This points to the third and most convincing explanation: while experts emphasize the overall benefits of openness, they tend to disregard or minimize its effects on particular professions or communities. They regard immigration – to which Cameron attributed the Leave campaign’s victory – as a net benefit for the economy; but they fail to pay attention to what it implies for workers who experience downward wage pressure or for communities struggling with a scarcity of affordable housing, crowded schools, and an overwhelmed health system. In other words, they are guilty of indifference.
This criticism is largely correct. As Ravi Kanbur of Cornell University pointed out long ago, economists (and policymakers) tend to look at issues in the aggregate, to take a medium-term perspective, and to assume that markets work well enough to absorb a large part of adverse shocks. Their perspective clashes with that of people who care more about distributional issues, have different (often shorter) time horizons, and are wary of monopolistic behavior.
If economists and other experts want to regain their fellow citizens’ trust, they should not be deaf to these concerns. They should first be humble and avoid lecturing. They should base their policy views on the available evidence, rather than on preconceptions. And they should change their minds if the data do not confirm their beliefs. This largely corresponds to what researchers actually do; but when speaking to the public, experts tend to oversimplify their own views.
For economists, humility also implies listening to people from other disciplines. On immigration, they should hear what sociologists, political scientists, or psychologists have to say about what coexistence in multicultural communities may entail.
Second, experts should be more granular in their approach. They typically should examine policies’ impact not only on aggregate GDP in the medium term, but also on how policies’ effects are distributed over time, across space, and among social categories. A policy decision can be positive in the aggregate but severely harmful to some groups – which is frequently the case with liberalization measures.
Third, economists should move beyond the (generally correct) observation that such distributional effects can be addressed through taxation and transfers, and work out how exactly that should happen. Yes, if a policy decision leads to aggregate gains, losers can in principle be compensated. But this is easier said than done.
In practice, it is often hard to identify the losers and to find the right instrument to support them. To argue that problems can be solved without examining how and under what conditions is sheer intellectual laziness. To tell people who have been hurt that they could have been spared the pain does not give them any less reason to complain; it just fuels resentment of technocratic experts.
Because growing public distrust of the cognoscenti provides fertile ground to demagogues, it poses a threat to democracy. Academics and policymakers may be tempted to respond by dismissing what looks like a celebration of ignorance and retreating into ivory towers. But this would not improve matters. And there is no need to surrender. What is needed is more honesty, more humility, more granular analysis, and more refined prescriptions.
By Jean Pisani-Ferry. This article is reproduced from Project Syndicate
Ed’s note: Do you think this applies to Zimbabweans?
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