Economists agree that policy makers should listen to them. But wait, there’s more they agree on.
In reality, most economists agree on 14 propositions, according to reports compiled by Harvard prof Greg Mankiw and mentioned in his blog. The compilation is presented in Mankiw’s widely-used introductory economics textbook.
Here are the 14 propositions with the percentage of consensus for each:
1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
2. Tariffs and import quotas usually reduce general economic welfare. (93%)
3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
6. The United States should eliminate agricultural subsidies. (85%)
7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
11. A large federal budget deficit has an adverse effect on the economy. (83%)
12. A minimum wage increases unemployment among young and unskilled workers. (79%)
13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)
These 14 propositions would also receive widespread public support. But why doesn’t Congress act accordingly?
Because Congress reflects the will of interest groups. Any change would have winners and losers. In other words, any change in legislation to reflect widely-held economic wisdom would result in a redistribution of economic and political power and changes in the flows of money and wealth.
The status quo may not be optimal, but it reflects the will of the people, as expressed through the organizations that they pay to lobby Congress.