First, Assume the Can Opener Is Broken

And more from this week...

On a feature panel at the American Economic Association’s annual conference last Friday, I spoke about the “great level of concern that economists have not done a very good job over the past 25 years advising policymakers… All of which has led to a situation where I think people rightly look at what economists are recommending and say, why on earth should we expect that to be true?”

This prompted a very interesting discussion, which the New York Times highlights in your one thing to read this week: “Economists Are in the Wilderness. Can They Find a Way Back to Influence?”

“When economists gathered in San Francisco this month for the annual meeting of the American Economic Association,” writes Ben Casselman, “there was a sense that their famous confidence — critics would say arrogance — had been, if not shattered, certainly dealt a body blow. What was the point of their careful data-gathering, their complex models, their intricate theories if no one was going to listen to their advice anyway?”

What follows is a remarkable psychological study of a profession in crisis. A few of the quotes from the story:

• “We’ve always been bad at forecasting. … Does that hurt our credibility? Probably.” - Greg Mankiw, Harvard University

• “It matters that the profession has failed society in a couple of ways. I think it’s important that when policy goes awry, people own up to what happened.” - Karen Dynan, Harvard University

• “We’re all sitting up here trying to diagnose what went wrong. I do feel that, as a profession, our understanding of inflation is not nearly where it needs to be.” - Christina Romer, University of California

• “Economists need to do a better job about understanding the problems people care about, about being innovative in developing approaches to them and about being clear about uncertainty.” - Jason Furman, Harvard University

• “Before there was more of a sense of ‘all economists say X,’ and now I don’t think you can necessarily say that.” - Ioana Marinescu, University of Pennsylvania

But my favorite part is a pair of paragraphs from Casselman, printed back to back, attempting to rebut my own critique:

Many economists, unsurprisingly, reject much of Mr. Cass’s analysis. They argue, for example, that the decline of manufacturing was at least as much a result of technological change and global forces as American trade policy, and that tariffs will wind up only hurting the people they are intended to help.

And in any case, they argue, Mr. Cass presents an outdated caricature of who economists are and what they believe. Perhaps in the 1980s and ’90s, economists overwhelmingly favored an agenda of lower taxes, reduced regulation and unfettered globalization, but in recent decades the field has evolved to take a more nuanced and varied view of these subjects.

Is there a consensus or isn’t there? Do economists reject the claim that American trade policy caused the decline of manufacturing, or do they now have a nuanced and varied view of globalization? Is free trade “the closest thing to a universally held value among economists,” as Casselman writes elsewhere, or is Ioana Marinescu right that, “Before there was more of a sense of ‘all economists say X,’ and now I don’t think you can necessarily say that”?

It's a fascinating conundrum: ‘tis better to defend a failed consensus to the death, or to deny there was a consensus at all? As Jason Furman says of Kim Clausing’s book, Open: The Progressive Case for Free Trade, Immigration, and Global Capital, “Everyone in this room agrees with your book. No one outside of this room agrees with your book.” In the short run, breaking ranks within that room is the personally and professionally painful course. In the long run, it is the discipline’s only hope.

THIS WEEK AT AMERICAN COMPASS

It’s the last week of This Week at American Compass! Next week we’ll be launching Commonplace, a new magazine focused on what matters in America—the economic, political, and cultural concerns that shape the trajectory of the American experiment and the experiences of ordinary Americans. Most of what we’ve typically published on The Commons at American Compass will appear at Commonplace in the future, along with more frequent commentary and essays from a fantastic collection of writers. If you have not already, please follow @commonplc and subscribe for regular updates at commonplace.org.

It Can’t Just Be DOGE: “There’s a reason the effort is so popular with ordinary Americans: wasteful government spending is undoubtedly a problem,” writes our Drew Holden. “But we shouldn’t confuse DOGE with a solution to wasteful government writ large.”

And this week on the American Compass podcast, we bring you Part 1 of the panel discussion featuring Jason Furman, Kim Clausing, Richard Burkhauser, and yours truly that is featured in the New York Times story discussed above. Part 2 will be out on Monday.

WHAT ELSE SHOULD YOU BE READING?

Technology for the American Family | Jon Askonas & Michael Toscano, National Affairs

This is a fascinating and important essay that you should read in full. It helpfully situates the current debates over social media (and, increasingly, artificial intelligence), within the broader context of past waves of technological change that have affected the shape and function of the family:

The family as an institution is amenable to many different kinds of social organization and technologies of production, but not every kind. What must society's underlying technological order feature for the family to survive? What kinds of technologies are conducive to its flourishing?

Surveying a broad array of thinkers who have contemplated these questions, from Thomas Jefferson and Matthew Crawford to Richard Sennett and Pope St. John Paul II, one arrives at two high-level conclusions. First, the technological order must support a real functional role for the family, one in which men and women are drawn together in a mutual reliance that sustains the raising of children. Second, technology must lend itself to the kinds of work that bolsters the virtues and gives people autonomy and control over their families. We will examine each of these in turn.

Observations from India | Tanner Greer, The Scholar’s Stage

Foreign policy discussions increasingly, and rightly, focus on the rising conflict between the U.S. and China. But the flipside, which gets far less attention, is the rising importance of a new set of alliances—with India and Japan in particular. Here, Greer takes a look at what India’s own conflict with China means for its potential role as a core U.S. ally.

Adam Smith and the Invisible Hand: From Metaphor to Myth | Gavin Kennedy, Econ Journal Watch

I have a piece forthcoming in Finance & Development, the IMF’s quarterly magazine, on the misunderstanding of Adam Smith’s “invisible hand” and the consequences for economics. In writing it, I came across this fascinating piece tracing the history of the metaphor (not originally Smith’s), the remarkably limited role it played in Smith’s work, and the way others misappropriated it to contort Smith in service to their own ideology. This is a recurrent pattern in the study of economic history: the conventional wisdom of what “everyone knows” is often built on shaky foundations, or no foundations at all.

Bonus link: On a related theme, there’s an interesting new book by David Lay Williams called The Greatest of All Plagues, looking at the dim view of greed taken by everyone from Plato and Hobbes to Smith and Mill, and the remarkably recent provenance of the idea that inequality does not matter so long as everyone is lifted out of poverty. Dip your toe in with this review by Nick Romeo in the Washington Post.

The Challenge for Made-in-America Bikes? Made-in-China Parts | Natasha Khan, Wall Street Journal

Brings to life the way supply chains operate in practice, the damage done by abandoning them overseas, the challenge of bringing them back, and the importance of thinking holistically about rebuilding a domestic industrial base rather than focusing narrowly on “strategic goods.” There’s no halfway reindustrialization, where you just make “the aircraft carriers” or even “the semiconductors” while ignoring the materials and the machine tools and the screws.

Bonus link: Really good thread from Glenn Luk on the new fronts opening in the global trade war as China confronts the threat of supply chains shifting to India.

The Honorable Parts | Spencer Wright, Scope of Work

Hat tip to Leah Libresco Sargeant for suggesting this fascinating profile of Chris Payne, who photographs manufacturing processes. You don’t even have to read it, you could just scroll through the photos, but the story itself is also a worthwhile look at the skill and complexity involved in modern manufacturing.

Enjoy the weekend!