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Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy Kindle Edition
The story of how economic reasoning came to dominate Washington between the 1960s and 1980s—and why it continues to constrain progressive ambitions today
For decades, Democratic politicians have frustrated progressives by tinkering around the margins of policy while shying away from truly ambitious change. What happened to bold political vision on the left, and what shrunk the very horizons of possibility? In Thinking like an Economist, Elizabeth Popp Berman tells the story of how a distinctive way of thinking—an “economic style of reasoning”—became dominant in Washington between the 1960s and the 1980s and how it continues to dramatically narrow debates over public policy today.
Introduced by liberal technocrats who hoped to improve government, this way of thinking was grounded in economics but also transformed law and policy. At its core was an economic understanding of efficiency, and its advocates often found themselves allied with Republicans and in conflict with liberal Democrats who argued for rights, equality, and limits on corporate power. By the Carter administration, economic reasoning had spread throughout government policy and laws affecting poverty, healthcare, antitrust, transportation, and the environment. Fearing waste and overspending, liberals reined in their ambitions for decades to come, even as Reagan and his Republican successors argued for economic efficiency only when it helped their own goals.
A compelling account that illuminates what brought American politics to its current state, Thinking like an Economist also offers critical lessons for the future. With the political left resurgent today, Democrats seem poised to break with the past—but doing so will require abandoning the shibboleth of economic efficiency and successfully advocating new ways of thinking about policy.
- LanguageEnglish
- PublisherPrinceton University Press
- Publication dateApril 5, 2022
- File size3064 KB
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From the Publisher
Editorial Reviews
Review
"This outstanding work is highly recommended. . . . Essential." ― Choice
"A captivating and detailed historical account of the rise of economics and economists’ influence within the US Administration during the 1960s and 1970s."---Cléo Chassonnery-Zaïgouche and Aurélien Goutsmedt, Oeconomia
"The historical account in Thinking like an Economist, which makes up the bulk of the book, is an original, insightful, and persuasive story. . . . Berman provides a fresh perspective emphasizing a wide variety of microeconomic topics, including antitrust law, antipoverty policy, health care, and the environment."---Jason Furman, Foreign Affairs
"It turns out this kind of thinking―what Berman calls ‘the economic style of reasoning'―has taken over not just environmental policy but the entire US policy bureaucracy, to dismal results. It’s as much something Democrats have done to themselves as anything forced by the right. One always enjoys having one’s priors validated by scholars of much greater distinction than oneself, so I was delighted to read the book."---David Roberts, Volts
"As a non-economist who writes about economics, I felt seen by Berman."---Peter Coy, New York Times
"Berman is at her best as an archeologist of ideas, digging through archives to excavate the origins of the economic style of reasoning and its takeover of federal policymaking."---Idrees Kahloon, The New Yorker
"An engaging account of the role that economists and government advisors with an economics training played in shaping public policy in the US during the post-war period. . . .Very well written and extremely erudite."---Giulio Zanella, Oeconomia
"A Choice Outstanding Academic Title of the Year"
"
The import of her book is clear to me. It’s OK to believe there’s value beyond markets and competition, and while efficiency can be a useful goal in many cases, sometimes we should embrace deeper values around fairness, and dare I say it, right and wrong.
