Donald Trump’s decision to impose rates has fueled a lively debate among economists and others: are rates good? Maybe some of them? Do governments then have to impose those rates that are good? Although these discussions are interesting in themselves, they also raise a more general question: what should economists do at all?
The title of this blog post is an echo of Buchanan’s groundbreaking paper. Although I refers to Buchanan, it is not his paper to which I want to refer. I would rather point to another Van Buchanan’s insights. Let me start by quoting a revealing (and charming) story told by Richard E. WagnerA student of Buchanan’s:
While I was excited in class the first day, I saw Buchanan looking at his roller. He looked into the room as he was looking for someone in particular and then said, “Mr. Wagner, what’s wrong with the American tax system?” I felt an adrenaline soot.
After my summer lecture, that question was written for me, or so I thought … I immediately started reciting things that I read that summer about simplifying the tax system by reducing exemptions and deductions and such things. Buchanan seemed to pay attention to me, which very satisfied me. However, when I was done, he replied: “Mr. Wagner, you have no things to answer such a question. We are Democrats here and not autocrats.”
The core of Buchanan’s reaction (who also runs through his work, starting with Knut Wicksell, who admired Buchanan enormously) is that economists are unable to determine what people want or to judge what is good for them. There is no ‘truth’ in politics, Buchanan tells us in his The boundaries of freedom. And if someone agrees with Buchanan and thus “rejects the truth hunter of politics”, it follows that, as he writes in the first chapter: “We can’t claim to play like God, and we can hardly pretend that our own private preferences reflect his” truth “.”
It is rather up to people – and each of them – to decide what they want and to be the evaluators of their lives. “A situation is” well “assessed to the extent that it allows individuals to get what they want, whatever this may be, only limited by the principle of mutual agreement,” says Buchanan. It is not the task of economists – namely of political philosophers or someone else – to determine what is good for others.
Where does that economists leave behind? They have an incredibly valuable role to play: they have to investigate the consequences of different action tools and order different ways, given what people want. Thus economists are concerned with caution. They must give people prudential advice about the best means to pursue given goals much in line with the ambitions of economists for value-free science.
But let me hurry to add that this does not mean that economists should not reprove the government for certain actions – indeed, this will often be their task. But they must make it clear that they only take the perspective of the citizens and not judge the government actions themselves. What I mean is that economists can criticize the government action when it goes beyond the unanimous permission of citizens (because this, to repeat, is always the benchmark of “goodness”). But then economists do not put their preferences forward – or their ‘truth’ – but insist that the government accepts the sovereignty of the individual. Economists must be democrats, not autocrats.
Max Molden is a PhD student at the University of Hamburg. He has collaborated with European students for Liberty and Prometheus – Das Freiheitsinstitut. He regularly publishes with Der Freydenker.