The Dismal Science
Myself when young did eagerly frequent
Doctor and Saint, and heard great Argument
About it and about: but evermore
Came out by the same Door as in I went.
I know how the poet felt. This past few days I've been pondering economics, which Thomas Carlyle famously described as "the dismal science." My pondering has been assisted by friends, readers, and colleagues, who have been trying to educate me in economic principles. I can't say I am no wiser than when I started, but I am very little wiser. I think I understand the math of Comparative Advantage; but for the rest, I am sorry to say it is pretty much the case that I came out by the same door as in I went.
This is not a very happy state of affairs. A good citizen ought to do his best with economics; a fellow who makes his living bloviating about public affairs should try twice as hard. Economic issues lie behind much, if not most, of political decision-making. Why can't I get my head round this stuff? The math is no problem — I have a degree in math, and have written a book about the subject. Whence this powerful inner resistance, this apparent inability, in the case of economics, to come out by any other door than the one by which in I went? I blame Harold Wilson.
My earliest acquaintance with big-time public-affairs economics was when I read in my father's newspaper (The Daily Mirror, solid for Labour in those days) that our nation's new Prime Minister, Sir Alec Douglas-Home, had confessed to being an economic ignoramus. When he had to solve a problem in economics, said Sir Alec, he did so by moving groups of matchsticks around on his desk. These confessions were received with great hilarity by the British intelligentsia of the time — a social category that, in Britain, includes tabloid-newspaper commentators — who confidently predicted that such an incompetent would surely wreck the British economy.
Perhaps Sir Alec would indeed have wrecked the economy. We never found out. He served as Prime Minister for less than a year before his defeat by Harold Wilson in the election of 1964. Wilson did not merely know economics, he had lectured in the subject at Oxford University, after getting a first-class degree there. If anyone knew economics, it was this guy. Wilson was no matchstick-shuffler, but an intellectual superstar of the dismal science. (When he became a fellow of University College he was, I believe, the youngest person to attain that honor in the college's 700-year history.) Furthermore, he brought into government as his advisors two more of the same, the Hungarians Nicholas Kaldor and Thomas Balogh. An Oxford don and two Hungarians — how much economics expertise is that! No more frigging around with matchsticks from these guys!
Wilson was in power for nearly eight years, during which time — guess what? — he comprehensively wrecked the British economy. I have regarded economists with a skeptical eye ever since.
It's not that I believe these guys are stupid. Of course they're not stupid. You don't get to be fellow of an Oxford college without demonstrating considerable smarts. I have no doubt at all that even with the wisdom of my years, if I could be set against the Harold Wilson of 1964 in a debate, I would come out of it looking like a mumbling moron. The same would probably happen if I were set up against Karl Marx, a man of good intellect who educated himself in economics through years of heavy intellectual labor. The fact remains that for all their expertise and diligence and — in Wilson's case, at any rate — credentials, the economics they thought they knew was not, in fact, much good.
(I am not quite willing to admit it was no good at all. The lives of my parents and grandparents improved immensely under managerial socialism. "Ah yes," say my friends and e-correspondents, "but they would have improved much more under classical liberalism." Maybe so; but how do you know?)
There you have the problem with economic expertise. How can it be tested? The answer seems to be: By wrecking the occasional country. "Those failed economists were creatures of their time," my patient preceptors explain. "Planning was all the rage, socialism had not yet been tested to destruction, and they had lost sight of the fundamental principles. Now if they had listened to Hayek …" Sure. But how do I, as a lay person, know that the economists of today are any less creatures of their time? How do I know that their theories will not look as daft forty years on as Harold Wilson's managerial socialism does now? I don't, of course, and neither do you, and neither do they.
Economics may be dismal, but it ain't a science. Sciences go forward pretty steadily. A scientific theory, once tested and shown to explain what needs explaining, without contradiction, will not fade in popularity, or be scoffed at for a century at a time while scientists go off and believe in contrary theories. My friends are all pushing David Ricardo's trade theories down my gullet. OK, but I can't help noticing that Ricardo's dates are 1772-1823. Since his time we have, for decades at a stretch, lived under the domination of non-Ricardian economists — mainly socialists of various kinds. Around 1930, pretty much every high-IQ person in the western world, including most of the economists, was a Marxist. Entire human lifetimes, several hundred million of them, have been lived under non-Ricardian economics. Now, of course, we are told that those policies were all wrong. But how can a lay person be sure that the economists of today are not all wrong? Some of the things they tell us sound uncannily like what the leaders of the old USSR used to tell their people. "Oh, you may be going through some hardship now, but you are helping to build a radiant future." Perhaps we are, and perhaps we aren't. How can we know?
Here is an economic issue of today, as it presents itself to an ignorant lay person (me).
The other day I checked myself out at a self-checkout station in my local supermarket. Suddenly these self-checkout gadgets are appearing everywhere — I notice that my local Home Depot has them too, now. I've resisted using them, partly because I don't like gadgets, partly out of proletarian solidarity with the cashiers, who are obviously going to be out of their jobs if this catches on big-time. The other day, though, I gave it a try, out of sheer curiosity, and it was surprisingly painless. I guess I'll be checking myself out more often in future. I guess a lot of supermarket cashiers will be out of a job.
My friends, the Economics 101 crowd, when I mention this, tell me about buggy whip makers. See, once upon a time people drove buggies, and they needed whips to keep the horses alert, and there were workers who made a living manufacturing buggy whips. Then along came the automobile, and buggy whip makers were surplus to requirements. "So they got other jobs!" my friends explain triumphantly.
I suppose they did. That, however, was then, and this is now. If low-skill jobs are melting away before my eyes, which they are (and setting aside for the moment the fact that our Administration has decided to import 800 million unskilled Third Worlders to do more of these vanishing jobs), what are these workers to do? Does the fact that the buggy-whip makers of 1904 got other jobs guarantee that the supermarket cashiers and C++ coders of 2004 will, too? Isn't linear extrapolation of past trends into the future supposed to be the besetting sin of amateur economic know-nothings?
Michael Lind, in a piece in the current Atlantic Monthly, writes of America's ability to keep inventing new kinds of middle class. The first middle class (says Lind) was the yeoman farmers of the early Republic, who looked down on what Jefferson called "greasy mechanicals." Then those greasy mechanicals became the inventors, engineers and factory workers of the industrial boom, and a new middle class was born — people of the Machine, who looked down on poor Bartleby the Scrivener scratching away at his ledger book in the counting-house. As industrial production automated and moved abroad, Bartleby in turn came into his own, and a third middle class of knowledge workers came up — the cube people of our own time, the ones now watching anxiously as their jobs drift off to Bangalore.
The assumption here is that like the buggy-whip makers, like Ethan Frome, like the middle-class engineer of 1960, the Cube People of today will go do something else, creating a new middle class from some heretofore-despised category of drudges. But … what? What is the next term in the series: farm, factory, office, …? Which category of despised drudges will be the middle class of tomorrow? Do you have any ideas? I don't. What comes after office work? What are we all going to do? The same thing Bartleby did, perhaps.
Well, well. Come what may, I am resolved that I shall no longer feel guilty about my resistance to economic theory. Most likely it is all a crock. Only mathematics is true. My own ignorance of the dismal science is in any case as nothing compared to the ignorance of others. A friend of mine who used to write a financial column for a downmarket London newspaper once told me that the question he was most often asked by readers was: Since the government controls the printing of money, why doesn't the government just print enough to make everyone rich? At least I understand that. It was all explained very clearly by Scrooge McDuck.