Preventing Stupid Economist Tricks

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Preventing Stupid Economist Tricks

Restarting the global growth engine obviously involves doing a lot of the right things in order to enhance productivity. But the other side of the equation involves avoiding policies that undermine productivity growth.

The current transition has been slowed by the entrenched economic interests of the mass-production era, which have tried desperately to prevent disruption. That's only natural.

However, the sophisticated mechanisms brought to bear during the transitional phase of the Mass Production Revolution and the Digital Revolution dwarf those available at a comparable point in the three preceding Techno-Economic Revolutions. Therefore, the dislocations of the Great Depression as well as the Great Recession, which really started with the bursting of the "tech bubble," have been extended and softened.

In the process, politicians have taken a short-term view, putting in place policies that shield their constituents from the pain caused by economic "evolutionary pressure." Those constituents are multifaceted, ranging from bondholders to tort lawyers to labor unions to tax lawyers to the perennial underclass to auto dealers and taxi drivers. The list of "oxen being gored" seems endless.

Given that nobody likes the discomfort of short-term radical change, even when the long-term benefits from that change are obvious, it's unrealistic to expect this behavior to disappear. The challenge is to learn from the consequences of our actions.

That's what is unique about this juncture in history. The Digital Revolution itself has given us, for the first time ever, the data and tools needed for a thorough forensic analysis of our economic decisions.

Moreover, the fragmentation and transparency associated with the Digital Revolution have enabled us to conduct a serious, "evidence-based" debate in a way that would have been impossible during the Railroad Revolution or the Mass Production Revolution. The New Deal, the Great Society, and even the Reagan Revolution were based on a set of "theoretical constructs" that made logical sense, but had not been thoroughly tested in a way that enabled us to separate the noise from the signal.

Today, we have a unique opportunity to make policy decisions based increasingly on empirical evidence, where differences of opinion are based on "values" but we all share a common understanding of cause-and-effect...

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