Economics: the futile science?
To mark the 85th birthday of Thomas Sowell, Hoover Institution economist and occasional Fraser Institute contributor who’s written about a book a year since 1971 and hundreds of articles in a career dedicated to clear thinking about economics, Kyle Peterson of the Wall Street Journal recently made him the subject of The Weekend Interview. The premise of Peterson’s piece was that the quality of economic thinking displayed in U.S. politics has not improved over the last few decades. Sowell himself said he was “tempted to think it’s gone down,” which prompted Mr. Peterson to observe that “maybe economics isn’t merely a dismal science, but a futile one.”
It’s not dismal at all, even if some of us who practice it are dour types, attracted perhaps by its Scottish origins. The “dismal” tag was pinned on us by Thomas Carlyle (a Scot), after reading Thomas Malthus’ gloomy population analysis in the early 19th century. In fact, these days we economists tend to be very optimistic about the future, certainly compared to the ghastly visions of environmentalists and others. We’re not quite the “giddy” science, but anyone who looks at the economic progress experienced, now almost worldwide, since Adam Smith’s day can only conclude, one, it is astonishing and, two, there’s no real reason for it not to continue.
But is economics a futile science? The virtues of competition and openness, both domestic and foreign, need constant reinforcement in the face both of self-interest, which can be counted on never to abate, and new vogues, such as localism, which dress up protectionism in yoga pants and navel rings. And our science of purposely not controlling things faces new challenges from other fields whose practitioners tilt hard toward instrumentalism.
Even so, there are encouraging signs, green shoots of good sense, in Canadian politics. Two out of three parties in the current federal election at least claim to aim for balanced budgets, and not off in the medium term but right away: this year in the case of the governing Conservatives, next for the social-democratic New Democrats. The NDP is so keen to establish its credentials for fiscal sobriety it has made a 2015-16 balance a firm pledge—even as it decries an economic slowdown that normally would have it recommending sustained fiscal stimulus. To be sure, deficit concern may be more a reflection of the good sense of middle-ground voters the parties are fighting over rather than the parties themselves. But still.
Deficits aren’t everything, of course. What really matters is the size of government. But even here the NDP leader, Thomas Mulcair, spent part of the first leaders’ debate explaining the hurtful effects of high marginal income tax rates. Under the Liberal plan to raise the top federal rate from 29 to 33 per cent, the top combined rate (federal and provincial) in New Brunswick would be 56 per cent, which would make it hard, Mulcair said, to attract doctors and others to the province.
For a social democrat to be explaining the harmful effects of higher marginal tax rates marks real progress. Now if only that party could come to understand the bad effects of higher corporate tax rates, which it favours, economists’ work would be almost done.
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