A reply to Michael Gove and all those who think the study of economics is of little value

What prompted this post was a comment from a friend to whom I was talking to over coffee. He informed me, politely of course, that my opinion as an economist on economic matters was of little value as it was no better than the common sense opinion of the man in the street. I was as an economist a self interested individual who was only interested in advancing the truths of my subject regardless of the truths of the real world. This friend I should add was a distinguished retired academic from one of our most prestigious of universities. Without trying to sound too paranoid it does seem to be open season on economists. We are one of the most discreditable of professions it seems. Whatever we do we cannot distinguish truth from the fiction.

This discrediting of the profession of economics was set in train by Michael Gove, a former senior politician in the UK and now a columnist. He said in reference to economists in the EU referendum debate ‘that people were fed up of experts telling them what to do’.  He was referring to a Bank of England report which stated that leaving the EU would have a substantial negative impact on the British economy. A report that was considerably over egged by his opponent George Osborne to discredit the pro-leave campaign. Whatever Michael Gove’s reasons, his was essentially a statement of British philistinism something which never lurks too far below the surface in any public debate.

What I will do is accuse Michael Gove and all his like minded followers of hypocrisy. This I can sum up in the following phrase, ‘they are happy to have Barney the Bear managing the nations finances but not managing their own’. Michael Gove as a MP and journalist has an income of several hundreds of thousands a year. Although I don’t know him, I imagine he invests part of his income in various fund management schemes. He will no doubt have a financial adviser who recommends the best possible schemes in which to invest. These various investment funds will be managed by people who employ economists. Investment funds and banks of various kinds vie to employ the best and brightest economists who leave our universities. They employ these economists to inform them about matters economic and more importantly to predict future trends in the EU and world economy. Then with this information they are best informed as to where invest their clients money. Michael Gove would expect his fund managers to be the best informed of people, yet he believes that being well informed on economic affairs is not a necessary qualification for a politician who manages the economy. For him as with many of his colleagues all that is required is old fashioned British common sense for the post of Chancellor of the Exchequer. I imagine my friend who although he disparages me for being an economist, does defer to experts such as myself when it comes to investing his savings.

I should add that this nation has a habit of employing Barney the Bear to manage the nations finances. A knowledge of economics is not required of those who become Chancellor of the Exchequer. In the past these Barney Bears were well informed people who took advice from the economists employed by the Treasury before making any decision. Now these Barney’s are likely to be single minded ideologues who having read Hayek and Ayn Rand at university believe that they have acquired the essentials of economic knowledge. Any further that knowledge of economics is a mere ‘gilding of the lily’ and unnecessary for a successful career in politics.

Some economists who have contributed to this disparaging of the profession, through their own arrogance and overestimation of their abilities. These are those economists who can be best described as the ‘forever after economists.’ Just as in the children’s fairy tale where the participants will forever live in a state of happiness and bliss, these economists believe that if their economics is adopted the people will forever after live in a state of happiness and bliss. I can identify three such economists who fit this category, Friedrich Hayek, Milton Friedman and the novelist Ayn Rand. While the latter never called herself an economist, she is seen by many contemporary politicians as written the Bible of Economics. What these three people have in common is the failure to recognise that the economy is a human construct which is as fallible as its makers. By ignoring this most basic of truths they could claim that if politicians followed there prescriptions they would create the ‘best possible of all economies’. The very many failures of the economies in which their ideas have been adopted, has demonstrated that the falsity of their ideas.

What is lacking in Britain is any real understanding of the economist and their work? If I was asked to describe what I thought was the role of the economist, I would say it is the reading and interpreting of the economic runes. Reading the economy is much like reading the runes, although the individual symbols are understood  there is some uncertainty about the exact message conveyed by the runes. Uncertainty because a contemporary historian cannot exactly replicate the in themselves the thinking of the rune carver. All of us are aware the individual happenings in the economy, such as increases or reductions in unemployment, businesses closing and opening; but only a specialist in economics can put all these individual happenings into context and explain their meaning. Since economics as with rune reading is subject to some uncertainty individual interpretations can differ, although not usually to any significant extent. Economists after reading the economic runes largely agree that Brexit will have a negative impact on the economy, what they disagree about is how great will be the negative impact. There are always a minority of economists who will misread the economic runes and give a very different interpretation of the message. They should be given exactly the same credence that those very few scientists who deny the reality of global warning are given.

Michael Gove will seize on the fact that a minority disagree with the large majority to say that are no economic truths as economists disagree as to what they might be all they can do is to state their own opinion which may have more or less value.  However as with climate change denying scientists very compelling evidence can be produced to prove them wrong. Similarly there is compelling evidence to suggest that those economists claiming that Brexit will benefit the economy are wrong. What Michael Gove needs to understand is that knowledge, even some knowledge is better than none. Ignorance is never bliss even in politics

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