Elizabeth Popp Berman Think Like an Economist: How Efficiency Replaced Equality in American Public Policy, is a historical account of how a wide range of policies enacted in Washington DC became – beginning in the 1960s – increasingly determined by the criterion of economic efficiency. As she points out (and as I do in Cogs & Monsters), this notion of efficiency is far from worthless, although many economists (and others) insist that it is.
A distinctive aspect of the book’s narrative is its emphasis on center and left as the source of this economic thought. Often, the dominance of economics in policymaking is attributed to the Chicago School, or neoliberals, or Reagan/Thatcher administrations that emphasize markets everywhere. I think the book makes a compelling case that the economic turn began earlier and gained significant momentum from the willingness to use government programs to solve social problems. The book therefore focuses on microeconomic issues – competition policy, cost-benefit analysis – rather than the macro battle of the monetarists against the Keynesians.
The transition that interests him is the shift to institutionalist economics before 1960, or even before the war: “Institutionalism emphasized the collection of quantitative data, but with an inductive and historical approach to the mind. He avoided formalism and tended to be progressive. After the war, however, Washington’s institutionalists lost their influence over time to two groups highlighted in the book: economists in RAND’s economics division and the new schools or programs of public policy that trained a growing number of civil servants in formal “RAND-lite” education. modeling approaches; and anti-trust and I/O economists who – even before the full flowering of the Chicago School – brought neoclassical economic analysis emphasizing the role of markets in allocative efficiency in place of structuralist approaches previous. The first group grew in step with the Great Society years, along with other political institutes evaluating social programs. The Reagan years cemented the role of economic thought by adding more cost-benefit analyzes of government interventions, favored by corporations to limit “interference” in their actions.
As the concluding chapter points out, there emerged a divergence along partisan lines in terms of the adoption of economic thought: Democrats consistently embraced it and “allowed the economic style to define the boundaries of legitimate political debate” . But Republicans “continued to use the economic style strategically and flexibly, adopting it where it helped advance their goals and rejecting it where it conflicted with more core values.” I wonder if there is less here for the centre-left now?
The book is entirely US-focused; it would have been interesting to read some reflections on the international diffusion of the economy style. The other thing that eluded me was the interplay between economic thinking in government and how the economy itself changed in the post-war period. How did the role of economists in policy-making contribute either to the era of rational expectations of the late 1970s/early 1980s, or to the later applied turn? That said, it’s a nice study of how ideas work in politics, and the key point about the consistent adoption of economic-style thinking by the left in contrast to the intellectual flexibility (cynicism?) of the right. is very interesting.