Good economics only beats the alternative

Living in the midst of the richest civilization in history, it’s perhaps not surprising that being economically literate—knowing about the worst and best ways to produce, distribute, and consume goods and services—seems less important, certainly less glamorous, than the spiritual and more idealistic areas of study. However, is easing up on rigorous economics actually a positive step on the road to enlightenment? State and religious bullies have always said so. Today, their betters too often play along.

In a weekend think piece on post-secondary education that the Globe and Mail called “Seven paths to the stars," philosopher Mark Kingwell offered this concession to the study of economics:

“3. The most important skill is critical thinking

“We say this a lot but don’t do much about it. Here’s what we need: courses in informal logic, so students can recognize fallacies in public discourse; in economic theory, since economists think they rule the world, and politicians believe them; and in computer programming, because you can’t see the biases of the system unless you know how it was coded.”

This is a topsy-turvy perspective that inflates the influence of economic theory and gives cynicism, not learning, a pass. Worrying about the limits of a discipline before mastering what it’s for—what it offers—only makes it easier for governments and citizens to make bad decisions.

The greatest economic theorizers—Adam Smith, Karl Marx, JM Keynes, and Joseph Schumpeter, for instance—were above all critics of dogma and bad popular economics. They never pretended to rule the world, let alone politicians in power or on the make. They didn’t insist that getting and spending was more important than good health, a clean conscience, or a life-sustaining ecosystem. They believed, however, that relieving human wants, like escaping misery and early death, is worth careful study.

Thousands of “economists” populate business and government today, but economics doesn’t dominate either. Making markets work better for humankind and for a sustainable environment are not their core businesses; economic efficiency and effectiveness seldom win over prevailing public sentiments and a chance to make a profit now.

Time and again, sound economics is sidelined in favor of simplistic clichés.

Environmentalists, like other humans with big ideas, can cut corners to win support. Economists have long known and argued successfully that pollution taxes are vastly more effective than “polluter-pay” regulatory regimes. Nevertheless, green politicians and their allies hate to go near them. Economists have argued for generations and now have mountains of evidence to demonstrate that subsidizing goods and services and protecting new and fine old industries are terrible ways to create prosperity and help the poor.

In democratic politics, actions that clearly express good intentions are much preferred to indirect actions that will work. Since superior economics is seldom an easy sell, universities and educators should be less worried about student gullibility—and more concerned about their ignorance.