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Saturday, June 24, 2017

Alan Blinder: Lamppost Theory and Dysfunctional Politics

Alan Blinder is working on a book with the working title The Lamppost Theory: Why Economic Policy So Often Comes Up Short. The title is based on an old metaphor that academic economists use to convey their relationship with politicians: “Politicians use economics in the same way that a drunk uses lampposts—for support rather than illumination.”

Blinder participated last week in a symposium on this topic at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution (which can be watched online at the link), and one of his discussion slides offers the following thought experiment.
"Imagine that rewriting the tax code was assigned to a bunch of technocratic experts—with instructions from Congress—and then brought back to Congress for an up-or-down vote. ...
  • Chances that we’d get a vastly better tax code: about 100%
  • Chances that this will happen: about 0% 
  • Q: Does that make you think there’s something wrong?"
Of course, Blinder's point is could also be applied to other settings, like health care reform, or reform of public pensions, or allocation of spending within various departments. Indeed, the way in which our political system was able to close some military bases was to have a group of experts come up with a list of what bases would be closed, and then require the political process to confirm or oppose the entire list as a group, rather than picking the list to pieces and eventually doing little or nothing.

It can be hard for group with weak hierarchies to make decisions. Group members need to find a balance between making their own contributions in some areas but acquiescing to the group in others. To make this work, it takes a skilled political leadership with a combination of policy-related and hands-on managerial skills, together with group members who see themselves as acting in the context of a broader whole, not just as grandstanding individuals. The US political system seems lacking in these areas.