Why economists are wrong to support the Romney plan

24th August 2012

By signing the statement these academics not only "enthusiastically endorse" Romney, but also commit their reputations on the statement that President Barack Obama has "failed to advance policies that promote economic and job growth". Foregoing the traditional economic jargon that the industry predominantly operates in, the message of the statement is clear: Romney supports growth and jobs; Obama supports debt-funded big government.

Although the claims are certainly open to (and are already the subject of) heated debate, the underlying problem is that this document has been signed as if it has already been settled. Moreover, while it is a positive step to open up the language of economics to a wider audience doing so in a way that immediately politicises the debate is likely to shut down rather than open up discussion.

DK Matai, chairman of the Asymmetric Threats Contingency Alliance (ATCA) 5000, illustrates the problem:

"By and large the public has a very limited understanding of the global financial system. It is very difficult for them to participate in a dialogue about high finance and I think that's why the debate tends to become very polarised."

Undoubtedly the concepts of fiscal deficits, monetary stimulus and the nuances of healthcare reform are difficult to comprehend (even for the vast majority of economists). Yet to distil them into party-political pot shots only serves to mischaracterise the nature of the choice that they need to make in November.

In this I agree with Laurence Kotlikoff, an economist at Boston University, who wrote that the act of signing the statement "amounts to an endorsement of Romney's presidential candidacy…[and] represents a disservice to the economics profession as well as to the statement's signatories, five of whom are Nobel laureates".

Yet unlike Kotlikoff, I think the issue is much more fundamental than a misrepresentation of the facts. The deliberate coercion of academic credibility into political grandstanding not only undermines the perceived independence of the profession but it further abstracts voters from a discussion that will have a profound impact on their future.

Of course, it is not only a strategy employed by the right. Notable economics professors on the left, such as Paul Krugman, himself a Nobel laureate, and Brad Delong, have also indulged in attacks on the Romney campaign in a manner that is perhaps best described as vitriolic. Their analyses may have merit, but few Republicans are likely to be tempted to look beyond the invective.

Indeed these entrenched positions actually help protect a politician or policymaker when they make a mistake. Attacks from the other side can be characterised as part of a wider campaign to discredit an entire political movement and so invariably result in an uncomfortable stalemate.

In order to change the tone of the debate, both sides have to be able to explain their visions for the American economy to the people who will have to live through it. As Joe Brewer, founder and director of Cognitive Policy Works, observes:

"The public have been deliberately kept out of the loop by making the language more obtuse and complex than it needed to be. Yet the economic stakes are genuinely high and it is a legitimate – indeed necessary – discussion for people to be having."

 

More on Mindful Money:

The changing face of the US labour market

The Financialist: 'This chart sums up 80 years of US energy policy'

Ferguson vs Krugman

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