"Politically Impossible" - the new Godwin's Law?

A think tank job provides ample opportunity for policy wonk talk. In doing so, I have come across a familiar frustration arising when conversations end with, “it would be politically impossible anyway”. I call it the policy wonk version of Godwin's Law.

This exasperation reveals the bittersweet warfare between politics and economics. As diluted, desecrated and debased the discipline of economics has become, nothing sullies it more than the visibly aggressive hands of politics. This is excellently outlined in William Harold Hutt’s ‘Politically Impossible’.

Hutt, distinguished economist of the 20th century grappled with the conundrum of economic wisdom, public opinion and politics to posit a strategy of effecting sound economic policy.

Economists’ ideas are often unpopular among public opinion, but this isn’t at all surprising; nobody serious would recommend a referendum, for example, on whether we should introduce a cash flow destination tax. Despite the pessimism about economics’ ability to affect change, public economic opinion is shaped by economists, be it at our schools, in our philosophies, or from newspaper op-eds.

Our political cultures too, are shaped by economists. So there must be at least some onus on the intellectuals of the time, to tell the truth about what they genuinely believe to be right, at least in description if not prescription. Hutt asserts that this is the most principled and practical position too; persuade the  “editors, the columnists, the television and radio commentators, the academics, the clergy and the teachers” and you’ll have persuaded the public before you know it.

The effect of becoming subservient to political leaders and the civil service and taming down, or outright denying economists’ convictions comes to the detriment of not only the economy but often the economic status of the poorest. It is the responsibility of the economist to refuse to appease ‘political’ whims or bow down to apparent political impossibilities.

This is because the role of a politician often comes with contradictory goals. This isn’t however, just whether to divide X or Y amounts of money between hospitals and schools or the police force or defence, as we are often made to believe. It is a centuries old occupational inhibition that Hutt calls the ‘voter acquisition process’ which tints the political lenses to the same prescription as their biggest voter base.

Economists, on the other hand are not faced with this pressure; the nature of their role is not necessarily tied to gaining votes as it is with politicians. They should never excuse their own silence on grounds that their prescription is politically impossible. In contrast, the more economists tell the truth, the more politically possible freedom becomes.

Often, those with ideas deemed ‘unrealistic’ are disparaged, softly humiliated even for attempting to bring to light such ‘idealistic’ policies.  We know this all too well at the ASI. As Madsen often likes to say, "we propose things which people regard as being on the edge of lunacy. The next thing you know, they're on the edge of policy”. Yet this perpetuates a vicious cycle. It is never absurd to attempt the difficult. What is foolish is to overstate the political costs of the policy by understating the benefits to the public.

The benefit of democracy is that it is an efficient way of getting rid of bad governments who rule in the interest of a few, but there are problems inextricably inherent:

"The vice is that, because the masses have not learned how to discern rulers who will legislate for their advantage but if I seem to be disparaging the electoral wisdom of 'the masses', I am in effect criticizing the people who create mass opinion, both from within and outside the political arena.”

Take a basic idea such as income transfers for example. It is expected that politicians would want to maximise the votes they have relative to the income promised to be redistributed. This is usually done by virtue-signalling and implications that redistribution is synonymous to charity.

Nonetheless, this is not the case. Sometimes, income transfers which voters deem deserving are neither for the ‘poor’ nor for ‘good causes’. A prime example is the farming industry. To paraphrase Professor Brozen, most agricultural programmes such as the notorious United States Agricultural Assistance Program are ‘a poverty programs for rich farmers'. Hutt points out how since all farmers are usually included in such government run programmes (which naturally is created to yield votes) it does not take into account that most transfers, at least in the case of the US example are enjoyed by those with incomes well above average. While the argument against farm subsidies is a whole other subject, it is a simple example explaining the demonstrable obstacle that comes with bad politics even if you accept good economics.

Whether distrust of experts comes from Michael Gove, or international bestselling economist Ha-Joon Chang (who kindly asserts that ‘good economic policy does not require good economists’) this is not new phenomena. So, while for some, Economics may well only be extremely useful as a form of employment for economists, it is naive to assume this is the case for all economists.  The “editors,  the columnists, the television and radio commentators, the academics, the clergy and the teachers” ought to be more receptive toward economists and their ideas - providing they are well thought through, of course - to continue Hutt’s legacy.

Only then can politicians sustainably implement such policies and we have the luxury of being able to disobey the policy wonk version of Godwin's Law.