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Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy
AuthorElizabeth Popp Berman
Audio read bySuzie Althens
Cover artistLauren Smith
LanguageEnglish
Subjects
Publisher
Publication date
5 April 2022
Publication placeUnited States
Media type
  • Print (hardcover)
  • Ebook
  • Audiobook
Pages344
ISBN978-0-691-16738-1 (print)
330.973
LC ClassHC106.84 .B47 2022
WebsitePrinceton University Press

Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy is a book by sociologist Elizabeth Popp Berman published in 2022. In the book, Berman describes how the "economic style of reasoning" – a way of thinking about public policy which prizes efficiency in particular – became predominant in United States public policy.

Berman argues that the economic style of reasoning became institutionalized in the U.S. public policy apparatus from the 1960s to the 1980s via the influence of two groups: systems analysts from the RAND Corporation, and industrial organization economists from Harvard University and the University of Chicago. Berman describes how the economic style of reasoning has come to dominate disparate areas of public policy to the present day, including social policy, market governance and environmental policy, resulting in policies being assessed primarily in terms of their efficiency at the cost of other policy objectives such as equality, universalism, other deontological standards or conceptions of inherent rights. Contrary to other accounts which credit the emergence of conservative and libertarian groups like the Chicago school and Mont Pelerin Society with the advent of this economic way of thinking in public policy, Berman argues that it in large part emerged from center-left liberals who wanted to make the functioning of government more efficient.

While the economic style has become institutionalized in U.S. public policy, Berman argues that the Democratic and Republican parties have a different relationship to it. While the Republican Party has come to use the economic style of reasoning as a means to an end – invoking it when it supports policy goals and ignoring it when it does not – the Democratic Party sees the economic style as an end in itself, and takes it as a starting point when designing public policy. Berman argues that this has unduly constrained what Democrats consider valid policies, hampering progressive goals.

Summary[edit]

Berman introduces the idea of a "economic style of reasoning". Styles of reasoning "are collections of orienting concepts, ways of thinking about problems, causal assumptions, and approaches to methodology",[1] and the economic style of reasoning in particular "starts with basic microeconomic concepts, like incentives, various forms of efficiency, and externalities" and "takes a distinctive approach to policy problems that includes using models to simplify, quantifying, weighing costs and benefits, and thinking at the margin."[2] While often perceived as value-neutral, Berman argues that the economic style contains values of its own, such as valuing competition, choice and efficiency highly, and viewing markets as efficient allocators of resources.

Throughout the book, Berman aims to show how the economic style of reasoning has not always been the standard by which public policy was measured, but in fact only became prominent in U.S. policy discourse in the latter half of the 20th century. However, from then onward, it has become institutionalized in the executive branch, in Congress, in the judiciary and in academia. As a result, Berman argues that the constraints of what is considered valid policy has become narrowed at the expense of other policy objectives such as equality, universalism, other deontological standards or conceptions of inherent rights.

Berman first describes the antecedents of the economic style, meaning economic theories which influenced government prior to the rise of the economic style of reasoning. These are the schools of institutional economics and macroeconomics. Institutional economics is described as being most prevalent from the beginning of the 20th century until after World War II, where its influence began to wane. Institutional economists are described as having been focused on the effect of social, legal and cultural institutions on the economy, rather than on mathematical theory, and being supporters of progressive politics. Berman credits the institutional economists with the creation of and data collection for various economic indicators, starting the trend of economists providing advice to policymakers and the creation of various government offices in which economists played significant roles.

Background[edit]

In interviews about the book, Berman has described herself as an economic sociologist with an interest in how the boundaries between what is considered a market, and what is not, are defined, and how we think about governing them. Following her work on her first book, Creating the Market University: How Academic Science Became an Economic Engine[3] – which investigated how science came to be treated as entrepreneurial and something with market value – she became interested in the broader question of why economic ideas have such purchase in U.S. policy circles. In addition to this intellectual interest, Berman has cited her experience as a political progressive in the 1990s, where she experienced how the range of what was considered viable policy was constrained by economic principles such as market efficiency, as an additional motivation for the study.[4][5]

Reception[edit]

Reviews not covered yet (ultimately it won't be feasible to cover each review in detail, and the overall tendencies in the reviews should be noted instead):

Historian Simon Torracinta, writing in the Boston Review, praised the book, calling it "indispensable" and "one of the most important studies of American governance in many years." However, he was critical of what he viewed as Berman "side-stepping a critique of efficiency itself" by not showing how "[i]n reality, 'efficiency' is hardly the objective measure so many take it to be."[6]

Idrees Kahloon, writing in The New Yorker, highlighted Berman's historical research positively, writing that "Berman is at her best as an archeologist of ideas, digging through archives to excavate the origins of the economic style of reasoning and its takeover of federal policymaking." However, he was critical of what he viewed as Berman's lack of acknowledgement of the role of economics and economists in progressive policy historically, and her lack of acknowledgement that policies based on the economic style of reasoning has sometimes been the best means of reaching progressive policy goals.[7]

