Yesterday, I read this in the Atlantic. It’s an argument from Larry Summers, the former Treasury secretary and star of the Zuckerberg-Winkelvoss dispute, for why spending money now, even at the expense of debt, might create less of a burden on our descendants than is commonly thought. It’s designed as a counterpoint to those (normally right-wing) assumptions that any debt accrued today is, by definition, a bad thing down the line:
The example I always like to use is Kennedy Airport is going to be repaired. It is going to be repaired at some point. Potholes in roads are going to be filled. The question is whether we’re going to fill them now, when we can borrow to fill them at zero in real terms, and when construction unemployment is near double digits, or whether we’re going to do that years from now, when there will no longer be any multiplier benefits to those expenditures and when the deficit problem will be a more serious problem.
Two things strike me about that. One is the forehead-slapping obviousness of Summers’s argument. The other is the phrase the example I always like to use.
That phrase implies a whole series of explanations by this very finest of economic brains (whether you agree with him or not). A whole sequence of attempts to make the complex comprehensible.
Economics as an academic discipline has long had this yawning gap between use of the system – by ourselves in financial transactions, by companies, by investors and most of all by governments – and understanding of the system as outlined in academic papers. Put bluntly, we none of us really know how this stuff works (and, to be fair, economists can face the same problem).
Only in the last decade has explanation been something economists have felt they have to do, perhaps following the lead of those who have sought to popularise science. It also seems that economists have embraced blogging as a platform for explanation. Tyler Cowen, Tim Harford, Jonathan Portes are all frequent and interesting explainers of obtruse theory, such that even dunderheads like me can understand them (and if you want to see economic blogging taken to its absolute limit, try following Brad Delong).
Along with this, Stephanie Flanders and Robert Peston at the BBC have done an outstanding job in turning seriously complicated economic considerations into narratives which anyone, with a bit of effort, can take in. Here’s an excellent example – Stephanie Flanders explaining why the US bond market is a complex signal of economic futures.
Why are Flanders and Peston so good at this stuff? Because, I think, economics is the one area where an “on the other hand” approach to news can really work. Because there is such profound disagreement at the heart of economic debate, an even-handed approach works. I think the BBC have made a bad mistake in inviting UKIP and even the EDL into the heart of the national debate in the name of “fairness”, because political ideas, at least when expressed on television, are hard to judge in terms of seriousness. Bad ideas can look just as important as good ones if expressed with sufficient certainty. Economic ideas do not have that problem, because they have academics observing them closely. These ideas are, in their essence, the thoughts of clever men and women who have considered carefully what they are about. We can rarely say that of politics.
Economics, then, is the perfect “digital” discipline. It needs lengthy explanations. It invites dissent. It thrives on numbers. And it’s so complicated that stories, such as the one Summers tells, are essential.