Furthermore, many economists profess a reluctance to meddle in what they
regard as a political debate about the distribution of economic output.
Quite often, the result is that economists finesse the question of
distribution by noting that the benefits of more efficient policy could be
distributed equitably, whatever that means, but the details should be
worked out by the politicians. Paul Romer, a Nobel laureate in economics,
argued in a recent essay (Romer 2020) that economists should just “say ‘No’
when government officials look to economists for an answer to a normative
question.”
I recognize the appeal of Romer’s advice. Overconfidence is a common
attribute in disciplines that reach for practical conclusions. Perhaps it
is even a necessary one: after all, choices must be made. But there is an
obvious attraction in limiting the scope of the potential damage.
The problem is that normative judgments can’t be avoided.
In the 1980s, for example, most mainstream economists favored the
elimination of minimum wage laws. In 1987, my predecessors at the New York Times editorialized in favor of eliminating minimum wage
laws, citing “a virtual consensus among economists that the minimum wage is
an idea whose time has passed.” This was purely a judgment about economic
efficiency. Economists did not pretend to weigh other arguments for minimum
wages. But by advocating for a change in policy on the basis of efficiency,
they implicitly devalued those arguments. (And, as it happened, even the
efficiency argument was wrong. A few years later, two economists took the
radical step of gathering evidence and reached a different conclusion.
American workers are still suffering the consequences.)
Even economists who embrace in good faith the argument for avoiding
distributional advice—especially economists who embrace this argument in good faith—must
recognize that, in practice, they are facilitating the exclusion of
distributional issues from public debate. A genuine concern about
distributional issues requires distribution to be treated as a primary goal
of policy, not as a by-product that requires remediation.
It is particularly problematic for economists to advocate for a policy as
broadly beneficial if there is no mechanism for a broad distribution of
benefits. Economists have often advocated for trade deals by calculating
net benefits and deferring questions of distribution. But the second act
seldom happens. “The argument was always that the winners could compensate
the losers,” the economist Joseph Stiglitz, also a Nobel laureate, told me
a few years ago. “But the winners never do.” Huffy, for example, built
about 2 million bikes a year in the town of Celina, Ohio, until it moved
production to China in 1998 to meet Walmart’s demand for cheaper bikes.
There is now a Walmart where the Huffy workers once parked their cars, and
everyone in Celina—and everyone in towns across the United States—can buy
cheaper bicycles. But the workers lost their jobs, and promises of help
went largely unkept. Advocacy for the interest of “the people,” in the
abstract, often ends up looking a lot like cruel indifference to actual
people.
