The following post is inspired by a visit that I paid this morning to Capitol Hill.
Suppose that you’re a brilliantly calculating, powerful, and sociopathic politician intent on inflicting as much economic harm as possible on ordinary workers and families. But you’re not all-powerful. You face constraints imposed by public sympathies, knowledge, and beliefs. If the public knew your true motives – knew the evil that fills your heart – you’d have no power. Likewise, if you inflicted massive economic harm on them all at once, the public would recognize it as such and strip you of your power.
How would you act in such a setting?
Of course, you’d give your policies fine-sounding names – such as “Fair Labor Standards Act” – meant to fool the public into believing you to be their friend rather than their enemy. More importantly, you’d implement your harmful policies piecemeal. You’d unleash your damage small step by small step.
Knowing that reality is complex, with many things always occurring simultaneously, you’d understand that, say, a policy that reduces by 2.5 percent, over the course of two years, the incomes of most of the country’s households will not be felt very strongly. And if this income reduction is felt, or if some statistician discovers this reduction and points it out in a widely read op-ed in the New York Times or the Wall Street Journal, it’s very easy for you and your cronies either to deny that this income reduction is real or, if you must concede that it’s real, blame forces other than the ones that you’re known to have unleashed. (“Yes,” you say gravely, “the policies of the opposing party have indeed caused to fall a bit recently. Good thing, though, that I’m in office and able to put in place some of my policies. Otherwise the fall in incomes would surely have been ever greater!”)
You would inflict with each round of your legislation enough economic harm to be real but never enough – during any one round of legislation – to be clearly detectable or firmly attributable to your legislation. You’d use the enormous complexity of reality as cover for your evil. Your brilliance at political calculation would ensure that the economic harm that you inflict with each round of legislation is just mild enough to allow you never to be blamed for doing economic harm.
And you’d applaud as “true scientists” those statisticians and economists who say to the public “We know about the economy only that which we detect in the quantifiable data. We don’t rely upon theory to tell us about economic reality; we’re data-driven. We’re Scientists.”
You, Dastardly Politician, will realize that such people are your useful idiots. When you raise the minimum wage, increase marginal income-tax rates, jack up tariffs by a few percentage points, or impose whatever other damaging economic policy you dream up, you know that the harmful effects of your policies will exist only amidst the massive and incessant swirl of other economic forces. You know that empirical researchers whose findings reveal the harmfulness of your policies will be credibly-enough challenged by other empirical researchers whose alternative findings cast doubts on those of the first empirical researchers.
So because you inflict your damage incrementally – drop by drop – no overwhelming, unchallengeable, or convincing empirical evidence of the damage that your evil-doing inflicts on society will ever be forthcoming. Thus, you retain your power.
Of course, over time – precisely because your policies work as you’ve designed them to work – society winds up much poorer than it would have been had your policies never been implemented. But just as it’s difficult in the short-run to tease out of the empirical data the effects of your policies, it’s difficult also in the long-run to do so. Although in the long run the actual trend of the economy, or of some aspect of the economy, is easier to detect than it is in any short-run span, the number of forces operating in the long-run is vast. You will sound plausible when you explain that, say, the unmistakable rise over the decades in black teenage unemployment relative to that of white teenage uemplayment  is, unfortunately, due to this force or to that trend – a force or trend outside of your control – and is not (as some reactionary and unscientific economists allege) a predictable consequence of minimum-wage legislation.
Politicians who impose policies the economic damage from which is easily identified – either because that damage happens quickly and unmistakably or because it is concentrated on politically influential interest groups – do not stay long in office. These politicians are weeded out. The politicians who remain in office – those who survive in power – are, whether consciously or unconsciously, those who are skilled at pushing or endorsing policies the damage from which is sufficiently meager during each short span of time that those politicians are never blamed for the damage that they do because it is (especially without knowledge of economic theory) often difficult even to see that any damage has been done and, even when such damage is seen, to identify that damage as being the result of those politicians’ handiwork.