"---John Warner, Chicago Tribune"Indispensable. Deeply researched and powerfully argued, it is easily one of the most important studies of American governance in many years."---Simon Torracinta, Boston Review
Review
“In what is sure to become a classic, Berman unravels how economists, and their way of thinking, came to exert such a powerful influence on the institutions that shape U.S. policymaking. Her sharp analysis shows how the resulting fixation on efficiency, a single-minded focus on market-oriented solutions, and the abandonment of political claims based on universalism, rights, and equality has undermined our ability to solve major social problems.”―Pamela Herd, Georgetown University
“This book deserves to make waves. It is original, finely written, provocative, and right. Fragments of this story have been told before―but Berman has done the hard work of crafting a compelling new narrative about where some of the most crucial aspects of our modern world have come from. Thinking like an Economist deserves a wide readership, not just among sociologists, but political scientists, economists, and everyone interested in how the economic approach came to dominate American policy debate.”―Henry Farrell, Johns Hopkins University
“If you want to understand modern policy debates in economics, you need to go beyond the shopworn neoliberalism narrative and explore what economists really are thinking. Elizabeth Popp Berman’s book provides a wonderful guide for doing just that.”―David Colander, Middlebury College
“The compass by which a nation sets its public policy tells us a good deal about its values and priorities. In this remarkable book, Elizabeth Popp Berman tells the story of how, for the United States, efficiency became the North Star with the economist as navigator. Less a partisan story than one of a shift in the culture of governance, this book sheds important new light on how economic thinking has infused both our policy priorities and the mechanisms for attempting to implement them.”―Steven G. Medema, Duke University
About the Author
Product details
- ASIN : B09K4SB43K
- Publisher : Princeton University Press (April 5, 2022)
- Publication date : April 5, 2022
- Language : English
- File size : 3064 KB
- Text-to-Speech : Enabled
- Screen Reader : Supported
- Enhanced typesetting : Enabled
- X-Ray : Not Enabled
- Word Wise : Enabled
- Print length : 333 pages
- Best Sellers Rank: #595,872 in Kindle Store (See Top 100 in Kindle Store)
- #210 in Public Policy (Kindle Store)
- #2,097 in Business Economics (Kindle Store)
- #4,578 in Public Affairs & Policy Politics Books
- Customer Reviews:
About the author
Elizabeth Popp Berman is associate professor of organizational studies at the University of Michigan. Much of her work focuses on recent U.S. history and emphasizes the role of public policy. Her research has been recognized with multiple awards from the American Sociological Association and the Social Science History Association, and supported by the Institute for Advanced Study. She is not, alas, an economist.
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Amazing use of & grasp of history
Top reviews from the United States
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- Reviewed in the United States on April 11, 2022I like Elizabeth Popp Berman’s “Thinking Like an Economist.” It is a good book.
I say that because her book made me change a structural paradigm I have in my head. Prior to reading this text, I had in my mind that everything went wrong when the business right took the Powell Memo, the libertarian right took Goldwaterism, and the religious right rose post Roe and it was all thrown into a mixer during the Reagan revolution. You can all sorts of well-being charts that dog-leg sometime between 1973 and 1981 or so.
Elizabeth Popp Berman’s introduces the idea that part of the change has to be seen as the takeover of economic reasoning of a cost-benefit or structuralist model into how policy was set over an idea of doing the right thing because they were the right thing based on “commitments to universality, rights, and equality” (99). Basically, it is the triumph of the consequentialists over the deontologists. She does note the basic issues where my priors lay, noting that there was a lot of political issues entangled in the rise of the right as you can’t separate the economic from the political (140).
The thing that really makes the book stand out is her use of and grasp of history – and that she shows that the institutionalization of the economic shift to efficiency wasn’t just dominated by one party. Embracing this move was a bipartisan approach from Kennedy though Clinton and beyond. If there’s a weakness to the text it is that she drops most of the history after Reagan, but we live in the world of the shift she outlines so including the new Democrats in depth might be beating too much of a dead horse. The bipartisan embrace means that this move is also internalized to the point where you don’t have to make the argument for efficiency anymore, but instead if you desire broad based policy you have to argue from that point and anticipate these sorts of objections about how you are going to pay for that if you want to do something because it needs to be done. The present gets little notice but there is mention of the Neo-Brandeisians (though exemplars like Tim Wu and Lina Khan aren’t mentioned by name) and an acknowledgement that there is a whole realm of policy argument to the left of the economic efficiency argument and that there is a possibility, at least in antitrust, that there is more than a very narrow understanding of what consumer welfare means under the Sherman Act.
Ultimately though, for me it circles back to the many-headed policy demon that was already in my priors. Instead of completely reframing the challenge, it is a drawing of a different sort of structural barrier to any real positive change for a broad base of people.
5.0 out of 5 stars Amazing use of & grasp of historyI like Elizabeth Popp Berman’s “Thinking Like an Economist.” It is a good book.
