both men believed they knew how the world worked

I’m always here for anyone giving neoclassical economics the kicking it so rightly deserves; in that sense, this piece at Aeon is a bit measured for my tastes, but Bergin—like all the best journalists—leaves plenty of room for one to read between the lines.

If even the simple supply-and-demand curve, a staple of the orthodox neoclassical framework, fails on something so fundamental as wages and employment, why do economists cling to it? And why do policymakers keep listening to them?

Perhaps the answer to the first question lies in the second. In 2009, the then US president Barack Obama appointed Cass Sunstein as his regulation tsar, with a remit to help cut automotive emissions. Sunstein argued a carbon tax on fuel was the most efficient way to influence people’s behaviour because that’s what the neoclassical dogma says. The fact that the tripling of fuel prices in the previous decade had not fundamentally changed Americans’ car purchasing patterns apparently did not merit consideration. Neither did the fact that other regulatory measures imposed in Europe had led to a far larger increase in fuel economy with only a modest price signal via higher fuel prices.

In 2020, the UK government appointed Mark Carney – a former governor at the Bank of Canada and the Bank of England – as climate change adviser. Carney was quick to declare the problem to be essentially a mispricing of the cost of emitting carbon. Neither Sunstein nor Carney are experts in climate economics, let alone climate change. But being economists, both men believed they knew how the world worked and therefore had the toolkit to provide solutions to world’s gravest and most complex problems. Political leaders believed them. In effect, their self-confidence made them more employable.

My bold, there, deployed principally in order to give me a reason to repeat a favourite riff from over the years:

… always remember that the “con” in “con-man” is an abbreviation of “confidence”.

That’s not to say that every confident person is on the con, of course. (Nor that con-mannery is exclusive to men, for that matter.) But frankly—the times being what they are!—if you wanted a rule of thumb for working out who to trust, that’s as good a one as you could ask for.

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