General Economic Policy

Elite Wisdom

Paul Krugman has an interesting piece in the NYT today titled The Unwisdom of Elites. In it he argues that policy elites are increasingly blaming the slow recovery and the other economic problems we face today on the general public. He writes that “the policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people.” He goes on to point the finger squarely at President George Bush and Alan Greenspan, among others. His conclusion at the end is “We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.”

I agree with much of Professor Krugman’s analysis but I think there is a worrisome unstated implication. If Krugman’s analysis is right about “elites” then we should ask whether the problem disappears when a new set of elites are brought into power. For example, Krugman has been vociferously arguing for the past few years that we need a larger fiscal stimulus and that there is little need to worry about the size of our budget deficit in the present circumstances. But Krugman is clearly among the policy elites on the Democratic side; especially as a Nobel prize winner in economics and a prominent NYT pundit. If we followed Krugman’s advice on things would we avoid the pitfalls of undue influence of wise elites? Or, would we simply be substituting one set of elites for another?

In my view the policy elitism problem is prevalent on all sides of the political spectrum. Republicans may give away more to businesses through deregulation and tax cuts whereas Democrats give more away to businesses via favorable regulatory regimes and tax increases with tax break carveouts. In other words, influential groups seek to influence outcomes no matter which party is in power … all in the name of “we know better than you what is best!”

Many say we need to impose more regulations to reduce the influence of powerful business groups. The problem is that any regulatory changes always go through the same political choice process that always alters the proposals into something more amenable to the special interests.

About

Steve Suranovic received his B.S. in mathematics from the University of Illinois at Urbana/Champaign and his M.S. and Ph.D. in economics from Cornell University. He has been a faculty member at the George Washington University since 1988. He has served several terms as the current Director of the International Trade and Investment Policy M.A. program at the Elliott School of International Affairs.

3 Comments

  • I heard a very interesting study where in certain tests pigeons are noted to perform better than people. The reason is pigeons are not encumbered by the frailty of hubris and thinking they are “right”.

  • I heard about an interesting study where pigeons performed better on certain learning tests than people, the reason being pigeons are not encumbered by the arrogance of “being right”.

Leave a Comment

Time limit is exhausted. Please reload CAPTCHA.