Reviewed in the United States on April 11, 2022
I say that because her book made me change a structural paradigm I have in my head. Prior to reading this text, I had in my mind that everything went wrong when the business right took the Powell Memo, the libertarian right took Goldwaterism, and the religious right rose post Roe and it was all thrown into a mixer during the Reagan revolution. You can all sorts of well-being charts that dog-leg sometime between 1973 and 1981 or so.
Elizabeth Popp Berman’s introduces the idea that part of the change has to be seen as the takeover of economic reasoning of a cost-benefit or structuralist model into how policy was set over an idea of doing the right thing because they were the right thing based on “commitments to universality, rights, and equality” (99). Basically, it is the triumph of the consequentialists over the deontologists. She does note the basic issues where my priors lay, noting that there was a lot of political issues entangled in the rise of the right as you can’t separate the economic from the political (140).
The thing that really makes the book stand out is her use of and grasp of history – and that she shows that the institutionalization of the economic shift to efficiency wasn’t just dominated by one party. Embracing this move was a bipartisan approach from Kennedy though Clinton and beyond. If there’s a weakness to the text it is that she drops most of the history after Reagan, but we live in the world of the shift she outlines so including the new Democrats in depth might be beating too much of a dead horse. The bipartisan embrace means that this move is also internalized to the point where you don’t have to make the argument for efficiency anymore, but instead if you desire broad based policy you have to argue from that point and anticipate these sorts of objections about how you are going to pay for that if you want to do something because it needs to be done. The present gets little notice but there is mention of the Neo-Brandeisians (though exemplars like Tim Wu and Lina Khan aren’t mentioned by name) and an acknowledgement that there is a whole realm of policy argument to the left of the economic efficiency argument and that there is a possibility, at least in antitrust, that there is more than a very narrow understanding of what consumer welfare means under the Sherman Act.
Ultimately though, for me it circles back to the many-headed policy demon that was already in my priors. Instead of completely reframing the challenge, it is a drawing of a different sort of structural barrier to any real positive change for a broad base of people.
Images in this review - Reviewed in the United States on April 23, 2022If you hang around federal agencies of the U.S. government, you can see the traces of economic thinking everywhere. Efficiency. Calculable trade-offs. Policies oriented around nudging. Democrat or Republican, economics thinking shapes the policy work of every modern White House. This book allows you to see how and why this came to be -- and how partisan arrangements were reconfigured through the introduction of economics into public policy.
This book is both thick with historical detail and delightfully intriguing in its storytelling, tracing a through line of a discipline's entrenchment in Washington through people, institutions, policies, and actions. While the book is written to help explain this arrangement to non-economists, this book also helps economists put their norms and practices into broader perspective.
- Reviewed in the United States on September 7, 2023Narrator is only average—sometimes seems to be confused by the content and reads sentences without an understanding of pauses and emphasis. Book provides the history of how Democrats became nearly indistinguishable from Republicans in the way they governed according to microeconomic principles of efficiency—not Justice or equity or rights. For those of us continually disappointed with Carter, Clinton, Obama this explains why.
- Reviewed in the United States on October 4, 2024If you want to understand why Democrats from the 1970s-2010s became increasingly beholden to economic efficiency, and in turn narrowed their vision for what the government could do, read this book.
- Reviewed in the United States on October 19, 2022Thinking Like an Economist by Elizabeth Popp Berman is part a historical guide to the drip-by-drip immersion of economics and economic thinking into the sphere of policymaking, and secondly, it is an argument as to where such thinking has lead us astray in the values that the United States has traditionally held. It asks if the economic welfare of the country, and more so, whether morally, the nation has become bankrupt of the higher ideals established over the historical past. In particular, she takes to task the Democratic Party that has strayed from progressive ideals and, in its place, embraced the ideology of the market-driven, efficiency model of neoliberalism.
First, the title. It is misleading; it is not about how a given economist, with all the economic thinking at hand, would look upon the world. Instead, a more complete title would be “How Democrats Gave Up Progressive Ideology for “Thinking Like an Economist.” If the title fooled you, well, so was I.
