Biased Experts

Michael already wrote this week about the Op-Ed by Brad Delong that we listened to over dinner on Monday. This specific Op-Ed is from October of last year, but Delong has been making similar arguments in the wake of the recent plunge of U.S. treasury yields after the earthquake in Japan. He argues that the fact that the interest rate is so low suggests that the U.S. government should borrow more right now. In the older Op-Ed he even goes so far as to suggest that it would not be a bad thing if a country that got in trouble because of excess borrowing ever had to borrow money from the IMF. I have no way of accessing these arguments as reasonable. Fair enough, in theory interest rates reflect the risk of borrowing. But should we not at least question that theoretical ideal in the face of bond rating histories like Greece’s and the similarly sudden drop in the ratings for mortgage backed securities during the recent financial crisis? But beyond that, it seems insane to me to suggest that it is ok and in fact commendable for a government to borrow money until there is no longer a private investor around willing to lend. Is Delong really arguing that we should emulate the example of Argentina/Greece? Or is he being chomskeyesque and merely making a populist argument?

Now my question is, is it ok for well-known Economists to be out there as public intellectuals making arguments that are pretty obviously bad economic arguments? It seems deceptive for people like Krugman and Delong (as well as people doing the same thing on the other side of the political divide) to use their reputation as experts to make political arguments without explaining that they are arguing from a politically biased position that ignores some of their economics expertise as well as readily available evidence. Don’t get me wrong, I generally think that economics is mostly a normative enterprise and that different assumptions can get you different answers. However, some of the stuff I have read seems like a recipe for economic suicide no matter what your assumptions are.

An additional downside of such bad economic arguments, beyond the potential economic consequences, is a lot of confused rhetoric in the public. For example, I met a history professor last year who told me she loved Paul Krugman and that she really enjoyed learning about economics from him in his New York Times column. She in fact corrected a student in an argument he was making because she was so convinced that she knew better because of what she had read in the NYT. I tried to tell her that Paul Krugman in the NYT is not Paul Krugman the Nobel Prize winning economist, but I was unsuccessful at getting her to actually hear me.

I guess the only consolation I have is that public opinion formation is still a competitive decentralized process. As long as there is plurality in opinion and as long as bias is distributed somewhat normally, we can still get sensible public opinion, which is an important constraint (at the margin) on government excess, at least some times. Going back to the original question about experts and bias though, I think the best tool we have to defend against such bias is general skepticism. Now all I have to do is to figure out a way to teach my students to be skeptics.