Politicians Listen When Economists Speak With One Voice

In the last few weeks, there has been a heated debate over whether economists are to blame for the bad policy decisions taken by Western governments during the Great Recession (see for example here and here).

A recent Washington Post article by political scientist Henry Farrell provides a useful summary of the discussion, followed by his answer to the question, based on his academic research.

According to him, three key questions emerge from the controversy: Should economists aim to agree a common position on crucial policies such as austerity? Is the discipline influential enough to steer policy-making? Are academic economists partly to blame for austerity politics?

Farrell offers an innovative answer. He sees two phases in economists' responses to the financial crisis. In the first, the profession showed a striking degree of consensus, advocating more public spending to boost the economy. This had a direct influence on politics, and governments generally followed the advice. The second phase, however, saw growing divisions in the discipline. Politicians pushed again their preferred austerity line and cherry picked experts who favoured it.

Farrell argues that the relationship between economics and policy-making is not straightforward. Economists tend to move back and forth between government positions and academic posts. Economics is influential in government circles, but governments' choices also have an impact on what ideas get traction in the corridors of academia.

At a time of growing confusion about the best solutions to stimulate growth, it is crucial that the public understands how economic policies are made and why they are chosen. Farrell's piece is a valuable contribution in this direction.