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Event Recap: Book Talk by Binyamin Appelbaum

September 24, 2019

On September 24th, the Wharton Public Policy Initiative hosted Binyamin Appelbaum for a talk on his newly released book, The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society. Appelbaum is a member of the New York Times Editorial Board and his book traces the history of the US economists’ growing influence in the policy sphere.

Professor Peter Conti-Brown, a legal historian at the Wharton School, opened the event by introducing Appelbaum citing both his prolific career as a financial journalist and his return to campus as a Penn alumnus.

Professor Peter Conti-Brown and Binyamin Appelbaum

Following the brief introduction, Appelbaum quickly moved into the main topic of the event – his book. He began by explaining the title, The Economists’ Hour. In his own words, it refers to “a revolution in the late 1960’s and the early 1970’s where economists began to gain new influence over policymaking in the United States.” An influence that allowed them to assert a profound impact on domestic economic policy by reshaping how the government interacted with and regulated that economy. His book follows the story of how and why this happened, and addresses the consequences of this history on our contemporary society.

To begin this story, Appelbaum addressed what came before the revolution. Prior to the 1960s, economists did not play a principal role in shaping economic policy. To give us a sense of the times, Appelbaum shared the story of a certain young economist at the Federal Reserve in the early 1950’s. At the time, the economist was relegated to the basement of the building and served mostly as a “human calculator.” He simply prepared numbers and data for the real leaders and decision makers of the Feds, none of whom were economists. Appelbaum recounted how the young man would return home and lament to his wife about how he saw no future in his career at the bank; it simply was no place for an economist. To the audience’s surprise, however, this was the story of Paul Volcker, who would later go on to become the Chairman of the Federal Reserve. Volcker in this way represented a significant paradigm shift. When he began his career, there was not yet a prominent place for economists in the Federal Reserve or the policy world at large. But by the end of the 1970s, the bank became an institution almost entirely led and staffed by economists.

Appelbaum argues that economists began to meaningfully impact public policy with changes to military service. Since the end of World War II, the US army practiced a system of annual conscription to fill its ranks. For a variety of reasons, among them the optics of the Vietnam War, Americans grew increasingly opposed to this practice however. But what brought an end to compulsory conscription was not its unpopularity, it was the decision of President Nixon motivated by the logic of economists, most notably, Milton Friedman. Friedman convinced President Nixon that conscription was an inefficient model for recruitment. For one, it ran the risk of underutilizing talent that could be served better in other sectors of society. Instead, an incentive model where you paid soldiers would not only increase retention, but also sidestep the aforementioned inefficiency. This thinking deeply resonated with President Nixon and with that we had the end to conscription policy in 1973.

With this anecdote, Appelbaum then pivoted to a deeper discussion on Milton Friedman, whose influence was both “profound and far-reaching.” Friedman was a child of the Great Depression. Unlike many of his contemporaries however, he did not survive this period believing in the importance of governmental efforts to combat poverty and inequality. Instead he believed that government should simply “get out of the way,” and allow markets to function freely. Although Friedman did not always find much support for this position at first, by the 1960s his theory gained increasing currency. In the economic slowdown that followed the “Golden Age” of post-World War II America, there was a growing sense that the paternalistic role that the government had taken was no longer working. As such, in a nation looking for a new economic model, economists provided this promise to a return to prosperity. Economists of this time argued that no one should regulate the economy because ultimately the market would regulate itself with greater efficiency. But Appelbaum shows how what ensued from the adoption of this ideology was not a deliverance of its promises, but rather significant economic problems, especially with respect to income inequality.

The last ripple cast by the economists that Appelbaum traces is one that concerns democracy at large. Due to the stratification of wealth and the widening of inequalities, Americans are starting to have less and less in common with one another. The very principle of “We the people” is being strained by differences exacerbated by the economists’ influence on our economy. In turn, Appelbaum posits that it has become harder for us to act on our collective interests because in fact that solitary is harder to define – a phenomenon he believes is well captured in the Law and Economics movement of the 20th century.

Binyamin Appelbaum

Finally, having taken a series of questions from the audience, Appelbaum closed out his lecture with a thoughtful descriptive statement about what he hopes readers and the audience takes away from his book: “Markets are seated in societies and their rules are determined by those societies. And the question of what the market does is very much in our hands. And I think we have lived in an era where what the market has produced is unacceptable, partly because we have failed to engage what those rules should be. The political process has deferred to economists not just for the achievement of our goals, but for the definition of our goals and that is where I’d like to see change.”

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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