Academic journal article
By Beaulier, Scott A.; Boyes, William J.; Mounts, William S.
American Economist , Vol. 52, No. 2
Do economists in government encourage or discourage the growth of government? Since economists tend to be more skeptical of government intervention in markets (Blendon et al. 1997), one would expect government spending to slow when more economists are employed by the government. In practice, however, economists have struggled to slow government growth Economists in government are not heroic defenders of market capitalism. In fact, when it comes to constraining government, they are no better, and sometimes worse, than other policymakers.
The reason that a government sometimes grows when more economists are in government is straightforward: while economists might, in general, be more sympathetic to markets and competition, they are also more knowledgeable about bureaucracy, rent-seeking, and interest group formation. Thus, the effect of economists in government is ambiguous. On the one hand, economists might be promoters of market solutions; on the other hand, however, economists are also aware of their place in the public bureaucracy. In this paper we call into question the way economists in government should be viewed. Maybe John Maynard Keynes had it right all along when he wrote (1935, 383),
... the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
Although the passage above is one of Keynes's most frequently cited statements, it is usually treated as nothing more than a great turn of phrase. We think there is more to this statement. If economists have as much sway as Keynes thought, then public attitudes and public policy should be affected by the growth or decline in the number of economists relative to the total population. Are the number of economists in government and the public's attitude towards government related? Or, are they simply concomitant events not foreseen by Keynes?
The most sympathetic view of economists in government models economists as experts interested in promoting economic efficiency (Nelson 2002). But, as was first pointed out by Buchanan and Tullock (1962), politicians and political actors--regardless of whether they enter government with a political science, sociology, or economics background--are no different from ordinary people. When presented with the opportunity to increase their own utility, even the best economic advisors in government will put their own interests ahead of the social good.
There is plenty of historical evidence of economists in government failing to roll back the state's power. Rather than blocking big government, economists have often opted for middle-of-the-road or decidedly statist policies. It is still hard to believe that economists recommended and defended price controls to President Nixon and then continued to support their use in petroleum markets through the Carter administration; however, their motivation for doing so was that they stood to benefit by gaining the loyalty and support of the president. At other times, well-intentioned economists stand by as policies get watered down to such an extent that reforms end up being worse than the status quo.
In this paper, we argue that our understandings about economists in government are often mistaken. In particular, economists in government are ineffective at constraining government's growth. If anything, they are cogs in the machinery of government. Their best efforts at promoting efficiency are thwarted by bureaucracy. Over time, government economists become more apt at passing regulations and new spending programs, and they become less effective at promoting efficiency. …