A week or so ago, I reacted to this piece by Ross Gittins that I thought may have implied that I was anti-action on climate change. I was wrong and that was not his interpretation but it was an issue I was sensitive on as I had gone out on a limb in the past to support the Government’s proposed actions on climate change (see here and here) even as most others had moved their support away. I did something that I rarely do and pulled the post.
Today, Gittins was back with another swipe against academic economists. The thesis this time is that the “lack of consensus” amongst Australian economists on how to implement climate change policy led to its downfall. Gittins is careful to note that some did support the Government’s plans but was scathing in his conclusion:
Parkinson concludes that economists’ lack of agreement on key implementation questions renders their preference for a carbon price signal largely meaningless in practice. In fact, it undermines public support for least-cost solutions. Well done.
The article recounts the Secretary of the Department of Climate Change’s view of why economists disagree. The possible reasons for this are (a) environmentalism has become synonymous with anti-growth (although that reason doesn’t quite wash to cause lack of agreement); (b) economist’s can’t evaluate catastrophic risk (well, who can do that well and in any case, I am pretty sure they can); (c) economist’s have a strong preference to leave things to the market; (d) they prefer perfection rather than a good compromise. Of these reasons, only the last has anything to do with disagreement on how to implement climate change policy. And even there it is arguing for agreement just agreement that the Government wasn’t on the right path! Oh and by the way, where are the perfection arguing economists in this debate. Could someone please name one and point to a few public words to that effect? Just one! I’m not even looking for The One who has supposedly de-railed current policy.
In any case, trying to work out why economists disagree is hardly practical. Indeed, it is lamenting an ideal view of public debate that policy-makers pine for but can’t have practically. Surely, we need to take it as an axiom of public policy implementation that economists will disagree.
Now, here is the thing, if it is an axiom, then it falls back on the policy-makers to work out what to do about it. My guess, given all of these discussions, mainly from public servants, is that in days old, public servants were the ones who did the job of translating academic economist opinion for politicians. There were few other paths by which academic economists could engage in policy debate and all of them were so costly very few bothered.
Today, that isn’t the case. Any defunct economist with a computer can hit ‘publish.’ The amazing thing for me is that this actually is mattering. I imagine that the politicians are being given the published arguments and that within the internal workings of government this is making the public servant’s job harder.
The right reaction to this is not to criticise the lack of agreement amongst now visible economists in public speeches. Instead, it is to work out how to engage with the new process. Public servants need to recognise it is there and come to meetings armed and ready to deal with it rather than, perhaps (and I don’t know if this occurs), dismissing them as the work of cranks. They need to be proactive in engagement, talking to academic economists who are likely to comment prior to policy releases. Work out how to explain the practical constraints earlier on. It is a new task to be sure but it reflects what seems to be a new reality.
And there are other ways of doing this. We economists don’t like to see public debate moved by politics rather than sensible discussion. That is why we organise conferences and certainly why we organise petitions to demonstrate large support when it exists. Others, in particular Warwick McKibbin and CEDA, have led moves to organise economists to collate policy debates in a more usable form. These moves require Governmental support to continue — and not in money but attention. Per Capita has been one think tank that has been doing this but more on that later.
Finally, perhaps this is the very charge that some budding young politician who might have some academic cred might be able to get behind and cut through.
Update: Over the fold is one of my favourite scenes from The West Wing. Josh has been sent out to sell free trade but they keep him in the dark over potential job losses in the short-term. He finds out and is upset. The episode is entitled Talking Points and is about how economic policy is sometimes just hard to sell.
Bartlet indicates for Josh to sit. BARTLET Leo's told me about the 17,000 jobs. JOSH We have to fix this thing. BARTLET We've talked about creative destruction. JOSH We made a promise. BARTLET It's the natural evolution of capitalism. JOSH This isn't economic theory. Where are our allegiances? To our own people or to Third-World plutocracies? BARTLET There are children in those plutocracies who dig through trash heaps for food who'd kill for a low-wage job. You think if they're not sewing sneakers, they're downing cocktails at a debutante ball? JOSH This is different. These programmers have middle-class jobs. BARTLET Different how? Because we know them? JOSH Different... because you and I looked them in the eye five years ago, at the Wayfarer Hotel. BARTLET I know that we did. And sometimes I wish I could stick to the theory. I don't like seeing our friends get hurt. JOSH Then let's not hurt our friends. BARTLET By doing what? Building a wall around the country so we can keep those jobs a bit longer and never create any new ones? Passing a law that no one can be fired, even if played video games at their desk all day? I'd probably get a spike in the polls for that one. JOSH The CWA's the reason we're in this room. BARTLET And they would prefer a Republican who'd support free trade then gut job training and eviscerate unemployment insurance? JOSH We made a promise. BARTLET There was a man named Canute, one of the great Viking kings of the 11th Century. Wanted his people to be aware of his limitations, so he led them down to the sea and he commanded that the tide roll out. It didn't. Who gave us the notion that Presidents can move the economy like a play-toy? Leo comes back from his office. BARTLET That we can do more than talk it up or smooth over the rough spots? It's a lie. What we really owe that union is the truth. JOSH We run around saying free trade creates high-paying jobs. BARTLET And it will. But I've been trying to tell you it's not that simple. LEO I'll set up a call with Bill Parsons. BARTLET It'd be nice to roll back that tide, wouldn't it? JOSH Yes, Mr. President, it sure would.