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Punish Economists For Bad Advice?

I came across an article on the Real-World Economics Blog that is highly relevant to our discussion. I want to draw your attention to it in order to stimulate more conversation. The article referenced hits home on exactly the point being discussed here. Namely: is the relationship between an economist and society ethically charged, such that advice that “fails” can be considered unethical and thus demanding of some measure of sanction?

The recent crisis has punctured the veil behind which economists have typically hidden themselves. They have been content to theorize and subsequently advise, but have sought to avoid responsibility for the consequences of that advice. Instead they claim academic freedom and continue to teach and theorize undaunted by the empirical record being piled up around them.

Does this matter?

Should economists care?

Should economics be regulated?

Or, perhaps more provocatively, how is it that tenured professors can promulgate a theory dependent upon labor mobility, flexible wages, and other elements of free markets without the stain of hypocrisy?

Any thoughts?

  1. March 20, 2012 at 12:09 am

    This is the subject of my paper Bad Theory, Bad Practice: Bad Ethics (Group 3).

    The opening of the paper is
    “A profession that claims to understand economies, and that has gained power over the greater part of our societies, has big responsibilities. The fundamental responsibility is to ensure its perception of economies gives some useful guidance to the behaviour of real economies. Here mainstream economics fails utterly, and has been failing for a long time. Worse, it actively resists alternative views that might overcome its failings. Ethics do not come much worse than that.
    The failings of mainstream economics are multiple. Its central theory, the neoclassical theory, is based on absurd assumptions and its central prediction of equilibrium is plainly contradicted by real economies. It counts the wrong things in the wrong way, using Gross Domestic Product quite inappropriately to measure well being. It is blind to the dominant roles of money and debt in the dynamics of economies. The banking and monetary systems it presides over are highly destabilising. The financial markets it venerates are also destabilising, and have become parasitic. It assumes a base parody of human beings and undermines social relationships and the health of society. It has become fixated on an impossible goal – eternal growth of GDP – that is rapidly degrading the planet and will soon bring about the collapse of global industrial society.”

    I think anyone who practices on the basis of neoclassical economics assumes the responsibility for it. The fact that it has not been properly compared with observed behaviour of economies, for about a century, is a collective failure, and every practitioner who benefits from their practice (which basically is serving the rich and powerful) is ethically responsible.

    See the comment on the RWER site by Edward J Dodson quoting the book by Gaffney, Feder and Harrison: “the authors provided evidence that the leading professors of economics in the early 20th century were recruited by the wealthy beneficiaries of entrenched privilege to create a discipline in defense of the status quo”.

  2. March 20, 2012 at 8:21 am

    This (whole) professional ethics discussion suffers from that people haven’t read my “Definition & Reality in the General Theory of Political Economy” (DRGTPE), see the PDF at http://www.dataweb.nl/~cool/Papers/Drgtpe/Index.html. It is already awkward that the directorate of the Dutch Central Planning Bureau censored my analysis since 1989/90 but that other economists copy this neglect is unwarranted.
    (1) If each democracy adopts an Economic Supreme Court, then there will be more regulation, see the amendment in DRGTPE on the scientific base.
    (2) I would not be in favour that economists get bonusses and options relating to the level of GDP. The ethics of science are sufficient.
    (3) I don’t agree with the put-down by Geoff Davies against neoclassical economics. I consider myself to be a neoclassical economist in the tradition of Keynes and Tinbergen. I agree that there are some simplifying and perhaps even simplistic models but any mature economic evaluation considers other information when actual policy is formulated. The problem in policy advice is not the level of science that some advisors can achieve but the interference from political muscle.
    (4) I submitted a paper on this topic but it was not included by the organisers of the conference. Perhaps if Peter Radford takes the liberty to refer to an external paper I am allowed to refer also, see http://boycottholland.wordpress.com/2012/03/20/not-at-the-wea-ethics-conference/

  3. Stuart Birks
    March 22, 2012 at 10:36 pm

    There is currently a discussion on a couple of blogs on this general theme.

    A consultant economist, Bill Kaye-Blake, discusses “Seven skills of successful consulting” with an academic economist, Eric Crampton, who has strongly criticised questionable work. See: http://gropingtobethlehem.wordpress.com/2012/02/02/seven-skills-of-successful-consulting/

    The academic economist gives an exampel in one of his pet areas, the use of estimates of costs or benefits to push particular investments, policies, or events. See “The amrket for dodgy” at: http://offsettingbehaviour.blogspot.co.nz/2012/02/market-for-dodgy.html

    The latter also points to comments by Sam Richardson, who has been drawing attention to questionable studies of sporting venues and events for soem time. See:

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