ECONOMISTS IN WASHINGTON

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ECONOMISTS IN WASHINGTON

President Harry Truman once said that he wanted to find a one armed economist. When he asked his economists for advice, they always answered, “On the one hand”.

Truman was right in realizing that economists’ advice is not always straightforward. This tendency is rooted in one of the Ten Principles of Economics. People face trade offs. Economists are aware that tradeoffs are involved in most policy decisions. A policy might increase efficiency at the cost of equity. It might help future generations but hurt current generations. An economist who says that all policy decisions are easy is an economist not to be trusted.

Truman was also not alone among presidents in relying on the advice of economists. Since 1946, the president of the United States has received guidance from the Council of Economic Advisers, which consists of three members and a staff of several dozen economists. The council, whose offices are just a few steps from the White House, has no duty other than to advise the pre ident and to write the annuai Economic Report of the President, which discusses recent developments in the economy and presents the council’s analysis of current policy Issues.

The president also receives input from economists in many administrative departments. Economists at the Department of the Treasury help design tax policy. Economists at the Department of Labor analyze data  workers and those looking for work to help formulate labor-market policies. Economists at the Department of Justice help enforce the nation’s antitrust laws.

Economists are also found outside the adrrunistrarive branch of government. To obtain independent evaluations of policy proposals, Congress relies on the advice of the Congressional Budget Office, which is staffed by economists. The Federal Reserve, the institution that sets the nation’s monetary policy, employs hundreds of economists to analyze economic developments in the United States and throughout the world.

The influence of economists on policy goes beyond their role as advisers Their research and writings often affect policy indirectly. Economist John Maynard Keynes offered this observation.

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ECONOMISTS IN WASHINGTON