NYT columnist Bill Keller decries a political process in which the consensus of mainstream economists is not according the respect it deserves. He failed to note one obvious reason why these experts' views might not be getting much respect: almost none of the experts noticed the huge housing bubbles whose collapse led to severe recessions in the United States and Europe.
In this case, the process of credentialing ensured that evidence would be ignored rather than examined. Those who raised concerns about the bubbles were dismissed as cranks. Even after the collapse, the economists who managed to overlook the largest asset bubbles in the history of the world have suffered almost no consequences in terms of their employment or professional standing. Clearly the economics profession does not have a structure where performance is rewarded and failure is punished. Given this fact, it is certainly understandable that the pubic would be suspicious of pronouncements by economists.
It is also worth noting that Keller's takeaway about the profession's consensus of what needs to be done is in fact wrong, or at least seriously misleading. He says that there is a need to reduce "entitlements." In fact, there is no obvious need to reduce Social Security. Its cost is projected to increase only modestly in coming decades as a share of GDP and is fully paid by its designated tax through the year 2038. Even after that date, the tax is projected to cover more than 80 percent of scheduled benefits through the rest of the century.
The real story is Medicare and Medicaid, the cost of which is in turn driven by the broken U.S. health care system. If the United States paid the same amount per person for health care as people in other wealthy countries we would be looking at long-term budget surpluses, not deficits. It is misleading to describe the problem of a broken health care system as a problem of "entitlements."
This is especially important because it conceals the main choice in containing Medicare and Medicaid costs. On the one hand, we can look to reduce the quality of care provided by these programs, as advocated by politicians of both parties. Alternatively, we can look to reduce the waste and excessive fees charged by providers.
There are enormous distribution implications to how this issue is resolved. However most people will not even be aware of these issues if the media hides them under the problem of "entitlements."