Good reads

If you wander into the Economics Department office, you can plunk down in the couch and read some interesting articles in our selection of magazines and journals. Here's one: George DeMartino's article "A Professional Ethics Code for Economists", in the July-August 2005 Challenge. DeMartino's argument is, in a nutshell, this. Lots of professions, such as the medical and legal professions, journalism, accountancy, and even such academic professions as sociology and anthropology, have established codes of ethics to which members must subscribe. The economics profession should do the same. A code of ethics for economists would focus on two principles. One is the adage from the Hippocratic oath: "First, do no harm". This means doctors (economists) need to place the patient's (society's) well-being above their own, and give great weight to the potential harm done by any treatment. The second is the "precautionary principle" which is a cornerstone of environmental ethics. This says that when a policy has the potential to do harm, precautions should be taken to prevent or mitigate this harm even if there is no scientific proof that the policy would cause the harm.



In practice, these two ethical principles would call for something like a "maximin" approach to economic policymaking: when weighing alternative economic policies, consider all of the possible ways in which each policy might harm society (or certain of its vulnerable members) and select that which maximizes the well-being of society or its members in the worst case scenario. By contrast, most of economic policymaking these days is conducted according to something like a "maximax" principle: adopt the policy that has the highest potential payoff, even if other outcomes produce much more severe negative consequences.



Using this framework, DeMartino criticizes the "Washington Consensus" policies that were pushed on developing countries in the 1990s. An equally powerful critique can be made, it seems to me, of the fiscal policies under the Bush administration. Economists advising the Bush administration have continually based the case for tax cuts on the best-case scenarios (high growth, low budget deficits) rather than the worst (exploding budgets, widening distribution of income). What would Greg Mankiw and Glenn Hubbard have said about the 2001-03 tax cuts if they had pledged themselves to a code of ethics when they took their Ph.D's?



A sampling from DeMartino's proposed code: "You do solemnly swear... that you will recognize the virtue of economic pluralism... the community you serve is never a means for your experimentation, but always an end unto itself... you will endeavor to introduce for the community's consideration a range of economic theories and policies, even while you advocate for that approach that you deem to be most appropriate... you will approach your work with an honest and open recognition of the imponderables that bear on the success of your work... you will be on guard against the self-serving argument of the privileged; and you will take pains to give voice to the needs and aspirations of the dispossessed..."



Sadly, economists in the real world behave more like lawyers than doctors. President: "What will be the effects of a $1.6 trillion tax cut skewed toward the wealthiest 1 percent of the population?" Economic advisor: "What would you like the effects to be?"