How do you get a body of professionals to go along with your program?
It’s an old idea: He who pays the piper calls the tune.
The pipers are economists. The paymaster is not you, but the Federal Reserve. There’s a suprising amount of agreement amongst even disagreeing economists that the Federal Reserve is, on the whole, “a good thing,” a necessary thing, even an institution whose existence and rationale must not be questioned.
Shocking, but less so when you apply what is called “Public Choice” analysis to economists themselves. Assume that economists are self-interested. Assume that they like to get paid. Opinions turn out to be somewhat elastic, even given some very hard facts. The results?
Don’t bite the hand that feeds you.
Nicely, a few economists bring this up, every now and then. Garett Jones on EconTalk did, reviving a letter monetary economist Milton Friedman wrote to researcher David M. Levy in the early 1990s. Friedman summarized the situation concisely, saying that the Fed
hires directly roughly half of all economists specializing in the field of money, and indirectly provides funds for a large fraction of the remainder. I have no doubt that is a major reason why the Federal Reserve, despite such a poor record of performance, has such a high public standing.
This also helps explain why there was a major shift away from laissez faire amongst economists. In the 20th century, the “worldly philosophers” developed a new labor market; they found that they could make a great deal of money working for government. And they don’t get paid for telling the government not to do what it wants to do, or to fire most economists.
This is Common Sense. I’m Paul Jacob.