Economist and former chair of the Council of Economic Advisers Jason Furman, writing in Foreign Affairs, likewise praised Berman's historical account, appreciating the fact that she avoided well-known macroeconomic debates in favor of focusing on the less well-covered influence of microeconomic thinking. He similarly praised her ability to keep her own views separate from her historical analysis. However, he argued that Berman overstates the political power of economists, stating that "very often, economics is still something policymakers use to find support for their existing ideas rather than to illuminate and better understand issues and debates." Furman also argued that historically, certain failures to enact progressive policy has been due to a lack of willingness to listen to economists, and that basing policy on concepts such as fundamental rights are not workable in practice. He also disputed that economics is simply a tool for the powerful, arguing that the developments in economic thinking chronicled by Berman were in fact due to the discovery of new knowledge within the discipline, although Furman conceded that "powerful interests can sometimes capture economic policy". His review concluded by arguing for the positive effects of the exchange of ideas between economics and other disciplines.[8]

In a review essay published in The American Prospect, writer Robert Kuttner concluded that "Berman is well worth reading for deeply researched detail on how market-fundamentalist economics colonized the administrative state and thus weakened progressivism." He did however critique what he viewed as Berman's overgeneralization of the economic profession, stating that some economists have argued that efficiency and equality are not mutually exclusive. He also argued that Berman mischaracterizes the politics of the New Deal, presenting it as being merely driven by notions of social justice when it was simultaneously seen as cost-effective.[9]

In a blog post written as part of a Law and Political Economy Project symposium on the book, economist Marshall Steinbaum positively described Berman's work as "a near-epidemiological study of the process by which the economic style became ensconced in government." However, he was critical of what he saw as Berman taking "her subjects’ stated values and their methodological choices at face value" and that "[s]he thus ends up telling the story as they would prefer it to be told." For instance, Steinbaum argued that Berman takes for granted the view that protecting small business is a moral commitment while allowing large companies to dominate markets is a commitment to economic efficiency, even though some contemporary and current economists argue(d) for the protection of small businesses on economic grounds. Similarly, he critiqued what he viewed as Berman characterizing deregulation of the transportation sector as grounded in efficiency, while characterizing prior policy as based on considerations of stability and fairness, stating that this view is "a simplistic juxtaposition, a history told by the victors." Steinbaum concluded that "Berman’s book suffers from some of the same flaws as the efforts to enact paid family leave, expand the [child tax credit], and legislate an increase in the minimum wage, even though Berman herself encourages progressives to avoid the economics-friendly strategies that were attempted to enact those policies: an inclination to achieve influence by means of giving your subjects and would-be critics nothing to hate and nothing to fear."[10]

References[edit]

  1. ^ Berman, Elizabeth Popp (5 April 2022). Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy. Princeton University Press. p. 5. ISBN 978-0-691-16738-1, with reference to Hirschman, Daniel; Berman, Elizabeth Popp (15 April 2014). "Do economists make policies? On the political effects of economics". Socio-Economic Review. 12 (4): 779–811, at 794. doi:10.1093/ser/mwu017. Berman credits the term "style of reasoning" to Hacking, Ian. "Statistical Language, Statistical Truth, and Statistical Reason: The Self-Authentification of a Style of Scientific Reasoning". In McMullin, Ernan (ed.). The Social Dimensions of Science. Studies in Science and the Humanities from the Reilly Center for Science, Technology and Values. Vol. III. University of Notre Dame Press. pp. 130–157.
  2. ^ Berman, Elizabeth Popp (5 April 2022). Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy. Princeton University Press. p. 5. ISBN 978-0-691-16738-1.
  3. ^ Berman, Elizabeth Popp (2012). Creating the Market University: How Academic Science Became an Economic Engine. Princeton University Press. ISBN 978-0-691-14708-6.
  4. ^ Adler-Bolton, Beatrice; Rocco, Phil; Vierkant, Artie (28 April 2022). "Thinking Like An Economist w/ Elizabeth Popp Berman". Death Panel (Podcast). Event occurs at 2:49–4:39. Retrieved 2 July 2022.
  5. ^ Grossman, Matt (20 April 2022). "Did economists move democrats to the right?". The Science of Politics (Podcast). Niskanen Center. Event occurs at 5:18–7:19. Retrieved 6 July 2022.
  6. ^ Torracinta, Simon (9 March 2022). "Bad Economics". Boston Review. Archived from the original on 2 July 2022. Retrieved 2 July 2022.
  7. ^ Kahloon, Idrees (16 May 2022). "The War on Economics". The New Yorker. Archived from the original on 2 July 2022. Retrieved 2 July 2022.
  8. ^ Furman, Jason (21 June 2022). "The Quants in the Room: How Much Power Do Economists Really Have?". Foreign Affairs. Vol. 101, no. 4. pp. 182–189.
  9. ^ Kuttner, Robert (2 August 2022). "The Enablers of Predatory Capitalism". The American Prospect. Vol. 33, no. 4. pp. 53–56.
  10. ^ Steinbaum, Marshall (6 September 2022). "When It Comes to the History of Economics, Don't Think like an Economist". LPE Blog. Archived from the original on 6 September 2022. Retrieved 2 November 2022.

See also[edit]

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