Berman’s appeal to Democrats is that the big-picture issues of equality, rights, health and well-being, have been replaced by the mechanical operations of a market economy. This development has shaped our policy to the point where we have lost sense of our direction. She documents the process of early economists through the RAND group bringing expertise from industry and the military into larger chunks of government. A familiar milestone was Robert McNamara’s spreadsheets, using data to assess how the Vietnam was progressing (and lying about it). But it was also spreading into other segments of Lyndon Johnson’s Great Society, where money was now made available to hire more economists to influence the development of programs. Step by step, economists were infiltrating government decisions.
One thorn that Berman particularly resents is that economic thinking is neutral regarding its intentions. See illustrates several examples that dispute those claims, but none more obvious than the Reagan “trickle-down” economics. Here, economic thinking was molded by the necessity to present economic models that supported their desired outcomes and to ignore all others. Social policy, market governance, and social regulation were now fully held in the hand of market-efficiency economists.
She castigates Clinton and Obama for missed opportunities to reverse the trend. She feels Clinton not only didn’t reverse the current but embraced it even more. The economic collapse of 2007-8 was Obama’s opportunity to mend things, but it was an opportunity missed. In his defense, Obama publicly stated that the situation was so precarious that trying to keep his head above the water was a big enough challenge.
I am not totally in agreement with Berman. In the post-WWII years, we gave ourselves a blank check to fill with big-picture thinking and ideas. Fighting communism, going to the moon, Medicare and Medicaid, and fighting poverty were all part of our history. But that check got smaller and smaller until resources became limited, and we needed to consider the word that had previously not been spoken: costs. We had to come up with ways of weighing cost-benefits, and economists filled that need. Economists were a necessity. We had to find a way to dig through the complexity to find simpler solutions as to whether a program is beneficial or not. So, to me, the development of economics in academics and then into government was needed.
However, I am fully behind Berman in the migration of economics into law and the creation of statutes, case law, and administrative rulings that reduced the protections of workers and small businesses. The market-efficient law in business came to fruition in redefining anti-trust that discarded much of historic legislation. It was now about efficiency, not protection…as long as they don’t raise prices unfairly, it’s free to operate. This has played out to be not all it’s cracked up to be. Big tech and big mergers often work against the consumer. And that’s no considering the political power they hold.
The historical documentation of the book is eye-opening. I learned about what was happening, ever so subtly, behind the scenes of our policymaking from the 1950s to today. I take some issue with her thesis of progressivism versus efficiency economics, but, as the saying goes, “what goes around, comes around,” and I think Americans are beginning to go back and ask the big-picture questions that could potentially reorient policy for the years to come.
Top reviews from other countries
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PIERPIERReviewed in Italy on June 1, 2024
3.0 out of 5 stars Interessante ma difficoltoso da leggere
Elizabeth Popp Berman, sociologa, è direttrice e professoressa di studi organizzativi presso l'Università del Michigan ed è l'autore di questo libro. Il tema che viene sviluppato nel libro è la storia di come il modo di pensare in stile economico sia divenuto sempre più dominante all'interno delle istituzioni degli Stati Uniti.
La storia della introduzione del modo di pensare economico nelle istituzioni si può far risalire inizialmente al cosiddetto "istituzionalismo", anni '30, che iniziò ad introdurre una varietà di uffici governativi nei quali gli economisti avevano un ruolo siglificativo. Il secondo passo fu la creazione dopo la guerra del Comitato dei consiglieri economici presso la Casa Bianca. Un ulteriore significativo avvenimento fu l'utilizzo della Rand corporation da parte della Aviazione degli Stati Uniti per analisi sul sistema di difesa aereo tramite la System analysis. La nomina di Mac Namara come Segretario della Difesa, con l'amministrazione Kenendy, fu un ulteriore tassello per il rafforzamento dell'approccio della System Analysis. A questo seguì l'adozione, con alterne fortune, dei sistemi di programmazione e pianificazione economica (PPBS) nelle agenzie governative.
