Dangerous guesswork in economic policy | LSE Event

Join us for this event at which Max Steuer will talk about his new book, Dangerous Guesswork In Economic Policy.
The book is about the need for, and the benefits of, drawing on specialist skills in formulating economic policy. Some issues can be addressed through common sense and first-hand experience. Few matters involving use of resources in the NHS, defence policy, education, housing and a host of other issues, such as high-speed rail, are of that kind. Recognising the need is the first step. With the best will in the world, drawing on knowledge is not easy. Dangerous Guesswork provides a sophisticated over-view of the working of the discipline.
Speakers:
Dr Max Steuer
Chair:
Professor David Webb
#Policy #Events #London
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[@isatousarr7044]

Economic policy is often shaped by a combination of data, theory, and intuition, but when policymakers rely on guesswork or unverified assumptions, the results can be far from ideal. Dangerous guesswork in economic policy arises when decisions are based on speculative projections rather than solid evidence or a thorough understanding of underlying factors. Such policies may lead to unintended consequences, exacerbate inequalities, or undermine economic stability.
One of the key dangers of guesswork is that it oversimplifies complex economic systems. Economies are influenced by a wide range of variables-social, political, environmental, and technological-which are often interconnected in intricate ways. Guessing the outcome of policy measures without fully accounting for these complexities can create policies that do more harm than good. For instance, cutting taxes for the wealthy with the expectation that it will stimulate growth might overlook the fact that income inequality could rise, resulting in lower consumer demand and stunted long-term growth.
Another concern is the potential for misguided priorities. Policymakers may make decisions based on political or ideological preferences rather than objective analysis. For example, prioritizing short-term growth over long-term sustainability might lead to economic practices that harm the environment, contributing to climate change and undermining future generations' prospects. Or, choosing policies that benefit specific interest groups at the expense of the broader population can result in greater wealth concentration and social instability.
Guesswork can also be dangerous when it comes to financial regulation. Without rigorous, evidence-based frameworks, policymakers might make decisions that favor speculative practices, leading to market bubbles or crashes. The 2008 global financial crisis is a prime example of how poorly understood or ignored risk assessments and regulatory gaps can have catastrophic effects on both national economies and global markets.
To avoid dangerous guesswork, economic policy should be grounded in solid data analysis, transparent decision-making processes, and a long-term perspective that accounts for unintended consequences. This includes a careful consideration of how policies will affect different populations, as well as the ability to adapt to new information and changing circumstances. Policy experiments can be useful, but they must be done cautiously, with clear goals, monitoring, and mechanisms for course correction if things don’t go as planned.
Ultimately, economic policies that stem from guesswork lack accountability and robustness. Policymakers must avoid the temptation of speculative decision-making and instead prioritize evidence-based approaches that are open to scrutiny, and that understand the complexities of modern economies. The dangers of guesswork are too significant to ignore when crafting policies that have far-reaching consequences for both current and future generations.

[@ym276]

Not a very useful talk, Professor Steuer also refused to answer most of the questions. Ridiculous