Introduction

This chapter is about economics and economists, and how both should influence policy. Some may be surprised that I do not talk more about the global financial crisis in this book. This is partly because my blog began some time after that event. Another reason is explained in Post 8.2. I’ve made a few additions to help with the jargon, but once again understanding the economic terms is not necessary to understand the message. I explore similar themes in Post 8.4, where I suggest that even if macroeconomists had predicted the crisis, they would have been ignored.

Economics is a unique science, but if comparisons have to be made with other sciences I think medicine is the most appropriate. Post 8.10 draws an analogy between the financial crisis and the opioid epidemic in the US, and by implication how crises should be viewed in either discipline. Post 8.5 describes in a light-hearted way why economics, although it has many disadvantages compared to the hard sciences, has one advantage: introspection. Post 8.1 talks about a problem that economics in particular has: ideological influence.

Post 8.7 deals with a major reason why economists get so much stick, macroeconomic forecasting, which ironically hardly any academic economists are involved in. It makes what should be the self-evident point, but one which was ignored in the Brexit debate, that trying to predict the future is very different from trying to assess the impact of, say, changing interest rates or leaving the EU. Post 8.8 argues that delegating decisions like changing interest rates to bankers or economists is making advice more transparent as much as it is about delegating power.

Delegation aside, Post 8.3 looks at an example where economic expertise was fully utilised to good effect: the UK’s decision not to join the Eurozone. Post 8.6 is an example of the opposite, where ideas about immigration that economists know to be false are allowed to continue to be regarded as true in public debate. Post 8.9 looks at how the decision to move to austerity was another such failure, and how central banks are important in understanding why this happened.