Sunday, October 17, 2010

Elite economists and the revolving door problem

I've just read the discussion that starts with a Chronicle piece by documentarian Charles Ferguson and continues with a response by Will Wilkinson, an (unusually odd) bit from Brad DeLong and a further response from Will Wilkinson.

Reading the original piece by Ferguson served mainly to convince me not to bother with his movie. He gets so many basic facts wrong in a relatively short text that it would be impossible to trust anything in his movie. As Wilkinson points out, he completely miscasts Summers as some sort of laissez-faire ideologue. He also gets wrong the story of Summers' comments about women and science. And he gets wrong the story of Summers' departure from the Harvard presidency, which had little to do with those comments. Shouldn't someone in the documentary business actually be checking on facts?

In addition to factual errors, he seems to have some conceptual troubles as well. For example, Ferguson seems to hold the view that financial derivatives per se are somehow evil and bad. This suggests a deep misunderstanding of the substantive context underlying his movie and, most likely, the replacement of research with ideological presupposition in its production. Ferguson even somehow finds it sinister that Summers supported legislation that prohibited the regulation of derivatives under state gambling statutes. While it surely would be entertaining in some perverse sense to watch a collection of state attorney generals undertake securities regulation, it is hard to see how it could turn out well.

Having said all that, had someone who was both intellectually honest and in possession of the background required to understand the relevant economics addressed these issues, I think there is likely much to talk about. I am an advocate of having academics move in and out of government, as with the chief economist at the Department of Labor, as I think it represents a relatively inexpensive way to inject research into the policy process, to place people inside government organizations who will push against policies based on narrow political concerns, and to give academics useful lessons in applied public choice theory. But there are surely potential costs to these interactions as well, particularly when they also include interactions with well-heeled private sector organizations, costs that would merit informed discussion. It is too bad that we do not get such a discussion from Ferguson's essay.

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