Why We Must Resist Economic Conventional Wisdom

Summary

In this engaging conversation, Dani Rodrik, a professor at Harvard University, discusses the role of economists in shaping inclusive prosperity. He highlights the need for economists to move beyond conventional wisdom and engage in policy-related work that balances efficiency with values like inclusion and equity. Rodrik elaborates on his efforts to create a platform, 'Economists for Inclusive Prosperity,' which aims to encourage younger economists to contribute to public policy debates. The discussion touches on the importance of rethinking economics education, the value of interdisciplinary approaches, and the evolving role of economists in addressing global challenges.

Takeaways

• 😀 Conventional wisdom often oversimplifies complex issues and can lead to wrong conclusions, as it tends to eliminate the nuances of reality.
• 😀 Dani Rodrik emphasizes a resistance to conventional wisdom, often challenging mainstream ideas, especially around globalization.
• 😀 The founding of 'Economists for Inclusive Prosperity' (EfIP) aims to engage economists in addressing key societal challenges, beyond just economic efficiency and growth.
• 😀 Economics has traditionally been dominated by a narrow view focused on efficiency, with less emphasis on values like inclusion, equity, and social opportunity.
• 😀 EfIP seeks to highlight the work of younger economists engaged in public issues, breaking down professional barriers that restrict involvement in policy discussions.
• 😀 Rodrik criticizes textbooks for presenting overly simplistic views of economics, which indoctrinate students into a narrow understanding of markets.
• 😀 Economic education should provide tools to think critically about market and government roles without indoctrinating students into a one-size-fits-all model.
• 😀 There's a call for economic models to reflect real-world complexities, acknowledging that markets are just one potential solution to broader social dilemmas.
• 😀 Rodrik advocates for a balanced approach that incorporates both decentralized market solutions and centralized coordination mechanisms when necessary.
• 😀 'Economists for Inclusive Prosperity' is an academic initiative aimed at involving younger economists in public discourse, though it remains exclusive to the academic community for now.
• 😀 The group aims to bridge the gap between scholarly economics and public policy, recognizing the need for broader engagement from economists in societal issues.

Q & A

What does Dani Rodrik think about conventional wisdom in economics?

Dani Rodrik expresses a resistance to conventional wisdom, especially when it becomes overly simplified and presented without qualifiers. He believes that once an idea becomes conventional wisdom, it's often wrong due to the absence of nuance and context.

Why did Dani Rodrik found Economics for Inclusive Prosperity (EfIP)?

Rodrik founded EfIP to demonstrate that economists can be part of the solution to societal problems, particularly those related to inclusion, equity, and opportunity. He felt that economists were often perceived as focusing only on efficiency and growth, neglecting other important social values.

What role do younger economists play in EfIP?

Younger economists play a central role in EfIP, as they are encouraged to engage in policy-related work early in their careers. The initiative aims to involve them in public discussions and to highlight the diversity of perspectives within the economics profession.

How does EfIP aim to change the economics profession?

EfIP aims to change the professional norms of economics by encouraging economists, particularly young ones, to engage with real-world policy issues. It challenges the idea that economics should be purely academic and not concerned with public matters.

What does Dani Rodrik think about the relationship between markets and government?

Rodrik believes in finding a balance between decentralized market mechanisms and centralized coordination mechanisms, such as government intervention. He emphasizes that both have roles in economic coordination and that the boundaries between them must be flexible and dynamic.

Why does Rodrik critique the simplification of economics in textbooks?

Rodrik criticizes textbooks for presenting an overly simplified view of economics, focusing too much on markets and rational selfish behavior. He argues that this approach doesn't capture the complexity of real-world economic challenges and misrepresents the full scope of economic thought.

What is the purpose of EfIP's policy briefs?

EfIP's policy briefs aim to communicate important economic ideas and research to a broader audience. These briefs cover a wide range of topics, including social policy, labor policy, international trade, taxation, and political economy, with the goal of influencing public debate and policy.

How does Rodrik view the role of political institutions in economics?

Rodrik views political institutions, power, and distribution as crucial elements in shaping economic outcomes. He believes that understanding the rules behind markets is essential, as these rules are made by people and influenced by political dynamics.

What does Dani Rodrik believe is missing in the economics profession?

Rodrik believes that the economics profession often misses the balance between efficiency and broader social values like inclusion and equity. He advocates for a more nuanced understanding of economic issues, one that acknowledges the real-world complexities and challenges faced by societies.

Why does Rodrik think younger economists should engage in public policy debates?

Rodrik believes that younger economists have fresh, insightful perspectives and that their engagement in public policy debates can enrich discussions. He argues that the public often hears a narrow view of economics, and involving younger scholars can help diversify the perspectives being represented.