Sometimes the People Need to Call the Experts

A populist approach to governance might work in some areas, but not technical ones like the Fed.

Not the best way to pick a Cabinet.

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William F. Buckley famously said he would rather be ruled by the first 2,000 people listed in the Boston telephone directory than by the faculty of Harvard University. The government about to take over in Washington has more billionaires than the Boston of Buckley’s time, but it seems willing to test the theory that academics can be dispensed with for the most part. Rather than give Buckley's comparison a simple thumbs up or down, I find it more useful to ask when we would side with the citizens and when with the faculty.

I prefer the citizens for broad questions of policy and society. The citizens are more likely to be in touch with the concerns of everyday life, and less likely to embrace utopian schemes. They are more likely to be politically and culturally diverse. Overall, they are more conservative in both the "small c" sense of that word and the more political sense. 1  By one estimate, 84 percent of campaign contributions from Harvard faculty in 2014 went to Democrats.

For better or worse, direct rule by Buckley’s 2,000 American citizens probably would mean a slower pace of immigration, less emphasis on free trade, more law and order politics, and a blunter form of nationalism in foreign policy.

Those don’t match my policy preferences (I am more of a globalist, and also a professional academic), but I fear what the Harvard faculty could bring. I can imagine an America closer to Bernie Sanders’s vision, with single-payer health insurance, levels of taxation exceeding 50 percent of GDP, levels of immigration unsustainable with a large welfare state, too many aggressive attempts to legislate equal treatment for various groups, excessive fondness for a universal basic income, and too many humanitarian interventions abroad.

I worry that rates of innovation and economic growth would fall, making that a bad deal for the world as a whole. The faculty would also underestimate the backlash from the American public for their social engineering. It’s a good rule of governance that policy cannot race too far ahead of the citizenry, and I don’t view faculty as a class of people well-suited for that kind of humility.

Nonetheless, when it comes to the nuts and bolts of governance, typically I would prefer to be ruled by the Harvard faculty, even recognizing the biases of experts. They understand the importance of applying expertise to complex problems, and they realize many issues do not respond well to common-sense fixes. The citizenry usually cannot make good decisions, or for that matter expert appointments, when technocracy is required.

If I had to pick a single area where faculty rule would be most appropriate, it is the Federal Reserve. (The Environmental Protection Agency would be another candidate.) Very few citizens understand such basic concepts as how inflation rates are calculated, the differences between real and nominal rates of interest, or how the shadow banking system is supposed to work, much less tripartite repurchase agreements or the Basel capital standards. The complexities increase every year, and it is no accident that the last two Fed chairs have been drawn from the highest ranks of academic economists.

In contrast, the citizenry probably would put forth various populist arguments for "hard money" and "easy money." It’s not that those claims are always wrong, rather each stands a chance of being right in some particular circumstances, and the populist approach doesn’t have any way to differentiate. For that you have to call in someone who specializes in monetary economics, a field with many counterintuitive conclusions.

I worry that the current debate over the Fed is headed in the wrong direction, namely away from reliance on expertise. For instance, financial analyst Danielle DiMartino Booth has argued that the Fed should put CEOs on its Board of Governors and more generally purge itself of many professional economists. She is not calling for the rule of the Boston citizenry, but still she seems comfortable pushing academics into a narrow corner, on the grounds that professors are basically out of touch. But compared to whom or to what?

The general trend in policy-making is more worrying yet. President-elect Donald Trump has nominated businesspeople to important economic posts, which is not intrinsically objectionable, but he has simultaneously shown aggressive disdain for academic advice. The main Ph.D. economist in the group, Peter Navarro, has economic views that basically nobody in the mainstream agrees with, and he’s been asked to lead a council on trade policy -- another technical area where the experts really know something. Trump’s flirtation with the discredited idea that vaccines cause autism is another worrying sign.

The real issue here isn’t intellectuals versus populism writ large. There is a time and place for populist sentiment, but an excess can be counterproductive on its own terms. As expertise is pushed out the door, the citizenry itself gets a bad name, precisely when we most need it to step up to the plate and demand some excellence.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

  1. In Buckley’s time, Boston was more of a middle class town than today and thus the contrast was more striking. Today’s Boston helped elect a Harvard faculty member -- Elizabeth Warren -- to the Senate.

To contact the author of this story:
Tyler Cowen at tcowen2@bloomberg.net

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Stacey Shick at sshick@bloomberg.net

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