It's The Economists, Stupid

Interest rates. Unemployment. GDP. Markets. Austerity measures. Economists tell us what we, as societies, can and can't afford. But how do they decide? What values are at play? IDEAS producer Mary O'Connell speaks with two economists about how modern mantras on the economy limit our choices and shut down civic debate.
(Kevin Coombs/Reuters)
Listen to the full episode53:59

Interest rates.  Unemployment. GDP.  Markets. Austerity measures.  Economists tell us what we, as societies, can and can't afford.  But how do they decide? What values are at play? IDEAS producer Mary O'Connell speaks with two economists about how modern mantras on the economy limit our choices and shut down civic debate. **This episode first aired September 9, 2015.

Chief Economist of The Australia Institute Richard Denniss argues for an open and honest approach in economics, and thinks that many experts are paid to say things in public which they don't even believe privately. 1:56

Participants in this episode: 

  • Dr. Julie Nelson,Department Chair and Professor of Economics, University of Massachusetts, Boston. 
  • Dr. Richard Denniss, Chief Economist, The Australia Institute, Canberra City, Australia.

As a group, economists don't have a great track record: they largely failed to predict the oil crisis of the 1970's, the dot-com bubble, the U.S. housing collapse.  Even the O.E.C.D. -- the Organization for Economic Co-operation and Development -- admits its forecasts have been way off.  One of its staffers even conceded: "maybe we suffer from group think".  Little wonder that economics has been known as "the dismal science" since the 19th century. 

John Kenneth Galbraith once explained that, "Economics is extremely useful as a form of employment… for economists".  However, there are deeper, more serious fissures.  Economists explain how the turbulence of housing markets, mortgage rates, inflation and income inequality affect us all.  But who are they speaking to and whom do they represent?

Julie Nelson
Feminist economist Julie Nelson believes most economists no longer represent the public good because they're operating out of self-importance and greed.  "You can find economists shilling for all kinds of groups.  If they're not consciously shilling, they're incredibly careerist."  The University of Massachusetts Department Chair and Economics professor thinks the media obsession with the state of financial markets doesn't tell us how we're doing as a society.  "Maybe we should be asking, who's eating and who's not."  Richard Denniss concurs.  He's Chief Economist for the independent think tank, The Australia Institute, and calls himself a "whistle-blower economist". He believes we've come to view markets as gods.  "The market does this, the market does that… as if it's something magical. It's really just a small group of people with a lot of money who are gambling on making more."   
Richard Denniss
Richard Denniss and Julie Nelson believe current economic group think produces a mantra that supports cutting taxes, reducing deficits, massive down-sizing, bloated CEO salaries, and "shrinking social programs till they scream".   Julie Nelson concludes these trends not only generate more poverty; they hollow out the middle-class, and that's bad for capitalism.  She says: "this was figured out a long time ago.  Henry Ford wanted to pay a wage to his workers that would allow them to buy the kinds of cars they were making.  And that makes a whole lot of sense.  If you want a market for your product, you have to have people who can afford to buy that product.  But that basic logic is drowned out by all the austerity rhetoric that we're hearing from industry and government these days".  

Reading List:

  • Affluenza: When Too Much is Never Enough, by Richard Denniss and Clive Hamilton, Allen & Unwin, 2006. 

  •  Economics for Humans, by Julie Nelson, University of Chicago Press, 2006. 
  • The Skeptical Economist: Revealing the Ethics Inside Economics, by Jonathan Aldred, Routledge, 2010.

Related Websites: 

**This episode was produced by Mary O'Connell


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