What Should Economists Do?

Though we’ve hinted at it throughout the book, here we are making this idea explicit: the way economists do economics matters because it influences the options policymakers perceive to be available. Indeed, a major motivator for writing this book in the first place was the observation that so many people, particularly young people, have been seduced by socialist and other collectivist ideologies in recent years. And why wouldn’t they be? If a politician promises that he or she can pull a lever and make notable progress against inequality, climate change, or opioid addiction, the romantic parts of our brains want to believe it. There are two problems here. One, if economists can provide some idealized model showing how a solution to these problems might actually work, both the romantic and the rational parts of a person’s brain might be satisfied. Two, and of larger concern to us here, conventional economics assumes we all agree on the basic parameters of life. But that is what is continually needed to be established. Further, the tone of our societies is set by the institutional arrangements we have in place. Policies don’t just reshuffle our incentives. They’re also part of creating and recreating the framework in which we relate to one another. They influence our patterns of relationships. In a world governed by private property, for example, all relationships have to be mutual and agreeable. In idealized democracy, actions will only be taken as long as they are agreed upon by most people. What is particularly difficult about our current situation is that we live in a world that we claim has some significant areas that are governed by private property, but which are actually characterized by substantial entanglement among private parties and political participants. Here, we explore why the type of economics that economists pursue is of great significance for shaping the kind of world we want to live in—or will live in after political forces and processes have done their work.