What Angus Said

Specifically, Angus Deaton, recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel* who has unloaded on members of his profession, whom he excoriated for ignoring the power issues in economics and inequality:

Angus Deaton is the economic doyen from central casting. The bow-tie-wearing econometrician was born in Scotland, did a PhD at Cambridge and has been at Princeton for the last 40 years. He’s currently the Eisenhower Professor of Economics and International Affairs Emeritus. He won the Nobel Prize for Economics in 2015. And he’s just dropped an almighty bucket of sh%$ on his entire profession.

(%$ mine)

Where Deaton published it is almost as interesting as the contents: at the International Monetary Fund, that institution once seen as the standard-bearer of neoliberal orthodoxy, but which has in recent years developed a curiosity about the real-world impacts of the hardline policies it once imposed upon or prescribed to countries.

Deaton lobs a series of truth bombs at his own profession, the result, he says, of “changing my mind, a discomfiting process for someone who has been a practising economist for more than half a century”. These include: “We have largely stopped thinking about ethics and about what constitutes human well-being”.

• If “economists should focus on efficiency and leave equity to others, to politicians or administrators… the others regularly fail to materialise, so that when efficiency comes with upward redistribution — frequently though not inevitably — our recommendations become little more than a license for plunder”.
• “Historians, who understand about contingency and about multiple and multidirectional causality, often do a better job than economists of identifying important mechanisms…”
• Far from being “a nuisance that interfered with economic (and often personal) efficiency”, unions “once raised wages for members and nonmembers, they were an important part of social capital in many places, and they brought political power to working people in the workplace and in local, state, and federal governments. Their decline is contributing to the falling wage share, to the widening gap between executives and workers, to community destruction, and to rising populism.”
• “I am much more sceptical of the benefits of free trade to American workers and am even sceptical of the claim, which I and others have made in the past, that globalisation was responsible for the vast reduction in global poverty over the past 30 years”.
• Immigration contributes to inequality.

But Deaton’s main point is a recognition of how power distorts policy: “Our emphasis on the virtues of free, competitive markets and exogenous technical change can distract us from the importance of power in setting prices and wages, in choosing the direction of technical change, and in influencing politics to change the rules of the game.”

One does wonder what took him so long to reach this decision.

It's been obvious since (at least) John Maynard Keynes.

^*It's not really a Nobel Prize, even if this were called the Nobel Prize in Economics.