Few would think to blame Biochemistry for the Opium Wars, or Physics for the Chernobyl disaster. Why then do we blame Economics for public policy challenges such as financial crises, environmental degradation, poor social housing, or rising inequality?
Ricardo Hausmann’s “Don’t Blame Economics, Blame Public Policy” commentary makes us look to questions like these, and perhaps come to a more balanced view on the Economics discipline.
However, Hausmann also goes on to suggest we should re-design Public Policy education to be more akin to training doctors or engineers, and that Public Policy schools might de-emphasise disciplinary fundamentals.
Better training is of course always a good thing, but it can’t here be a call to stop teaching basic principles in economics or international relations or leadership. (I don’t say Hausmann suggests this but some of his readers might go away thinking it: “Economics is to blame for the mess that the world is in, why do you want me to learn about marginal costs?)
Nor is such de-coupling the reality in either medicine or engineering schools. I wouldn’t want to regularly go over a bridge put together by those who don’t understand resonant lateral vibration, nor be treated by health personnel who don’t appreciate both the anaphylactic and spillover-systemic effects of administering antibiotics.
The question is, Do we get the balance right? My two cents? It’s difficult to imagine how the practice of public policy could be successful if it systematically ignored three principles:
(a) “move your assets from where they’re doing little good to where they’re doing a lot more good” [i.e., understand tradeoffs in resource allocation, equalise marginal benefits and marginal costs];
(b) “let your people do what they do best” [i.e., find the appropriate boundary between state and market; leverage economies of scale; engage in win-win opportunities in, among others, international trade];
(c) “Always look for better ways to do what you need to do” [embrace technical change; seek balanced economic growth; incorporate thinking about the knowledge-based economy].
These three principles of course are not sufficient to take a public servant everywhere they need to. Much more specialised knowledge and expertise are needed in each case. But these three alone constitute a large part of the economics fundamentals that economists teach. Simply working in the small on very self-contained public policy projects (doing a “Sim City” on your society) without invoking some variant of these principles will quickly lead to public service that, in my view, cannot be future-ready.
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