The anti-economists have overreached
Before you criticize something, at least try to understand it.
Oren Cass, the founder of the think tank American Compass, is probably the leading intellectual voice of MAGA economics. In a recent blog post, he discusses the question of whether economic forces are like gravity. He writes:
[Y]es, the physical world is governed by the laws of gravity. But it is not governed only by the laws of gravity. Indeed, anyone who thought he could reliably predict the motion of bodies with knowledge only of gravity would be something of a moron.
Oh, really? Would such a man be a moron? Then please explain to me how Edmond Halley, using only his knowledge of gravity, and having no understanding of any of the other forces of nature, was able to predict a solar eclipse in 1715 to an accuracy of four minutes:
In 1715…a total solar eclipse was visible across a broad band of England. It was the first to be predicted on the basis of the Newtonian theory of universal gravitation, its path mapped clearly and advertised widely in advance. Visible in locations such as London and Cambridge, both astronomical experts and the public were able to see the phenomena and be impressed by the predictive power of the new astronomy…Wikipedia will tell you that this is known as Halley’s Eclipse, after Edmond Halley, who produced accurate predictions of its timing and an easily-read map of the eclipse’s path. Halley did not live to see the confirmation of his predictions of a returning comet – a 1759 triumph for the Newtonian system – but he was able to enjoy his 1715 calculations, which were within 4 minutes[.]
Cass — who holds a Bachelor’s in political economy from Williams College and a law degree from Harvard, but has no apparent training in physics — confidently assures us that anyone who attempted what Edmond Halley did would be “something of a moron”.
This is the kind of insult that says less about the target than about the person doing the insulting. Before you make confident assertions about a field of study, you owe it to your readers to attempt to understand that field at least a little bit.
A botched physics analogy is harmless enough. But Cass’ main argument isn’t about gravity at all — it’s about economics. And it’s here where his willingness to make grand pronouncements about whole fields of study gets him into real trouble.
Cass’ post is a response to a Wall Street Journal op-ed by Matthew Hennessey. Hennessey, in turn, is responding to J.D. Vance’s declaration that markets are a “tool”. Hennessey argues that markets are more like a force of nature than a tool.1 Cass is trying to rebut Hennessey, criticizing market fundamentalism while also taking a swipe at the entire discipline of economics.
Now, I am no fan of market fundamentalism, and I spent my early years as a blogger bashing the field of (macro)economics — often with even more scorn than Oren Cass employs in this post. But I like to think that when I did this, I generally stuck to making specific criticisms about actual economic models and methods.
A lot of econ critics don’t do this. Back when I was at Bloomberg, I used to have fun poking at the grandiose broadsides against economics that periodically appear in British publications like The Guardian or The Telegraph. These critiques tend to repeat the same old nostrums over and over — economics isn’t a science, it doesn’t do controlled experiments, its assumptions are bad, its theories don’t work, people can’t be predicted like particles, etc. etc.
There are grains of truth to these boilerplate critiques, but the people who write them generally haven’t bothered to pay much attention to what modern economists actually do. Here’s what I wrote in a Bloomberg post back in 2017:
[E]conomists have developed some theories that really work. A good scientific theory makes testable predictions that apply to situations other than those that motivated the creation of the theory. Slowly, econ is building up a repertoire of these gems. One of them is auction theory, which predicts how buyers will bid for things like online ads or spectrum rights -- Google’s profits are powered by econ theory as much as by search algorithms. Another example is matching theory, which has made it a lot easier to get an organ transplant. A third is random-utility discrete choice theory, which is used in everything from marketing to transportation planning to disaster preparedness.
Nor are econ’s successful theories limited to microeconomics. Gravity models of trade, though fairly simple in nature, have proven very successful at predicting the flow of international trade.
These and other successful economics theories can be used confidently in a wide-variety of real-world situations, by policy makers, engineers and businesses. They prove that anyone who claims that econ theories will never be reliable, because they deal with human beings instead of atoms, is simply incorrect.
Yes, studying mass human behavior is different than studying the motions of the planets, in a number of important ways. But the intellectuals who loftily declare that economics “isn’t a science” don’t seem like they’ve bothered to think very hard about what those differences are, or when and why they matter.
For example, what do the people who write that “economics isn’t a science” think about natural experiments — the empirical technique that has taken over much of econ research in the last three decades? Do they think that these are always less informative than lab experiments in the natural sciences? And if so, why? What do they think are the strengths and weaknesses of natural experiments relative to lab experiments, and how much can they help us test theories and derive general principles about how economies work?
I suspect that very few of the econ critics have thought seriously about these questions, and that far too few have even heard of natural experiments. Certainly, if they have, they must have some good reason for never mentioning them. And certainly they must have good reasons for never talking about auction theory, matching theory, discrete choice models, gravity models, or any of the other economics theories that prove themselves in the real world day in and day out. Right?
