Friday, March 7, 2008

3. Politicians use economists as hired guns.

3. Politicians use economists as hired guns. Consequently, the economic analyses politicians provide to the public are usually incomplete and one-sided. Rather than using professional economists to help develop social policy, politicians often ask them to support existing opinions, without objective analysis.

A story from state politics provides an example. Wisconsin state legislators considered an increase in the minimum wage in the late 1980s. Tommy Thompson was then the governor of Wisconsin. Rather than asking staff economists to provide him with a complete analysis of the issue, however, Thompson instructed them to develop arguments against the proposal.

Another example involves economist Gregory Mankiw, who was the Chairman of President George W. Bush’s Council of Economic Advisers from May 2003 to February 2005. When Mankiw was questioned in February 2004 about the outsourcing of American jobs to foreign countries, his response was an attempt to explain the economic perspective on trade. When countries specialize and trade, some jobs that were previously done by American workers must now be done by foreign workers. Thus, outsourcing (to the extent that it represents specialization) is good for the American economy. This is not a politically popular opinion, however. Mankiw was told by the administration to retract his comments, even though similar ideas still appear in his and hundreds of other economic textbooks.

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