Commenting on this post, commentor Warren Platts writes (emphasis added):
You economists can debate amongst yourselves about how trade deficits don’t matter. But your debates are what don’t matter now. Now we need to just get this done, come hell or high water. Your job now, as an experienced economist, is to tell us how to get this done.
His comment leads to an interesting question: what is the role of the expert? Is the role just to tell the non-expert how to get whatever the non-expert wants done? I argue that the answer is “no.” The expert should advise, not merely comply. The decision-making process should be collaborative, not dictatorial. The non-expert may have some goals in mind, but the expert should be active in helping the non-expert decide: 1) what goals are actually achievable (as opposed to merely possible), 2) what goals are desirable, and (assuming agreement upon 1 and 2), and 3) how to achieve said goals. In other words, in order to avoid expert failure (that is, the advice of the expert not achieving the desired results), both the expert and the non-expert should be active in the decision-making process.
In his 2018 book Expert Failure, Roger Koppl sets out a taxonomy of expert failure (see Table 10.1, page 190). One of the conditions he discusses, where the expert decides for the expert and there is only one expert, can lead to the “Rule of Experts.” Under the Rule of Experts, we are most likely to get expert failure. There are few checks in the process to ensure the opinion being sold is actually desirable and useful. Most notably, the non-expert cannot push back; the expert makes the decisions for the non-expert. Contestation is a vital check in the information-generation process to ensure the opinion generated is actually useful.
But, since any transaction is reciprocal, we can consider an inverse scenario where there is a monopsony for expert opinion. That is, there is only one buyer. Just like the non-expert’s ability to push back against the advice of the expert is essential to reduce the probability of failure, so is the expert’s ability to push back on the non-expert. There must be dialogue between the two parties: a fair, free, and reciprocal discussion. A monologue, where one party simply dictates the terms, is a recipe for disaster. A few months ago, I wrote about how such monopsony power can lead to experts becoming mere mouthpieces. Indeed, we have seen the disasterous consequences of this monopsony over the past few weeks as the Trump Administration wiped out about $6 trillion in American wealth in just a few short days thanks to extraordinarily bad advice on trade.
I have been lucky in my relatively-short career to be an advisor to private companies, governments, and lawyers. In each of these, before any contract is signed, I sit down with the prospective client to discuss needs and expectations. I lay out what they are buying from me: advice and opinion. If an idea or policy is bad, I will say so. If a goal is bad, I will say so. If they push, I will walk away. Most clients understand this point. If they already had a goal or policy in mind, they wouldn’t need an expert. They are looking for advice. But, I have had a few clients who insist they want me to come up with a model or line of reason to support their views. I have walked away from those deals.
So, I reject the argument that it is the job of the expert to do whatever the non-expert wishes, “come Hell or high water.” Rather, we should avoid Hell and high water, not cause them. If the non-expert is intent on destroying themselves, the expert should have no part of that. Or, as is the case of Trump’s trade war, the action will cause widespread harm to millions of people, the expert has a solemn duty to stop it, rather than give legitimacy to the action.
PS: There is no serious debate among economists whether trade deficits matter. They don’t. Economists are quite universally agreed upon that point. There are always some dissenters, but that doesn’t mean there is a debate. Just like there is no debate among astronomers that the world is actually a sphere. Sure, you’ll get the occasional one who will insist the world is flat, but that doesn’t mean there is a debate in any meaningful sense.
