Blinder (Economics and Public Affairs/Princeton Univ.; After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead, 2013, etc.) argues that economists and politicians often talk past one another.
Both groups not only “speak different languages,” writes the author, but they live in “two different, often clashing, civilizations.” As a result, American economic policymaking is dysfunctional, with its four elements—“politics, message, process, and substance”—“in motion at the same time…like a Marx Brothers movie shown in fast forward.” In this far-reaching, accessible book drawing on Blinder’s several decades as a leading academic as well as service on the Federal Reserve Board and on President Bill Clinton’s Council of Economic Advisers, the author examines the factors behind poor economic policy (“ignorance, ideology, and interest groups”) and suggests practical ways to improve the situation. Both economists and politicians can do better. At the moment, policymakers rely on economic experts for support, not illumination (the “Lamppost Theory”) and often dismiss what economists advise. Instead, politicians must learn that longer time horizons are needed to accomplish good policy and that “logic, arithmetic, and facts will ultimately triumph over spin, wishful thinking, and alternative facts.” On the other side, economists must begin to talk in simple English. Blinder warns that “crackpot solutions with scant support among economists sometimes sweep to political victory….With economic illiteracy as widespread as it is today, a popular democracy is painfully vulnerable to the self-serving machinations and hucksterism of economic snake-oil salesman.” The author offers thoughtful chapters on government leaks, rising inequality, and such deeply divisive issues as international trade and tax reform. He makes a forceful case for old-fashioned bipartisan economic policymaking that “is deeply concerned with both preserving and enhancing the efficiency of the market system and with improving the lot of society’s least fortunate citizens.”
A valuable book from a sensible centrist who writes with great knowledge and good humor.