

Economics focus

Dismal ethics

An intensifying debate about the case for a professional code of ethics for economists

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re watchingchina Paul Krugman is not promoting a structural deficit he pleading for a cyclically neutral budget rather than the pro-cyclical contractionary budgets the country as a whole has in place. Krugman's has an economic philosophy that assumes straight forward basic truths such as 'business cycles do exist' and 'people do not behaviour in a purely rational way', as behavioural economics continues to show to be irrefutable.
Your economic philosophy requires assumptions that are simply, provably inaccurate, and are promoted by economists who know them not to be true but espouse them anyway to be popular to those they want to like them. This is the reason economics so desperately needs a code of ethics because most arguments are between classical economists who know their asumptions are false and the rest of us.


Well, if all you read was the article, there really isn't much to say about professional ethics in economics because there isn't much of a definitiion of ethics.

Can we at least distinguish arguments of competence (Krugman and the like) from arguments of conduct? And later in the article, positions of economists employed by organizations on the free market side, supposedly subservient to free market arguments, a black-white view of the private sector that could only come from socialists. Even Krugman himself is employed by a NYSE organization (however unprofitable), going to put him in the dock as well?

So it looks like this ethics argument is simply a stalking horse for professional arguments-by-other-means. In which case, sure, put an "ethical" strait jacket on a subset of professional opinions. Wouldn't be the first professional organization demoted to rank of cheer-leader for the progressive future, nor the last.


It is hightime econonists had a code of conduct. This will professionalizid economics. On the issue of biased reporting due to affiliation,the potential code of conduct will stand as a guard against misconduct. Ethical issue is a human problem and not just an economic issue.


There is another, greater difficulty with the presumption that full disclosure of financial ties to industry allows us to make better judgments about economists' conclusions: too many people automatically assume that advocating less regulation is in the interests of a given corporate client. In fact, I suspect the reason for the lack of a discernible difference in regulation advocacy between those with industry ties and those with no ties is that certain regulations are favored by large industry players, since they know that regulations create barriers to entry and prevent smaller competitors from gaining as much ground. So the automatic conclusion of ethical purity, which some might reach when an economist with financial ties to Wall Street (e.g.) favors this or that regulation, would (in many cases) be fallacious.


Would it be too much to ask of a scientific society that they seek out some empirical data on the effects of professional codes of ethics before they proceed?

Peter Price

Well because economics permeates all levels of society, from politics to socail dynamics, it was inevitable that it would become a moral question as well.

I'm dubious of what a proffesional code of ethics would do, and believe more research should be done on the professional code of ethics influence in other professions, before essentially imposing them on economists.

I also believe the article is perhaps misleading in suggesting that economists are heavily influenced by their financial relations. Similar to historians I am sure that regardless of one's beliefs you must consider and analyse credible alternatives, particularly when it's a nationwide affair such as the economy.


That economists have no code of ethics is not huge news. I suspected that for years. That they are considering one is. Hopefully, they will choose to join other respectable professions with strong codes of ethics and adopt one that makes a difference.


From the book "AN AUTISTIC WORLD (1)"

We have built our increasingly complex world on the shoulders of knowledge and trust, and challenging any of those facts can cause us astonishment and disappointment. The quest for reaching a satisfactory result, thanks in great manner to the developments of science and technology, has made us forget the essence of our intelligence; which is to be aware that there is a space between each step that we take. What makes a society special, is the ability of its individuals to materialize new ideas, finding solutions to emerging problems, accepting in the process the realization of conflict.