Nonostante la Great Society di Johnson avesse dei valori in conflitto con la visione economicista questa facilitò la rapida diffusione dello stile economico nel governo federale e l'efficienza divenne un fine centrale di politica sociale. Inizialmente ci fu una certa continuità nell'uso dello stile economico nell'amministrazione Nixon, anche se i conservatori tendevano ad usare lo stile economico per raggiungere obiettivi macroeconomici.
L'approccio economico per quanto di presentasse come neutrale in realtà venne in conflitto con approcci diversi alla politica sociale. Lo stile economico e la centralità della efficenza si espanse anche nel ambito della legislazione riguardante l'antitrust e divenne quindi anche un riferimento per il quadro normativo legale. Anche con l'amministrazione Carter la efficienza e lo stile economico rimasero al centro delle politiche sociali e antitrust. Un altro ambito dove si diffuse l'approccio economicista, cambiando completamente la legislazione, fu quello dei trasporti e delle telecomunicazioni dove si diffuse la deregolamentazione.
Con la presidenza Regan l'atteggiamento cambiò ancora, in realtà questa amministrazione non era interessata all'aspetto scientifico, piuttosto sfruttava le agenzie governative per giustificare i suoi programmi governativi. Di fatto ci fù una massiccia riduzione dei budget per gli uffici governativi che rimasero con poche risorse per le ricerche di politiche sociali. L'obiettivo di Regan era rimuovere le restrizioni governative alle aziende, e il ragionamento economico era solo un mezzo per raggiungere i suoi obiettivi politici, in questo fu essenziale la crescita di importanza e di rasppresentanza nelle istituzioni della Scuola di Chicago.
L'obiettivo iniziale degli economisti era quello di usare il regionamento economico per migliorare l'azione di governo; ma una volta che tale stile divenne maggioritario andava in contrasto con i valori puramante morali e di principio, riducendo lo spazio per approcci alternativi. Da un punto di vista politico l'adozione da parte dei Democratici del pensiero economicista ha ridotto lo spazio per politiche sociali più coraggiose nella sanità e nella tutela ambientale in particolare, anche se dopo il 2008 la sinistra del partito democratico ha riabbracciato politiche che sono al di fuori dello stile economico. Nelle conclusioni l'autrice afferma che anche se lo stile economico va incoraggiato è necessario costruire un quadro intellettuale che vada oltre l'approccio economico, e che metta al centro valori come l'uguaglianza, giustizia razziale, diritti e comunità.
Il tema del libro è senz'altro interessante e svolto con grande dovizia di particolari e ricostruzioni storiche dettagliate. Detto ciò, il fatto che si addentri in tutta una serie di nomi, sigle di amministrazioni statunitensi finisce per essere dispersivo e piuttosto faticoso da seguire. Più che un libro dedicato al grande pubblico pare un ottimo studio per addetti ai lavori, pertanto lo consiglio solo a chi è vermente interessato all'argomento e alla storia degli Stati Uniti.
- Gerard de ValenceReviewed in Australia on February 1, 2024
4.0 out of 5 stars How social, moral and ethical issues became ones about markets, allocation and tax
The book details how what she calls “the economic style of reasoning,” has become the dominant way of thinking about public policy in the United States. This is usually (almost universally) seen as a result of the movement led by Hayek and the Mont Pelerin Society that became known as neo-liberalism. Instead, Berman argues, “the most important advocates for the economic style in governance consistently came from the center-left.”
In the 1960s two intellectual communities within economics played the crucial role. One was a systems analysis group from RAND Corp. at the beginning of the Kennedy administration. The other was a network of university economists specializing in industrial organization, first at Harvard University and later at the University of Chicago.
These economists became key advisors and formulators of policy, introducing cost-benefit analysis and other tools for assessing government policies and raising efficiency above other policy goals. As macroeconomics descended into doctrinal disputes about fiscal and monetary policy in the 1970s, US conservatives turned this into a deregulatory agenda. At the same time institutional economists lost their standing in university departments as the mathematical turn after Samuelson marginalised their work.
The book records (in great detail) the development of the economic style, how many of its leading advocates came from the Democratic party and the left, and how the right strategically used these ideas to promote policies that turned social, moral and ethical issues into ones about markets, allocation and tax. Highly recommended.