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The curious task of economics and the President’s Council of Economic Advisers

Summary:
The Wall Street Journal had an article last week about Princeton professor Cecilia Rouse being nominated to be the chair of Council of Economic Advisers (CEA).  See Cecilia Rouse, Tapped to Be Biden’s Top Economist, Brings Labor-Market Focus: The Princeton dean would be the first Black chair of the Council of Economic Advisers by Paul Kiernan.A passage in that article reminded me of what Nobel prize winning economist F.A. Hayek called "curious task of economics."Here is the passage:"The primary role of the CEA chair is to provide objective economic analysis to the president. Its staff of Ph.D. economists brief the president on economic data, write an annual Economic Report of the President, and participate in policy discussions alongside other agencies—often seeking to stop ideas

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The Wall Street Journal had an article last week about Princeton professor Cecilia Rouse being nominated to be the chair of Council of Economic Advisers (CEA).  See Cecilia Rouse, Tapped to Be Biden’s Top Economist, Brings Labor-Market Focus: The Princeton dean would be the first Black chair of the Council of Economic Advisers by Paul Kiernan.

A passage in that article reminded me of what Nobel prize winning economist F.A. Hayek called "curious task of economics."

Here is the passage:

"The primary role of the CEA chair is to provide objective economic analysis to the president. Its staff of Ph.D. economists brief the president on economic data, write an annual Economic Report of the President, and participate in policy discussions alongside other agencies—often seeking to stop ideas they think are bad from gaining traction."

So one thing the staff is supposed to do is stop bad ideas from gaining traction. That sounds similar to what Hayek said in his book The Fatal Conceit: The Errors of Socialism. Here is the relevant passage:

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.  To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order.  Yet that decentralization actually leads to more information being taken into account." 

I think stopping bad ideas from gaining traction is like (or can be achieved by) demonstrating to people that they don't know enough about the policies they are proposing or designing. So the two quotes in red maybe say the same thing.

Click here to see more on Hayek.

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