales for
tax policies, fiscal stimulus, regulation schemes, and so on. And, as the past
few years have shown, though economists may hold hands and sing "Kumbaya" around the normal
science that constitutes the majority of their field, when it comes to policy they
disagree as profoundly as the rest of us do. Tellingly, even highly respected
names in the field seem to let their politics determine their economics rather
than the other way around, even to the point of making what other economics
consider to be intro-level mistakes. So there are good reasons for the
perception that economics is a form of ideology, a field that attempts to make
prejudices look objective by dressing them up with numbers and equations.
As for Smith’s second observation, it’s simply much easier
for the average person to notice social fairness than social efficiency. For
most of us, the modern world’s historically unprecedented prosperity is
background noise. It takes an economist to marvel appropriately at the wonder
that is a $1 bag of Lay’s potato chips at the mini-mart; the average person
sees it and is bummed because he can’t afford the $3 gourmet chips with the artisanal
sea salt.
One might expect Smith to close ranks with his fellow
economists and chide us laymen for our naïveté
about his profession. Instead, he suggests we have a point:
In a certain sense, the normal people's approach makes more sense than that of the economists. We are an incredibly rich economy - the world's richest large economy by far. This means there are relatively few efficiency gains to be had, but the impact of any redistribution of our titanic wealth will be enormous. Economists usually try to be impartial, shrugging and saying "Rent is rent!" when confronted with questions of distribution, or pooh-poohing welfare analysis as the province of philosophers and dorm-room discussions. They focus on efficiency because a Pareto improvement is something that everyone can get behind (in fact, that's how it's defined). In the process, they ignore the main issue that is usually on the mind of someone thinking about the economy: "What's in it for me?"
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