But the screeds in The Guardian or The Telegraph are downright erudite compared to what Oren Cass serves up in his own criticism of econ. Here’s what he writes:
Economics is nothing like physics. Its principles are not generated from repeatable experiments, nor do they hold consistently across space and time. Trusting otherwise is a quite literal example of the blind faith and fundamentalism at issue.
That’s it. That’s literally Cass’ entire criticism of the field of economics in this post. He spends the rest of the post pulling quotes from conservative political thinkers — G.K. Chesterton, Robert Nisbet, Yuval Levin, Roger Scruton, etc. — who urge us to value things like community, tradition, etc., or who assert that markets can’t work without a robust social fabric. Those are interesting things to think about, to be sure, but they don’t bear on the question of what, exactly, Cass thinks is so inadequate about economics.
Cass does not name or criticize any specific economic theories in this post. He cites zero papers and names zero researchers. I looked through a bunch of his other posts about economics, and I almost never found him naming or criticizing any specific theories in those posts, either. In one post, I did find him criticizing the theory of comparative advantage, and he did make one useful, substantive point about it — that comparative advantage can’t explain trade deficits and surpluses. He’s right about that. That’s by far the most substantive, knowledgeable criticism of economics that I could find on his blog.
If Cass is aware of any economic models other than comparative advantage and the basic Econ 101 supply-and-demand model, he plays his cards close to his chest. He doesn’t mention gravity models of trade, which some economists use to try to predict the effects of tariffs (with some success). Nor does he mention Paul Krugman’s New Trade Theory, which implies that countries can sometimes benefit from targeted tariffs against other countries’ national champions (but which wouldn’t recommend the kind of broad, sweeping tariffs Trump has tried to implement).
Neither of those theories is outside the mainstream; both were invented by economists who went on to win the Nobel. Why doesn’t Oren Cass mention them, or grapple with their implications, or use their existence to inform his criticisms of the field of economics? My guess — and this is only a guess — is that Cass is completely unaware that these theories exist, that he has no interest in discovering whether such theories exist, that if he did discover them he would have no idea how to evaluate them, and that even if he did know how to evaluate them he would have no interest in doing so.
A sophisticated understanding of what mainstream economics actually says and does is not useful to Oren Cass’ project, which is to denounce intellectual rivals within the conservative movement. If you want to actually figure out how trade works and what tariffs do, it would help to look at the research literature. If you didn’t get the training needed to understand that literature, it would help to ask some people who did get that training, or at least read a little Wikipedia and ask ChatGPT a few questions.2 That won’t give you all the answers — the world’s best economists don’t even have all the answers — but it would leave you a lot more knowledgeable than you started out, and it would give you a much better idea of where economists are on solid ground and where there are gaps in their understanding.
On the other hand, if all you want is to dunk on Wall Street Journal writers, perhaps all you need is some hand-waving rhetoric about “market fundamentalism” and a vague half-knowledge of one simple trade theory developed 200 years ago.
The real problem with these econ critics — both the lefty writers in The Guardian and the new crop of MAGA defenders — is that their project is fundamentally political. The lefty writers think that if everyone accepts that econ isn’t a science, and that the econ Nobel isn’t a real Nobel, and people aren’t like particles, and so on and so forth, then some sort of lefty ideology — Marxism, or degrowth, or whatever — will flow in to fill the hole left when economics vanishes. The MAGA writers think that it will be Trump’s economic ideas that fill that void instead.
But Matthew Hennessey, the Wall Street Journal writer, got one big thing right: Simply replacing academic theories with your own ideology can win you power, but there are important things it can’t do. It can’t change the nature of what tariffs actually do to the economy. Even if you and your friends and your political allies all shout very loudly that tariffs will restore American manufacturing, and act very scornful toward nerdy academics who tell you it doesn’t work like that, the economic headwinds that tariffs actually create for American manufacturers won’t change one iota.
However limited mainstream academic economics is as a tool for understanding the consequences of your policies, ideology is even worse.
Who’s right, Vance or Hennesey? Both are right. Market forces are, quite literally, forces of nature. And markets themselves are, quite literally, a tool. Tools work by harnessing forces of nature. A pendulum clock works by harnessing the force of gravity. A market works by harnessing the forces that drive people to buy and sell things. Vance is right that markets should be shaped to serve our desired ends, rather than being an end in and of themselves. Hennesey is right that market forces can’t be denied, ignored, or wished away.
Just to see how AI is doing, I asked ChatGPT o3 about the papers on gravity models. Its characterization of the papers’ results was oversimplified and omitted crucial nuance about the ex ante predictive accuracy of Fejgelbaum et al. (2020). But overall its explanations weren’t too bad!
Cass perhaps best illustrates MAGA's intellectual underpinning - bullshit in, bullshit out.
Damn! The righteous annoyance is dripping from every word here in a way I don’t usually perceive in your work. Thoroughly enjoyable!