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Why No One Listens to These Economists

A recent poll from the University of Chicago shows that economists overwhelmingly believe that the fiscal stimulus helped the economy coming out of the Great Recession.  And this has lots of economists scratching their heads (see here and here for instance).  After all, if the stimulus helped then why, with such a muddling recovery over the last 5 years, were we so eager to argue against the possibility of more fiscal stimulus?   The answer is simple in my view – the opinions of those economists matter a lot less than the opinions of the constituents which our elected officials have to answer to.

This disconnect between the opinions of economic experts and constituents speaks volumes about the divide between the two sides.  But it makes complete sense when put in the right perspective.  Let me summarize why I think there is this great divide in views:

  • First, the economy is really confusing and most Americans don’t even have an entry level understanding of basic finance and economics.  See this SEC study for instance.
  • Second, the average American is skeptical of just about anything an economist says because economists themselves disagree on so much and many economists seem to work with models of the world that the common person can’t even come close to relating to.
  • Third, we are inundated with propaganda about how bad the government is.  Americans are trained from the day they are born to be skeptical of the government.  It’s in our DNA.  And that skepticism is healthy up to a point.  But it becomes unhealthy when the skepticism turns into dogmatic rejection.  Our government does some really great things for us.  It also does some pretty crappy things.  But we shouldn’t just reject any increase in government spending on the false assumption that all government intervention in the economy is automatically bad.
  • Lastly, there are actually a whole bunch of economists and media outlets who would vehemently reject the idea that the fiscal stimulus worked even though the CBO has already confirmed for us that the stimulus helped (but who needs facts from an apolitical entity when you have economic dogma to fall back on?).

So, there’s this tangled web at work here.  It’s all very political.  It’s all very misinformed.  And it’s all very dogmatic.  And the result is a whole lot of emotional disagreement that leads to nothing good.

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