Dr Eric Crampton: Another offering in the underwhelming history of economists’ open letters

Economists’ open letters don’t have that great of a track record.

In 1981, some 364 economists warned against UK Prime Minister Margaret Thatcher’s fiscal policies. She quickly proved them wrong by restoring fiscal and monetary discipline and balancing the budget.

A group of University of Auckland economists wrote an open letter criticising Ruth Richardson’s 1991 budget. The recession was bad, but the economy quickly turned around and showed substantial growth from 1992 onward. And a strong fiscal track was maintained for decades after.

David Farrar: Usual suspects want more debt

A group of economists have written to Nicola Willis complaining about the modest fiscal restraint imposed on the public sector. Grant Robertson grew government expenditure by $76 billion/year or a massive 7.6% of GDP, leaving NZ with a structural deficit. Many were champions of his policies or worked for him, and now they complain his successor is not going to carry on a policy of spend and borrow.

Chris Bishop had the best response, being:

Oliver Hartwich: It's happy hour for economists in NZ now

Economics enjoys the reputation of being the “dismal science”. And yes, there is hardly a policy in which economists cannot find a flaw.

To a degree, this is understandable. When you have studied economics, the world around you looks like a madhouse. All too many government policies, often introduced with laudable goals, simply do not make sense.