Wednesday, October 08, 2008

Why won't any economist defend McCain's economic policies in a northern California debate?

I came across this question in a discussion thread on the net. The OP clearly implied that this means that no economist would want to defend McCain's economic policies. Of course, that's a naive view.

One knowledgeable economist posted the following reply, which I really liked. In this posting, MR means "marginal returns" and AVC means "average variable cost."


When marginal revenue is below average variable cost, a competitive firm will produce no output in the short run. Here, output is debating De Long.

Suppose you're a McCain-supporting economist. Why would you debate De Long? You would if doing so would get you something - like increase your candidate's chances in the election or your influence in the Republican party - and it wouldn't cost you much.

But whilst a McCain-supporting economist might well continue to support McCain and perhaps bag Obama on his shortcomings, it would be foolish to debate De Long, because:

You stand to gain little or nothing because even if the election is winnable, it's not being fought on economic policy issues as debated amongst economists in California.

You stand to gain little or nothing by defending McCain's policies, because either McCain's going to lose or you're going to want him to change them after the election. Either way, you don't want to be tied to them. And you certainly can't go into a debate conceding that whilst you support the candidate you don't support his policies.*

An example: McCain's call for expenditure cuts. If you're a conservative economist, you think one of three things about this:

1. It's a bad idea at the moment when the economy is about to go or has gone into recession (you're a conventional economist).
2. It's a good idea even now, but totally inconsistent with the mortgage bailout stuff (you're a neo-Mellonite).
3. It's good as far as it goes, but irrelevant because there is no crisis anyway (you're a real business cycle type).

So the conservative economist will want to avoid supporting McCain's positions and look to have influence in the unlikely event of a McCain administration or try to build something from the wreckage if he loses. Some, of course, have decided their fixed costs are well and truly sunk and have bailed entirely.

So, like I said, MR<\lt>avc.