“Give me a one-handed Economist. All my economists say ‘on hand...’, then ‘but on the other...’”
In light of the expected naming of Kevin Hassett to head the White House Council of Economic Advisers, it is important to remember the value of economists (and other eggheads more broadly) in policy discussions. During the 2016 campaign and his subsequent administration, Donald Trump has been consistently insulated from serious academic economists in a way that stands out from past candidates and presidents. With the exception of Peter Navarro, himself far outside the mainstream economic thinking on trade, Trump has never demonstrated an affinity for economists and the valuable insight they provide. One of the great virtues of economic thinking is that it requires a consideration of effects beyond the first order and an aversion to bumper sticker simplicity. Perhaps the decision to name Hassett to this position reflects some opening for reasoned economic thinking to creep into the White House. I won't be surprised if that is being too optimistic.
Sendhil Mullainathan1 of Harvard has a timely piece in The New York Times on the importance of economists in policymaking. The relevance of economic thinking goes beyond the obvious applications like taxes and stimulus projects.
“For example, suppose a reduction in the size of the Army was being considered. The effect on national security would be a major concern, but even this policy has economic consequences. What would the reduced job opportunities do to people who have made the military their profession? What would happen to the economies of the towns that surround Army bases? What would the fiscal consequences be, such as the cost of early retirement or severance packages that might need to be paid as part of a downsizing? It is the council’s job to marshal the best analysis and evidence to answer these questions.
....
Yes, academics fret about what their peers think, just as other people do. In this case, it’s a good thing. It is important to have someone in the cabinet who is more interested in protecting academic integrity than in protecting business interests or the president’s image.”
Economists have long been a source of annoyance for presidents. Ask Harry Truman. Those who are serious about their profession are no fun for policymakers looking for simple answers. That is exactly why they are necessary.
1 Mullainathan is the co-author of the classic study looking at labor market racial discrimination with regards to "African American" and "White" names. Well worth reading.