He (Socrates) supported a state of virtue and justice where the citizens were informed of the advantages of finding and defending the truth over their own personal interest. To him, the community must strive to be righteous towards the individuals that form its body, and it mustn’t censure or scorn those that could help. To achieve that end, Socrates states that: “The easiest and noblest way, is not to be crushing others, but to improve yourself.”

chris macrae

My resarch of 40 years of dad's writings in The Economist shows that the humbling question - what is the purpose of economics? - is worth asking in 2 parts. 1) Originally did the forefathers of economics, including Adam Smith and James Wilson, see the main purpose of economics as aiming to advance the human lot by investing in next generation. 2) Did the purpose of Economics in the West turn in an opposite direction during the 3rd quarter of 20th Century. Depending on how you profile yourself on this 2 by 2 grid a lot of consequences follow - including whether we will seize the opportunity to make the net generation the most productively free and most valuably goal oriented ever. http://worldeconomist.net One segment of this grid is launching a new journal next month out of Glasgow University where Adam Smith's archives are still treasured.


Theoretically, a code of conduct is always associated with professionalism. And it wouldn't harm the "dismal science" to receive the long overdue recognition as a professional field...

Dr.Ramesh Singh CIVILS INDIA

Such situations are obvious- economists playing double or triple roles! The very loyalty of the expert is having the chances of getting influenced even more since most of the economists suggest incentives to the workforce. The world is witness to the Swine Flu controversy where the panic button was pushed by the WHO board members and it was found that many of the board members were on the boards of the private medicine companies producing flu vaccines! So we have a world with worhty knowledge capable of getting even Nobel Prizes but the very 'ideology of time' has given us a life style devoid of ethics! The search for a better world still continues!


Good article.

I doubt though that disclosure is the greatest of the problems dealing with economists. I believe the real problem is ideology, particularly political.

For example, looking at the US-China trade balances:

If you consider the basic economic facts, the RMB exchange rate plays a very small part in that equation. The largest factor is that the US has so completely de-industrialised itself that it has little to sell that China wants to buy. And the things China does want, the US labels as 'strategic' and refuses to sell.

A second part is that a substantial part of China's surplus is due simply to the import/export accounting system, where China imports $50 of parts for Apple, adds $10 of assembly, and Apple exports the item at $250. China is charged with the entire amount as a 'trade surplus' - which of course it is not.

There are other factors, but you get the idea.

And even a first-year economics student already understands that when a country has structural defects, like the US does, these cannot be addressed through exchange rates.

In any case, for the past 35 years the US has consistently run trade deficits with more than 60 countries and the total today is more than 90 countries. So it isn't just a "China Problem".

But many US economists, Paul Krugman as one foolish example, ignore the incontrovertible facts and appear to be guided solely by their political ideology (or perhaps patriotism).

Krugman, for e.g., ignores the 90+ deficit countries and paints the entire picture as a bilateral problem. And he blames virtually the entire problem on China's RMB exchange rate, suggesting it should appreciate at least another 25% to 40%. He knows that won't help the trade deficit. He knows there is no example of such a result. He knows that Japan's Yen doubled in only two years and yet its trade surpluses with the US only continued to grow. He knows that China's RMB appreciated by almost 25% and the deficit only increased.

We can excuse US politicians for either their patriotism or ignorance, but Krugman has no such ready defense. His position on the US trade deficit would serve only to destroy China's continued growth - and he knows that better than any of us.

Ahd there's no question he's being consciously misleading and dishonest. Krugman has repeatedly and consistently bitterly accused China of maintaining its currency value at an artificially low level. And then, lo and behold, the US begins their quantitative easing program - in which of course, the US would be doing precisely what they accuse China of.

And Krugman refuses to address the issue, preferring to write on political matters. His only reference to the printing of money was a short paragraph buried in a political article. I told him that was really quite a cowardly thing for him to do, that given his incessant vocal attacks he should have had the courage to face this - and to face his readers. He chose to avoid it altogether.

To me, this is a serious issue of professional ethics - a man with wide knowledge, stating facts as they truly are (when it's to the advantage of his country), but then dissembling with those identical facts when they go against the US.

In my mind, THAT is what we need less of, and where the real ethical problems lie. I don't believe this will change because nobody with political leanings will sacrifice them just for the sake of the truth.


Should economists reveal their affiliations etc. which I think they should thus helping to bring more transparency, How would the Economist deal with its policy of nondisclosure of article bylines?


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