Defrock Deregulation Economists?

Recent economics Nobel prize winner Paul Romer is furious that economists have sometimes argued for deregulation; he wants them “defrocked”, & cast from the profession: 

New generation of economists argued that tweaks … would enable the market to regulate itself, obviating the need for stringent government oversight. … To regain the public’s trust, economists should … emphasize the limits of their knowledge … even if it requires them to publicly expel from their ranks any member of the community who habitually overreaches. …

Consider the rapid spread of cost-benefit analysis … Lacking clear guidance from voters, legislators, regulators, and judges turned to economists, who resolved the uncertainty by [estimating] … the amount that society should spend to save a life. … [This] seems to have worked out surprisingly well … The trouble arose when the stakes were higher … it is all too easy for a firm … to arrange for a pliant pretend economist to … [defend them] with a veneer of objectivity and scientific expertise. …

Imagine making the following proposal in the 1950s: Give for-profit firms the freedom to develop highly addictive painkillers and to promote them via … marketing campaigns targeted at doctors. Had one made this pitch to [non-economists] back then, they would have rejected it outright. If pressed to justify their decision, they [would have said] … it is morally wrong to let a company make a profit by killing people … By the 1990s, … language and elaborate concepts of economists left no opening for more practically minded people to express their values plainly. …

Until the 1980s, the overarching [regulatory] trend was toward restrictions that reined in these abuses. … United States [has since been] going backward, and in many cases, economists—even those acting in good faith—have provided the intellectual cover for this retreat. …

In their attempt to answer normative questions that the science of economics could not address, economists opened the door to economic ideologues who lacked any commitment to scientific integrity. Among these pretend economists, the ones who prized supposed freedom (especially freedom from regulation) over all other concerns proved most useful …  When the stakes were high, firms sought out these ideologues to act as their representatives and further their agenda. And just like their more reputable peers, these pretend economists used the unfamiliar language of economics to obscure the moral judgments that undergirded their advice. …

Throughout his entire career, Greenspan worked to give financial institutions more leeway … If economists continue to let people like him define their discipline, the public will send them back to the basement, and for good reason. …

The alternative is to make honesty and humility prerequisites for membership in the community of economists. The easy part is to challenge the pretenders. The hard part is to say no when government officials look to economists for an answer to a normative question. Scientific authority never conveys moral authority. No economist has a privileged insight into questions of right and wrong, and none deserves a special say in fundamental decisions about how society should operate. Economists who argue otherwise and exert undue influence in public debates about right and wrong should be exposed for what they are: frauds. (more)

Oddly, Romer is famous for advocating “charter city” experiments, which can be seen as a big way to escape from the usual regulations.

So how does Romer suggest we identify “pretend” economists who are to be “exposed as frauds” and “publicly expelled from economists’ ranks”? He seems to say they are problematic on big but not small issues because firms bribe them, but he admits some are well-meaning, and doesn’t accuse Greenspan of taking bribes. So I doubt he’d settle for expelling only those who are clearly bribed. 

That seems to leave only the fact that they argue for less regulation when common moral intuitions call for more. (Especially when they mention “freedom”.) Perhaps he wants economists to be expelled when they argue for deregulation, or perhaps when they offer economic analysis contrary to moral intuitions. Both sound terrible to me as intellectual standards.

Look, people quite often express “moral” opinions that are combinations of simple moral intuitions together with intuitions about how social systems work. If they are mistaken about that second part, and if we can gain separate estimates on their moral intuitions, then economic analysis has the potential to produce superior combinations.

This is exactly what economists try to do when applying value of life estimates, and this can also be done regarding deregulation. The key point is that when people act on their moral intuitions, then we can use their actions to estimate their morals, and thus include their moral weights in our analysis.

In particular, I don’t find it obviously wrong to let for-profit firms market drugs to doctors, nor do I think it remotely obvious that this is the main cause of a consistent four-decade rise in drug deaths.

Yes of course, it is a problem if professionals can be bribed to give particular recommendations. But in most of these disputes parties on many sides are willing to offer such distorting rewards. My long-standing recommendation is to use conditional betting markets to induce more honest advice from such professionals, but so far few support that.

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