Economists are arguing over how their profession messed up during the Great Recession. This is what happened.

Over the past two weeks, academic economists (and a couple of bystanders) have been arguing about why economics wasn’t able to guide policy better during the Great Recession. Some blame nonacademic economists. Others blame prominent academics. Others still say that economic advice doesn’t really matter, because politicians will pay attention only to the advice that they wanted to hear anyway.

John Quiggin and I have a forthcoming article in International Studies Quarterly that tackles this question, asking why politicians were influenced by a key group of economists early in the Great Recession but not in the later part. Our argument is that the key factors didn’t have much to do with the quality of the advice. Instead, what was crucial was the perceived degree of unanimity among economists. When the profession of economics appears to be speaking with one voice, politicians are more likely to listen, sometimes even when they don’t want to. When the profession appears to be split, politicians are much better able to pick and choose.

Unfortunately for economists, this offers incentives to politicians who don’t much like what economists are saying to elevate and promote dissident economists to create the appearance of intellectual division.

This was the fight

The recent argument began with a disagreement between Unlearning Economics, a blog that is critical of mainstream economics, and Simon Wren-Lewis, a left-leaning macroeconomist, over whether mainstream economics was partly responsible for the turn toward economic austerity during the Great Recession. Unlearning Economics said that it was. Wren-Lewis then retorted that the actual villains were “politicians, with help from City economists [i.e., economists working for private firms in the city of London], [who] started scare mongering about the deficit.” This led Brad DeLong, a Berkeley economist who was prominent in debate during the recession to argue that it wasn’t just politicians and the private sector, but also prominent academic economists who had made the case for austerity. In DeLong’s description: “The fact is that the ‘mainstream economists, and most mainstream economists’ who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side.”

Read the full piece at The Washington Post