Mere Economics Isn't - Ideology
In this series of posts, I'll describe five things that mere economics is not. Note, this post was written with Scott Burns and was originally published at The Independent Institute.
Ideology
Economics also isn’t an ideological discipline.
Ideologies tell people what policies they should support to achieve their political and ethical goals. Should voters agitate for policies that seek to reduce income inequality, even if that goal comes at the expense of reduced economic growth?
Economics qua economics is silent on this question.
The so-called “dismal science” is positive, not normative. Its analysis is descriptive, not prescriptive. It teaches us about what is, not what ought to be. Economics tells us what tradeoffs we face, not which tradeoffs are worth making.
Consider a policy aimed at reducing inequality: capital gains taxes. Economics teaches us that capital gains taxes discourage people from investing their savings. As a result, there will be fewer savings available to finance business investments, other things equal.
Economics cannot, however, tell us whether those tradeoffs are worth bearing. Whether or not a government should tax capital gains is a normative question. It is best suited for a course on ethics or political philosophy, not an economics class.
Critics often accuse economists of being apologists for free market ideology, since economists so frequently highlight the tradeoffs associated with government intervention.
Yet, such criticisms notwithstanding, economics is ideologically neutral. Good economists point out the tradeoffs associated with policies; they don’t tell you which policies to support.
It’s true that economists are more likely to favor market-oriented policies and to be wary of the efficacy of regulation than are their counterparts in other disciplines. This support, however, doesn’t stem from dogmatic adherence to “laissez-faire” ideology. It flows from a dogged insistence that no policy ledger is complete until it has taken a full accounting of the costs of an action.
In any case, economists’ apparent affinity for markets isn’t ideological. It’s logical. While it’s relatively easy to identify benefits of government intervention, economics trains our vision on the “unseen” costs, the drawbacks, of such actions.