The popularity of economists inversely correlates to the health of the economy. Dismal times make the dismal science suddenly exciting, joyous, and even sexy.
This was certainly true during the 1930s and the 1970s. Those tough times, very much analogous to our own, made rock stars of John Maynard Keynes and Milton Friedman. That the applied prescriptions of the latter worked, and those of the former did not, has something to do with actual work, i.e., labor. Only people who don’t work in the real world could stubbornly tether themselves to theories that don’t work in the real world.
The central theme of my new book “Blue Collar Intellectuals: When the Enlightened and the Everyman Elevated America” is that both the intellectual and the everyman is better off when the two strive for an understanding of, and a conversation with, the other. Our present troubles stem in no small part from economists largely separated from the economy.
Take the examples of Keynes and the prolonged Great Depression, on the one hand, and Friedman and the eighties’ abrupt reversal of seventies’ stagflation, on the other. The thirties proved that economic theory divorced from experience is dangerous, if not to the theorist’s reputation then at least to the rest of us. The eighties showed that theory grounded in experience tends to succeed, if not in the minds of professors then at least outside of them.
John Maynard Keynes, the scion of an economics professor and social gospel do-gooder, was schooled at tony Eton and bucolic Cambridge. He toiled primarily in government and academia but not, significantly, in private enterprise. Keynes cavorted with the Bloomsbury Group, an avant-garde clique dedicated to free love and command economies.
Rahway, New Jersey, where Milton Friedman grew up, is about as far away from all that as it gets. Friedman was raised atop various in-home family businesses. He scooped ice cream at his parent’s parlor and sold fireworks by the roadside. He earned a state scholarship to Rutgers, where he waited tables for a meal, sold tradition-mandated white socks and green ties to freshmen door-to-door, and partnered with Barnes and Noble in a book-buy-back venture at semester’s end.
Milton Friedman wasn’t born in the University of Chicago department of economics. He succeeded there in part because he had participated in the economy.
This isn’t to say that Friedman’s days as an Encyclopedia salesman served his career better than his knowledge of mathematics or that Keynes would have been better off had his father scooped ice cream rather than taught economics. It is just to point out that people shielded from the repercussions of their ideas can afford to push bad ideas. Only in a field drowning in theory could Friedman’s common-sense wisdom that “the only relevant test of the validity of a hypothesis is comparison of its predictions with experience” be considered controversial.
Our economy now suffers from experts without experience. They are more Keynes than Friedman. The economic authorities derive their authority from outside the economy rather than from within it. They are play-by-play announcers accustomed to watching the game rather than the color commentator offering wisdom from his playing days. Paradoxically, it seems that the less one has participated in business, the more one thinks oneself equipped to order the affairs of businessmen.
Washington overflows with masterminds eager to tell private enterprise what to do without the slightest sympathy for what private enterprise actually does.
There’s the community-organizer-in-chief; his Treasury Secretary Timothy Geithner, a third-generation Ivy Leaguer who grew up in Asia and Africa but seems wholly ignorant of America; Austan Goolsbee—the name alone tells you that he was Skull and Bones—who replaced a Council of Economic Advisors chair that went back to Berkeley and was succeeded by one who came from Princeton; and their cheerleader Paul Krugman, the former Enron advisor whose work in the media-academia-government nexus puts him as far away from normal Americans as one can be while still living in America.
Blue collars suffer in this economy’s blues. The lack of blue-collar intellectuals does much to explain the suffering of both the economy and the blue collars. To loosely paraphrase working-class heroes Archie and Edith, Mister we could use a man like Milton Friedman again.
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